Shein's Growth is Hurting Discount Retailers as Store Closures Surge

Welcome to The Brink. I’m Reshmi Basu, a reporter in New York, where I’ve been reporting on the headwinds facing discount retailers. We’re also looking at a missed bond payment by a Chinese car dealer, the latest at WeightWatchers and a downgrade at Altice International. Follow this link to subscribe. Send us feedback and tips at debtnews@bloomberg.net.

The rise of Shein and Temu is hurting America’s discount stores, with rising competition and the looming threat of tariffs denting bricks and mortar retailers targeting low income consumers.

“Amid wider ‘noise’ around consumption and consumer caution, we believe the pressure on some nonfood retailers from the rapid growth of low-price cross-border retailers and marketplaces is being underappreciated,’’ said John Mercer, head of global research for Coresight Research, which estimates the cross-border retailers generate $100 billion plus in combined sales globally.

“While Shein is widely known for fashion, it now incorporates a meaningful home and general merchandise offering, which we expect to increase as it grows its marketplace component.”

Discount store closures rose almost 360% to 1,754 last year, according to data compiled by Coresight, making the category the biggest source of shuttered shops in the period. Nashville-based Bargain Hunt is the latest discounter to succumb to financial strain with plans to shutter more than 90 of its locations as part of last week’s Chapter 11 filing.

Meanwhile, Dollar Tree is seeking a strategic review for Family Dollar after closing hundreds of those stores last year. Options include a potential sale, spin-off or other disposition of the business, according to public disclosures.