Forever 21 is a staple shopping go-to place for every youngster because of its low prices. It has made it possible for everyone to be a part of all the fashion trends of the moment, because of its price ranging from 10$-30$.
The chain became a huge success in just a matter of years, it expanded operations from 7 to 47 countries within just 6 years while its revenue rose to $3.8 billion in 2017.
The three said causes of Forever 21’s failure are, aggressive expansion, the inability to adapt to new consumer behaviour and, its clothes quality. Forever 21 has followed the footsteps of many fashion brands and filed for bankruptcy protection.
The Burden Of Maintaining Physical Stores
Forever 21’s first and foremost mistake was going after an opposite business strategy than that of the other retailers. When others were downsizing in response to the apocalypse, Forever 21 was busy opening new stores and increasing storage space.
In addition to this, the size of their stores is massive. With more than 700 stores across the globe, the street-side stores where clothing and accessories are available at a cheaper rate are the company’s biggest competitors.
Also, stores that are completely online-based such as Shein, Fashion-nova reduce a lot of indispensable costs and allows them to offer better deals which makes them potential competitors of Forever 21.
Consumers Shifting To E-commerce
Forever 21 is solely for young people, the name speaks for itself. However, the technology era is shaping our shopping habits in another dimension, and young people are the ones most affected due to their constant exposure to the Internet.
Not focusing on spreading the online business cost Forever 21 a high price when fashion and beauty are trending best sellers on the E-commerce platforms. With a limited budget, consumers have shifted to online shopping for cheaper and unique options that represent themselves.
Sustainable Clothing Is The New Wishlist
In a fact, 20% of the world’s wastewater and 10% of global carbon emissions come from the fashion industry. Producing cheap, designer clothing using low-cost labour is the centre of fast fashion, a strategy that has been facing backlash for a long time.
The world is eventually recognizing climate change problems and putting in efforts to tackle the problem. This means opting for more sustainable fashion choices such as vintage and sustainable brands, thrift-clothing and using second-hands, or simply a reduction in usage.
Leading Causes of Forever 21’s Bankruptcy
The aggressive expansion method that forever 21 used to increase its sales and to expand itself in the market, increased its costs at a fast rate. Large store size demands high-rent costs and difficulty in the management of stores.
Another reason is, the inability of Forever 21 to adapt to new consumer behaviour such as online shopping and mould itself respectively. Instead of expanding on the e-commerce business, Forever 21 focused on expanding its business through opening new stores.
The last latent reason would be the company’s degrading clothing quality. Along with it, it even contributes to the environmental impact by not adapting to sustainable clothing.
Also, the fashion industry that Forever 21 is an integral part of has been closely related to the abuse of worker’s rights and safety norms such as in the wake of the Rana Plaza building collapse in Bangladesh in 2013 that killed more than 1000 garment workers.
After They Declared Pre-Bankruptcy
Forever 21 filed for bankruptcy in September end 2019 and announced a plan to compensate its global business by closing hundreds of stores in the United States and abroad to cut down its lease amount.
Forever 21 revealed that it plans to exit most of its businesses overseas, in Asia and Europe. It plans to continue operating in its stronger zones of Mexico and Latin America, and it doesn’t plan to exit major markets in the U.S. Though, it will shut dozens of stores there.
Forever 21 reached a mutuality agreement to sell its assets for $81 million, almost four months after filing for pre-bankruptcy. As part of the purchase, Forever 21 retailers will be sold to a cartel made up of Simon Property Group, Brookfield Properties both who are mall operators and Authentic Brands Group, a brand management firm.
Still, Forever 21’s website read that its main goal is to increase the number of stores they own. Unfortunately, this goal has led the company to bankruptcy. They quote “to open 600 stores in the next three years, it’ll be exciting to see the company achieve in three years what it initially took 30 years to do.”
Edited by - Christeena George
Written by - Nandita Singh
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