Founded in California in 1984, Forever 21 has been around in Boston and surrounding American cities for a long time. However, the retail corporation has fallen ill and is on the brink of disappearing forever in the 21st century, just like many other retail giants such as Sears and Kmart. However, it just might be a domino effect, a plague that will infect other stores doomed to a similar fate as Forever 21. Where did they go wrong?
Although many stores have been closing their brick-and-mortar locations, Forever 21 was still opening up new stores in 2015. Forever 21 opened 50 stores four years ago, making it the largest expansion in Forever 21’s retail history. Openings included France, Germany, and Britain. According to Fashion United, it did want to keep investing in Europe after getting a foothold and debuting in Birmingham in 2010. During that time, Forever 21 was on track to becoming an eight billion dollar company in a couple of years, as it had doubled its revenue in the previous years. However, its projected profit was not to come into fruition.
By 2016 Forever 21 was beginning to have financial troubles, according to the New York Post. The company had always been succeeding and busy expanding world-wide, but the shoppers and audience shifted taste, having grown tired of the price and style. Like many other stores in the past, the company seemed to be over-expanding and outdated in its business model. Many follow the same fate of expanding too fast and not making the expected revenue, thus so many closings after periods of expansion. A few examples of these include Independence Air, Quiznos, Even Stevens, and Krispy Kreme — more businesses with similar tales. Mattress Firm is also a good example. Forever 21 could have taken some notes and learned from these companies’ mistakes.
Forever 21 has made some bad moves in the past such as expanding too quickly, not catching up with consumer needs, and minimally investing in online retail. Reuters reported that despite the difficulties paying off debt, Forever 21 competed with Amazon in acquiring the bankrupt company American Apparel. With so many stores around the globe, which generated high prices in rent and catered to a small, specific demographic, the company did really limit itself, and with new competition in fashion and e-commerce, Forever 21 was really lagging behind.
By June of 2019, Forever 21 was looking for avenues and advice to avoid bankruptcy. Concerns about falling short and going bankrupt officially arose in June but it has been under financial speculation for years, so it’s not very surprising. Even before 2010, the world knew that the online market is the future and was worth investing in, plus anticipated that brick-and-mortar locations wouldn’t stick around forever.
Around the time Forever 21 filed for bankruptcy (late Sep. 2019), a whopping 178 stores closed across the country, with 350 shutdowns world-wide. By the end of this year, the company expects 12,000 closings of its stores — permanently as of January 30, 2020 — as stated by Elizabeth Hernandez, a company representative. Over 500 of its stores are based in malls all over the United States, but the website is just a small portion of the pie in sales, accounting for a mere 16 percent. Forever 21’s website is not as developed, showing a customer discount and slowdown to competitors, as narrated by Forbes.
Most seem to point to Generation Z and Millennials as the culprits of the near-collapse of Forever 21, as ultimately the demand for clothing and merchandise in-store continues to dwindle. Another factor is the emergence of e-commerce, which makes up a significant portion of the market, as many have moved towards buying on the internet for the most part, leading brick-and-mortar retailers to fall out of favor in the market’s eye.
Within the bad news, there are still good news for Forever 21. A retail analyst from Bloomberg predicted that Gen Zers may help save Forever 21, despite being a suspected contributor its downfall. Despite the store closings and chapter 11 bankruptcy, experts from National Real Estate Investor state that the Forever 21 chain will survive. Vox reported even the executive vice president of Forever 21 believes this isn’t the end, stating that “This was an important and necessary step to secure the future of our company, which will enable us to reorganize our business and reposition Forever 21.” Hopefully the company will remain intact by repositioning to investing in their website and marketing to the newer generation via social media.
A Woof poll surveyed public opinion on what type of shopping they prefer. According to the survey, three members picked online shopping, 10 of them selected in-store shopping, and 53 chose both (online and in-store). It seems there may be hope after all.