Shein’s Pop-Up Store Ruffles South African Retail Sector

Chinese-founded e-commerce retailer Shein has divided opinion with its first physical pop-up store in South Africa that lured bargain-hunters and spurred a tax change after rivals said the competition was unfair.

The store that opened in Mall of Africa, north of Johannesburg, for just over a week in August attracted long queues of customers eager for clothes and accessories often selling for the equivalent of less than $10 each.

Some like 30-year blogger and fashion influencer Mi’chal Naidoo said she was won over.

“First initial expectation from Shein was that it was not up to my standard of what good quality would be,” Naidoo said.

“So when I started noticing that, hey, this is actually like every piece of clothing in my cupboard, I was like maybe I should rethink this and give it a try,” she added. “It’s actually really affordable.”

But the price for Shein products that can only be bought online is expected to rise as South Africa’s tax authority has increased levies to protect local retailers.

From Sept. 1, people importing low-value parcels have been required to pay value added tax of 15 percent, which they previously avoided, and the tax authority has said it could also increase the 20 percent customs duty concession rate they pay. The standard level is 45 percent.

Shein’s critics, who have said its low prices resulted from the customs duty exemptions, say the changes will help achieve a level playing field, but they also need to sharpen their game.

“We have to get smarter in order to be more responsive,” said Michael Lawrence, the executive director of the National Clothing Retail Federation that represents fashion retailers in South Africa.

Reporting by Nqobile Dludla; editing by Barbara Lewis

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