Can bankruptcy safeguard the Forever in Forever 21?

Forever 21 are in trouble, but what led to their fall from the top and what can we learn from this retailer?

Can bankruptcy safeguard the Forever in Forever 21?

Late Sunday night Forever 21 the Californian fast-fashion chain announced that they have filed for Chapter 11 bankruptcy. They have now planned to close 350 of the 800 stores worldwide including all of those in Europe and Asia.

Do Won and Jin Sook Chang’s Forever 21 chain was the stuff of retail legend, the American dream story - having invested $11,000 of their savings to start the business they then grew it to 600 stores across 57 countries with over 30,000 employees...but the dream has become more of a nightmare.

The retailer grew aggressively; they were continuing to open new stores as recently as 2016 so what went wrong for this fast fashion pioneer and how can they turn around their fortunes?


Forever 21 were one of the pioneers of teen fast fashion retailers - but they didn’t evolve their retail model fast enough to keep up with rapidly changing consumer behaviours. This allowed other fast-fashion retailers to capitalise and steal market share. They were slow to go online and instead they continued to open bricks and mortar stores which struggled to compete against the newer direct to consumer fast-fashion retailers such as Boohoo and Pretty Little Thing.

Competition in this market segment has really increased in recent years - predominantly because of the low barriers to entry in setting up a direct to consumer brand as opposed to the high costs for ‘prime’ retail premises that Forever 21 favoured.

Furthermore, Forever 21 lost sight of who their customers are and their product mix became a confusing mix of unrelated pieces. They were technically still fast-fashion as they could source stock quickly to meet demand but unlike more agile fast -fashion retailers they didn’t have the capability to accurately predict customer wants with products stocked.


It’s been widely reported that in the pursuit of growth, Forever 21 aggressively expanded their worldwide store count over the last decade while the majority of retailers sought to shrink their bricks and mortar presence.

The company had ambitions of becoming the next generation of department store - where the entire family could shop, therefore chose large multi-level retail spaces. They were obviously reimagining department stores in the same way Primark has - but whereas Primark has pulled this off with aplomb and has soaring results despite also avoiding an online presence - Forever 21 has not.

Forever 21’s store count rose rapidly from 280 in 2010, to 600 in 2014 and 800 in 2018. According to media reports the business was so confident in its approach that they typically signed costly 10 year leases. Now, with footfall on high streets and malls dropping, Forever 21 have found themselves with expensive real estate in an age where their core customers are opting to shop online and they haven’t managed to realise their full family department store vision.

But what now for Forever 21?

If Forever 21 is to survive, they will need to refocus on their younger customer, including developing a stronger omni-channel offering that meets their changing shopping habits.

Sadly we'll most likely lose another retailer from the UK high street as Forever 21 refocus on their core market - the US, closing stores out as they retreat from European market. However, I have to agree with this strategy, as retailers such as New Look have proven, playing it closer to home has the potential of stabilising a struggling retailer. Hopefully, they can develop their online offering quickly for the remaining loyal UK customers.

Read more about Forever 21 here

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Tags: Data, Fashion, Retail

Richard Magnusson

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