Forever 21 – The dream fades away

From a strong American fashion empire, Forever 21 went bankrupt quickly in front of online sellers.

Forever 21 – Dreams disappear – Did you know?

Forever 21 filed for bankruptcy protection and will close some stores in more than 800 stores today (September 30). According to the New York Times, the bankruptcy is a blow to a company that prides itself on fulfilling the American dream, as well as a reminder of how fast the retail market is changing.

Forever 21’s story begins with Jin Sook and Do Won Chang (Don)’s dream of getting rich. In the early 1980s, they emigrated from Korea to California (USA) with the ambition to start a business. After working as a security guard and a coffee shop attendant for three years, Don realized “the best box drivers are in the garment industry” – he said in a 2010 interview with Los Angeles Times.

In 1984, Chang and his wife were determined to open a 900-square-meter clothing store in Highland Park, Los Angeles, called Fashion 21. In the first year, the retailer earned $ 700,000. This initial success drove growth, helping them open a new store every six months. In 1989, the company changed its name to Forever 21, targeting people in their 20s, meaning the elderly want to go back to 21 again, and young people want to forever be 21.

In 1995, the company opened its first store outside of California, at the American Mall in Miami, Florida. In 2001, the first international store opened in Canada. By 2006, the brand launched a product line for men. Forever 21 grew drastical in 2010 with 500 stores across the United States, while Don ranked 79th on the list of the 400 richest people, according to Forbes.

Photos of the Forever 21 advertising campaign by photographer Christopher Kilkus.

Trendy fashion products that are mass produced at affordable prices are the secret to the success of Forever 21. With prices ranging from 4-20 USD and models with high applicability, diversity, brands quickly attracted young people. For more than 25 years, the company has become a thriving fashion chain, presenting in shopping malls. In 2009, the airline had about 450 stores, which was well received by consumers. Meanwhile, hundreds of people ready to line up on the day the company opened a new store. According to Forbes, the “fast fashion” brand peaked in 2015 when pocketing US $ 4.4 billion from more than 600 stores and Chang and his wife own a net worth of US $ 5.9 billion.

But things have started to decline since the competition between other fast fashion brands like H&M, Zara, and Topshop has been increasing. In 2018, Forever 21 began to narrow and close a number of stores in Amsterdam, Dublin, England and North America. At that time, Business Insider reporter Bethany Biron visited Forever 21 and H&M store at Westfield World Trade Center in New York. She finds that H&M attracts more shoppers with a well-organized and bright store. In late April, in China, the company closed its online shopping site on Jingdong and Tmall and a series of retail stores.

In June, a company representative told Business Insider: “Forever 21 is negotiating with lenders and complying with all agreements to be able to continue operating normally.” By July, Mr. Chang was no longer a billionaire and the couple’s common assets fell to $ 1.6 billion, Forbes said.

Once a retail brand that appealed to young people, Forever 21 failed to choose the wrong direction and underestimate the situation.

The New Yorks Times expert said Forever 21 lost a significant number of visitors to other retailers, especially online stores. The company did not anticipate the rise of digital savvy rivals like Asos or Fashion Nova.

Wendy Liebmann, the chief executive of consulting firm WSL Strategic Retail, says young shoppers are increasingly turning to online shopping. At the same time, in the last 5 years, the industry has faced backlash around the problem of environmental waste caused by disposable clothing. Therefore, brands that follow the trend of sustainable fashion such as Stella McCartney, Rag & Bone, Spencer Phipps, Katie Jones … are highly appreciated by the fad, consumers choose more than fast fashion brands.

Lack of individual characteristics, little innovation is also one of the reasons that make consumers leave. In a survey on Sina, young people aged from 15 years old to 25 years old were no longer interested in the company when the product was one color, not updated with new ideas to meet customer needs. Many people insist they will switch to another brand.

The design of Forever 21 has been popular with many stars, including Julianne Hough (left), Charlize Theron (middle) and Emma Roberts. Photo: Wenn, Splash News.

While teenagers and 20-year-old women are core customers, Forever 21 believes it can sell clothes to the whole family. The brand immediately opened a store in the Gottschalks building, massively adding more goods. The move to selling clothes and accessories to a wider audience loses the brand identity and interest of younger customers. In the Los Angeles Times, Roger Beahm, the executive director of the Retail Innovation Center at Wake Forest University, said: “They try to change by expanding the brand but the result dilutes the inherent nature of itself “. Meanwhile, Mark A. Cohen, the director of retail research at Columbia Business School, believes that fast fashion is more popular than ever by pointing out Zara’s success. “But Forever 21 has expanded too fast without thinking of feasibility and a reasonable outlook,” said Mr. Cohen.

Business failures, Forever 21 has been involved in many copyright and trademark lawsuits over the years. In early September, singer Ariana Grande sued Forever 21 using more than 30 photos and promotional videos reminiscent of her image in the album Thank U, Next. In a social media campaign, the fashion agency hired a model with her look, hairstyle, and outfit in MV 7 Rings. A part of the song also featured in the product introduction post. Ariana believes that this violates California law regarding advertising, trademarks and copyrights.

The information that told us Forever 21 may bankruptcy appeared from August, due to cash exhaustion and the ability to reform obscure. At that time, Chang said that she and her sister planned to continue working for the brand, but wondered just how long it could continue. The bankruptcy process will help retailers to end leases and close stores at lower costs. “We believe this is the right path for our long-term business ability. After restructuring, Forever 21 will be a stronger company,” the company representative said.

The wave of bankruptcy is sweeping the US retail industry. In early September, luxury retailer Barneys New York also announced bankruptcy and will close 15 of 22 stores. Swedish H&M struggled as profits fell, stock prices halved over the past four years.

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