Fast Fashion's Fall: Tariffs Hit Shein and Temu Hard

Money Explainers

See how new tariffs are reshaping the fast-fashion market. Understand the policy change that tanked sales for Chinese retailers. Explore how other brands are benefiting from Shein and Temu's struggles. #RetailShift #DeMinimisLoophole #SheinTemuImpact

Transcript

00:00El reino de China de online retail giants Shine y Temu en el mercado de U.S.

00:05Once seemingly unstoppable, ha tomado un gran turno.

00:09After años de crecimiento, ambos empresas han visto sus sales plummeten en el pasado dos meses.

00:15En May, Shine's sales dropped by 10%,

00:18while Temu's fell by nearly 20%, con little signs de recuperación since.

00:23Retail experts están pointing a una decisiva factor.

00:25President Donald Trump-esque April decision to close the deminimized loophole.

00:31This tax exemption previously allowed companies to ship goods valued under $1.800

00:35into the U.S. without incurring import duties.

00:39Shine and Temu heavily relied on this carve-out to flood the American market with incredibly low-cost goods,

00:45from $3 t-shirts to $15 sneakers, and even $100 appliances,

00:50all shipped directly to consumer stores.

00:52However, the elimination of this loophole is now severely straining their pricing advantage.

00:58Neil Saunders, a retail expert at GlobalData, notes that higher prices have deterred shoppers.

01:03But, the pullback in advertising, particularly by Temu,

01:06has also resulted in it dropping off the radar of a lot of consumers.

01:10This sudden shift underscores a crucial point.

01:14Consumer loyalty to these platforms was primarily driven by their rock-bottom prices.

01:18For legacy retailers, Shine and Temu's aggressive pricing was a looming threat.

01:24Forever 21, once a fast fashion disruptor itself,

01:28partly attributed its recent bankruptcy to their rise,

01:31shuttering all its stores earlier this year.

01:34But with Shine and Temu now stumbling,

01:37other retailers are seizing the opportunity.

01:39Amazon's women's clothing category, for instance,

01:42has grown by an impressive 26% over the last six months.

01:47The e-commerce giant is also adopting a similar fulfillment model,

01:51working with China-based third-party sellers to maintain competitive prices.

01:55Other beneficiaries of this market shake-up include

01:58Dollar Tree, Target, Walmart, Five Below,

02:01Zara, Azos, Arapastali, Nordstrom Rack,

02:05and even discount retailers like Ali's Bargain Outlet.

02:08Saunders confirms,

02:09customers have migrated in a number of directions.

02:12While Sheehan and Temu are unlikely to vanish entirely from the U.S. market,

02:16their days of extraordinary growth appear to be behind them.

02:20To stay afloat,

02:21Temu is already adapting,

02:23transitioning to a U.S.-based fulfillment system,

02:26and collaborating with more,

02:27domestic sellers to avoid international shipping taxes.

02:31Both brands are also aggressively pursuing growth in overseas markets,

02:35with Temu sales in Europe jumping 60% in May alone,

02:39and significant surges for Shine in the U.K. and E.U.

02:43Analysts anticipate further shifts in their supply chain strategies

02:46to regain pricing power in the U.S.,

02:48a challenge compounded by ongoing global trade tensions,

02:52particularly between the U.S. and China.

02:54The lack of ultra-low-priced goods

02:57could soon start to pinch consumers' wallets,

03:00signaling a significant shift in the global retail landscape.

03:03Money exports

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