Shein Pop-Up Tests in Forever 21 Make Way to California

From an optics perspective, the four-day run of the Shein pop-up inside Forever 21’s Ontario Mills store – the first in California – seemed a slam dunk: Shoppers waiting ahead of opening to get in, lines out the door, frenzied buying and social media posting. 

But the era of two of fast-fashion’s biggest names now working together is still very much in beta. 

Shein’s four-day pop-up in Ontario, Calif. ended Sunday and it’s part of several temporary shops consumers will see launched throughout the country as the two competitors figure out how best to play nice with one another. That’s due to a partnership announced in late August between Shein and Forever 21 operator SPARC Group Holdings – a joint venture between Simon Property Group and brand management firm Authentic Brands Group.  

Shein U.S. president George Chiao told the Los Angeles Times the pop-up serves as “one example of how we will combine SPARC’s leadership in brand development and physical retail with Shein’s products and passionate customer base.” 

Of the terms made public under the Shein-SPARC deal, Shein took a one-third stake in SPARC. Meanwhile, SPARC became a minority shareholder in Shein. 

The idea: leverage the assets of each. Forever 21’s expansive physical store fleet could be utilized by Shein, while Shein’s digital prowess – with some 150 million online users – could help Forever 21 better scale its presence on the web. 

“The powerful combination of Simon’s leadership in physical retail, Authentic’s brand development expertise and Shein’s on-demand model will help us drive scalable growth and together make fashion more accessible to all,” Shein Executive Chairman Donald Tang said in a statement at the time of the partnership’s formation. 

Inside the Shein Pop-up

The “passionate customer base” Chiao described was obvious Sunday morning, the pop-up’s final day. 

A small crowd of shoppers milled about outside the entrance to Forever 21 ahead of the mall’s opening. At 11 a.m. employees promptly flagged those waiting to enter the Shein pop-up through a nearby employee entrance where a line was queuing. Shoppers received admission tickets as they waited as small groups were led into the pop-up every 20 minutes. 

Inside, was a little bit of everything: kids, men’s, women’s, activewear, footwear, accessories and cosmetics. Shoppers hurriedly went from one area to the next, filling their shopping totes as just as many employees wearing black shirts with “Shein” written in white looked on, stood at the cash registers or chatted with one another. 

Just outside the pop-up, the Forever 21 store was much more quiet and the cash wrap far less active than what was going on behind the shop’s black curtains. 

Why Pop Up in Ontario? 

Shein as a company has typically been tight-lipped, particularly with press, making the more pertinent details of the pop-up – what’s been learned so far, how are the locations being mixed and, perhaps most importantly, how will the Shein and Forever 21 brands and product assortment be distinguished from one another moving forward – murky. 

Keeping the first pop-up in Southern California certainly made sense, given Shein’s local team is based in downtown Los Angeles. Ontario isn’t exactly close, but there’s no need to hop a plane for executives to get a read on the shop and gauge consumer interest. 

Why an outlet center was chosen over a full-price property, could have simply been a matter of logistics due to anticipated crowds or availability of space. 

Ontario Mills boasts the largest tenant roster of Simon’s outlet centers, with 214 stores across 1.4 million square feet. Tenants include Coach, Saks Off 5^th, Uniqlo, Lucky Brand Jeans Outlet, Reebok Outlet, Kate Spade New York Outlet and Michael Kors Outlet.  

A Simon leasing brochure, citing SPG Research and PopStats demographic data from 2022, says the mall counts roughly 300,000 people within a five-mile radius. The overall trade area totals 2.5 million people with an average household income of $93,000. 

Upside

With the upside a bit more clear for Shein, what’s in all of this for Forever 21? 

As shoppers trickled out of the Shein pop-up, they could certainly peruse Forever 21 product. But with both making low-cost, trendy apparel and accessories, what would be the incentive? 

A fashion collaboration between the two is due out at some point, which could offer some additional insights. 

Shein, which has been rumored to be exploring an IPO, has been dogged by criticism over where it sources and produces its product, including accusations it has used forced labor, and cries by some it has an unfair advantage in the de minimis tax exception on imports. One wonders if such a shadow could be a drag on Forever 21. 

Shein is clearly adept in the digital realm and uses it to its advantage to work up buzz. Forever 21 doesn’t have that. Forever 21, the older retailer of the two, also struggled in 2022 under the weight of inflation and a pullback in consumer spending. There were other issues between 2021 and 2022, but those appear to have been addressed.  

“We made some tactical mistakes with Forever 21,” Simon Property Chair, CEO and President David Simon told analysts in recapping 2022. We brought in a new CEO to rectify those mistakes.” 

Despite past misfires, Forever 21 has something that would be far too costly for Shein to duplicate on its own: an in-real-life business model that, in many cases, takes up anchor space at malls. 

Being a brand today means being everywhere for every current and prospective consumer. 

Said Simon during the mall owner’s August earnings call: “The physical environment in terms of bricks-and-mortar sales is as important as ever. That’s been reinforced by essentially every retailer and anyone that’s in the e-commerce business. All look to that. I think there was obviously a long period of time where many of the pundits felt that bricks-and-mortar just don’t matter. That’s the furthest thing from the truth.” 

Shein and Forever 21 are proving this sentiment true, even if the end game is far less certain.