NRF Rejects Shein Membership as Retailer Pursues US IPO

Shein has attempted to become a member of the National Retail Federation (NRF), the industry’s largest trade association, numerous times but has been rejected, reports CNBC. It’s unclear why the NRF rejected Shein’s membership application, but according to one of the people familiar, someone with sway is strongly against the company’s admittance. The NRF hasn’t totally shut the door on Shein’s membership application and has been in talks with the retailer about its request, people familiar with the dynamic told CNBC.

Shein’s ties to China could be enough to exclude it from NRF membership, but the trade group is considering expanding internationally, according to one of the organization’s board members. If those plans come to fruition, the trade group will have to determine where to draw the line. Absent a clear reason for excluding Shein from membership, the NRF’s decision could raise antitrust concerns, legal experts said. If Shein can earn a stamp of approval from the NRF, it would be a form of validation for the retailer and could help legitimize it in the eyes of U.S. lawmakers.

Total Retail's Take: For most companies, becoming a NRF member wouldn’t have a major impact on their business. The organization is the retail industry’s primary lobbying machine in Washington, D.C., and provides access to its events and research on market trends, among other benefits. However, Shein is in the midst of an image makeover. It has been working to convince lawmakers that it can be trusted as a public company listed on American exchanges despite concerns over its ties to China, its supply chain, and its use of a trade law loophole. The Chinese retailer filed to go public in the U.S. late last year.

In addition, Shein is caught in the middle of a complex geopolitical rivalry between the U.S. and Beijing and has been targeted by lawmakers who are concerned the company shares data on American consumers with the Chinese government and produces goods made with forced labor. It's also not favorited by many U.S. retailers for whom its become a large competitor. There have been claims against Shein for ethical and sustainability concerns, as well as the perception that the retailer is competing unfairly because of its use of a specific U.S. tariff law loophole called the de minimis provision.

Considering the perceived and in some cases real ire the retail community has for Shein, the NRF is stuck between a rock and a hard place. If the trade group accepts Shein as a member, it could upset its influential member base. However, it also needs a valid reason to continue to deny the influential and growing company access, otherwise it subjects itself to potential lawsuits.