Key Takeaways:
- A large coalition of French brands and trade federations has launched legal action against SHEIN, arguing that the company has benefited from practices they say domestic retailers cannot compete with. The breadth of the filing reflects a growing belief inside parts of the French industry that conventional competition has stopped delivering fair outcomes. It marks one of the most coordinated attempts yet by a European market to challenge the commercial terms fast-fashion platforms operate under.
- Economic pressure is a major driver behind the shift toward ultra-low-cost platforms. This is evidenced by UK retailers reporting increased reliance on promotions, while several large Australian chains have warned investors about the impact of imported platforms on essential-wear categories, showing a global economic shift towards low-price sourcing.
- The recent reduction in the scope of the EU’s due diligence rules, which now only require the largest companies to report on direct suppliers, creates an uncomfortable tension. European brands are calling for strict transparency from imported platforms like SHEIN while receiving a version of the same leniency for themselves, raising questions about how consistently the idea of a “level playing field” is being applied.
France has added another salvo to its growing list of actions against fast fashion giant SHEIN. This week, a coalition of one hundred brands and a dozen trade federations has filed a legal complaint outlining four areas of alleged unfair practice by the global brand: misleading advertising, non-compliance, counterfeiting, and breaches of personal data rules.
Some of these allegations have been documented and substantiated by regulators before – particularly misleading advertising and repeated non-compliance. Others sit in more ambiguous territory; counterfeiting is difficult to isolate and prove in a sector where design emulation is so widespread and “dupes” reside in such a legal and cultural grey area, and data protection issues are hard to judge in a global ecosystem where data sovereignty is routinely breached by universal over-reliance on American tech products and platforms.
Despite some of these allegations having more merit than others, at least in The Interline’s opinion, it’s nevertheless clear that this collective action reflects a belief amongst enough domestic French brands, retailers, and industry bodies that the threat that SHEIN represents can no longer be addressed through even-keel competition alone.
The case is also entering a market where domestic mid-and value-market fashion has been losing ground for some time. France, like the rest of Europe, now buys most of its value clothing through imports coming from outside its own retail ecosystem. Much of what people buy day-to-day (and not necessarily just basics) no longer passes through domestic French brands at all, and it’s largely the same story across the EU and the UK. Buying patterns have changed, and the domestic companies that once dominated the value-centric and mid-price markets are no longer the default source for most households – a point industry executives have acknowledged for some time.
Increased economic pressure on shoppers has unquestionably accelerated this change. We are living through an affordability crisis in many major fashion and beauty consumption markets, so it’s little wonder that people have reduced discretionary spending. According to the filing, SHEIN receives more traffic from French consumers than several major domestic retailers put together, and while part of that lopsided online landscape is down to marketing on SHEIN’s behalf, an equal amount is down to a simple reprioritisation of value.
In most markets, bills have gone up but wages haven’t, and it’s hard to condemn anyone for wanting to buy (or sell!) cheap clothing in that set of circumstances.
But it is, though, important to understand that demand doesn’t exist in isolation. Price-led behaviour is only one part of the story. The platforms supplying ultra-cheap goods can do so because they operate under conditions that hold prices down in ways domestic retailers have not been able to match – either due to taxation loopholes, or without falling foul of legislation. Low-value parcel exemptions like the America de minimis exclusion (now closed) provide an import route that bypasses duties and the product checks domestic companies must undertake. High-volume overseas brands also avoid seasonal risk by keeping everything small, fast, and adjustable.
Some of the suppliers behind these platforms fall below European labour or environmental expectations. None of this is new inside fashion, and none of it is the direct subject of the lawsuit. It’s simply the machinery that has kept the lowest end of the market running for years.
The impact is visible beyond France. UK retailers with long histories in the middle of the market have reported falling margins and increased dependence on promotions and markdowns to shift inventory. While several large Australian chains have warned investors about the effects of imported platforms on essential-wear categories. These regions have little in common in terms of culture or retail identity, yet the same pattern appears once economic pressure increases.
Brussels appears to be thinking along similar lines when it comes to tightening import rules. Other governments are looking at platform liability and whether companies selling into their markets should carry more responsibility for product accuracy and safety. The U.S. example shows that these steps can influence short term parcel flow with data showing a clear dip after the de minimis change. Whether this represents an effective long-term strategy is less clear. Cheaper clothing remains the priority for many households, regardless of source. Restricting imports may direct more traffic to domestic value retailers, but it won’t raise consumer spending power. The French lawsuit, and the regulatory debates surrounding it, attempt to correct the supply side of the equation but the demand side remains unchanged. As long as that economic pressure continues, value-led purchasing will continue, too. No amount of retail strategy will fix household budgets.
There is also the question of how much market freedom should be preserved. There’s a school of thought that suggests that if clear demand exists for inexpensive goods, companies should be able to supply them provided they meet the regulatory expectations of the markets they serve. That view does not excuse poor standards. It simply accepts that supply follows demand, and that restricting entry based solely on price sets a precedent that becomes difficult to maintain. If authorities want different outcomes, they can tighten compliance rules or bring platforms under closer oversight. They can’t, however, legislate household economics through import policy alone; this requires more in the way of social change.
A more uncomfortable issue sits within Europe’s own regulatory decisions. Earlier this week, the EU reduced the scope of its due diligence rules. As we detailed in our last newsletter, only the largest companies will need to meet the detailed transparency requirements that were initially planned, and even then those companies only need to report on direct suppliers.
That reduction has been welcomed by several domestic industries even while the timing of it creates tension. European brands are calling for strict action against SHEIN for operating without adequate transparency while receiving a version of the same leniency. The two issues are separate, but their proximity does raise the question of whether levelling the playing field should mean letting domestic brands get away with the same lack of due diligence that imported ones are being penalised for.
These complexities create a difficult environment for any single legal action to solve and there isn’t a single lever that fixes all of this. The French case identifies real concerns. It also emerges in a market shaped far more by economic pressure than by competition alone – and one where transparency just became a much fuzzier lever to try and pull. The more interesting question sits outside the courtroom. Policymakers need to decide whether they want to create a level field by raising expectations for every company selling into Europe, by giving domestic brands room to breathe through exceptions, or by working to elevate relative purchasing power in a way that de-emphasises the need for shoppers to seek exceptional value that can only be realised thanks to large deltas between compensation, due diligence, and human rights in different regions.