Shein’s pop-up store causes a stir in South African retail sector, ET BrandEquity

(Representative image)

China-founded e-commerce company Shein caused division after opening its first physical temporary store in South Africa, attracting bargain hunters and prompting a change in tax laws after rivals said the competition was unfair.

The store, which opened in the Mall of Africa, north of Johannesburg, in August for just a week, attracted long lines of customers eager to buy clothes and accessories, often sold for the equivalent of less than ten dollars a pop.

Some, like 30-year-old blogger and fashion influencer Mi’chal Naidoo, say she was impressed.

“My first expectation from Shein was that it wouldn’t meet my standards of good quality,” Naidoo said.

“So when I started noticing that, hey, this is basically every single item in my closet, I thought, maybe I should reconsider and try it,” she added. “It’s really affordable.”

However, the price of Shein products, which can only be purchased online, is expected to increase as South African tax authorities have increased taxes to protect local retailers.

From September 1, those importing low-value shipments must pay value-added tax (VAT) at a rate of 15 percent, something they previously avoided, and the tax authority said it could also increase the 20 percent duty relief rate they pay. The standard rate is 45 percent.

Critics of Shein who say their low prices are due to duty waivers say the changes will help level the playing field, but they need to do a better job.

“We need to become smarter so that we can respond better,” said Michael Lawrence, executive director of the National Apparel Retail Federation, which represents clothing retailers in South Africa.