Cape Town – South Africa’s established clothing retailers could get some relief from the growing pressure on Chinese fast-fashion giant Shein, as rising costs, tighter regulation and increased competition challenge its ultra-low-price model.
According to Daily Investor, Shein’s profit margin has fallen to 2.1%, raising questions about the sustainability of its low-cost model. Retail and trend analyst Bronwyn Williams told The Money Show that Shein is facing pressure from weaker economic conditions, regulation and competition from other online platforms.
“It’s got some internal competition, too,” Williams said, referring to Temu’s growing presence.
The development comes after Shein reported a 67% decline in adjusted net profit to $228 million in the second quarter of 2026, while its profit margin fell from 6.2% a year earlier to 2.1%, Reuters reported. Shein’s European sales also declined by 13.9% during the quarter.
Shein has indicated that it intends to expand into higher-priced clothing. The company said it sees an opportunity to “enrich its product price range by broadening consumer choice”, while maintaining its value-for-money offering, according to EWN.
Increased scrutiny
Williams cautioned that local retailers should not become complacent, however, arguing that the pressure on Shein does not remove the underlying competitiveness problems facing South Africa’s clothing industry.
Shein and Temu have already faced increased scrutiny in South Africa over their import practices. The government changed the treatment of low-value clothing imports, while the Competition Commission has also examined the competitive impact of the platforms.
The pressure on Shein comes as traditional retailers continue to navigate a difficult consumer environment. Sunday Times reported in August that South African clothing retailers had lost billions in market value amid weak economic conditions, cautious consumers and growing online competition.
Recent company results nevertheless show signs of resilience among some of the major players. TFG reported 3.4% growth in TFG Africa sales in the 21 weeks to 22 August 2026, while online sales in the region surged 54.1%.
Mr Price reported R41.1 billion in retail sales for the year ended March 2026, an increase of 4.3%, while its store network expanded to 3,182 outlets.
Truworths, meanwhile, reported a more difficult trading environment, with group retail sales declining 0.9% to R21.8 billion in the year ended June 2026. The company said consumer spending conditions remained challenging but expected to benefit from an eventual improvement in consumer spending.
The developments suggest that while Shein remains a significant competitor, its cost and regulatory pressures are changing the competitive landscape for South Africa’s established clothing retailers.
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Compiled by Betha Madhomu
