What's Happening?
Shein, the ultra-fast-fashion giant, is proceeding with its plans to open shops-in-shop in five regional BHV department stores outside of Paris. This expansion is part of a controversial partnership with the legacy retailer, Sociéte des Grands Magasins
(SGM). The new spaces, ranging from 5,400 to 11,000 square feet, will be located in Limoges, Angers, Dijon, Grenoble, and Reims. This move follows the November launch of Shein's first permanent physical store inside BHV Marais in Paris, which faced backlash from protestors, politicians, and brands. The controversy was fueled by items listed on Shein's marketplace, including child-like sex dolls and prohibited weapons, leading to the exit of approximately 100 brands from BHV. Despite these challenges, SGM cofounder Frédéric Merlin believes the partnership with Shein will address declining footfall and generational shifts in consumption patterns.
Why It's Important?
The expansion of Shein into physical retail spaces in France highlights the ongoing transformation in consumer shopping habits, where digital-first brands are increasingly venturing into brick-and-mortar retail. This move is significant as it reflects a strategic attempt to revitalize city centers and increase foot traffic in provincial stores. For BHV, the partnership with Shein is a bet on leveraging Shein's large customer base to boost sales and attract more visitors. However, the controversy surrounding Shein's marketplace items and the backlash from existing brands underscore the challenges of balancing innovative retail strategies with ethical considerations and brand reputation. The outcome of this partnership could influence future collaborations between digital and physical retail entities.
What's Next?
SGM plans to implement a phased approach for the regional rollout, starting with a winter assortment and expanding into seasonal and locally adapted merchandise. From April, Shein will take over product selection and orders within BHV, while SGM will maintain control of sales staff. The department store operator will shift to a commission-based model on Shein sales, reducing inventory risk. Additionally, SGM is planning a broader revamp of the BHV Marais store in Paris, including converting retail space to mixed-use areas such as a food hall and para-pharmacy. The success of these initiatives will be evaluated over the next year, with potential adjustments based on consumer response and sales performance.
