4 things that went wrong for Forever 21

Forever 21 is having a tough time, but what can we learn from this retailer?

4 things that went wrong for Forever 21

Forever 21 has been forced to seek rent reductions and bankruptcy protection in recent years, but new reports claim it's not enough. The company is on the brink of filing for bankruptcy after the continual poor trading performance.

The retailer grew aggressively and was continuing to open new stores as recently as 2016, so what went wrong and what lessons can be learnt?

Changing consumer attitudes

Throughout the Forever 21 growth story, the key customer segment has been young teens, spending little and often on the latest trends. However, this group is changing in terms of their values, something we're seeing reflected in their shopping behaviour. They have moved past the idea of shopping as a leisure activity, and as for any retailer with a large and expensively maintained store footprint this then becomes a problem.

Poor online offering

The Forever 21 website has had little attention spent on it until recently, and the experience is dated. With competitors like H&M and Zara offering a superior user experience online, it's something that users have little patience for.

Customer disconnect

As the brand has expanded, Forever 21 have tried to unlock additional growth by adding male products and ranges for older consumers. Although there is undoubtedly value in this approach, something we're passionate about at Mallzee Insights is making sure retailers are laser-focused on their core customer groups before expanding and trying to tap into new markets. It can lead to a product offering that confuses customers and quickly forces the core customer to become disengaged.

Increasing competition

The sub-21 female customer is an incredibly competitive market, and we've seen a massive influx of digital-first retailers entering the market place and working hard with extensive influencer collaborations and digital campaigns. Individually they might not be a huge worry, but the sheer volume of these brands has eaten away at Forever 21's sales.

The story of Forever 21 isn't currently an unusual one in the retail industry, and sadly it's unlikely to be the last business to face a similar fate. But when the reasons for its issues can so clearly be seen, it should serve as a lesson for others in the months and years ahead.

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Tags: Retail, Fashion

Richard Magnusson

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