Forever 21 Killed by E-commerce?

Avatar for Stevan Vlaski

Forever 21 was one of the booming fast-fashion retailers. At it’s peak the company made a whopping $4,4 billion in revenue. But now the once flush company is filing for bankruptcy. 

So, what happened?

The company’s Korean founders, Jin Sook Chang and Do Won Chang, took advantage of wholesale closeouts to buy merchandise from manufacturers at a discount. With only $11,000 in their pockets they opened in 1984 their first store called Fashion 21. Their system worked and the store made $700,000 in sales the first year. The company grew at a fast pace with the owners approving 400 designs a day. They changed the name to Forever 21 to emphasize the idea that it was “for anyone who wants to be trendy, fresh and young in spirit.” 

Opening new stores every six months, which broadened the company’s customer base at the same time, the Changs were selling trends as they were happening and customers couldn’t get enough of its affordable styles.

As a result, Forever 21 became one of the largest tenants of American malls, with 480 locations nationwide. And by 2015, business was at its zenith. Forever 21’s sales peaked, with $4.4 billion in global sales that year. The main reason why Fashion 21 was so popular was the fast-fashion model. Even though its products were always mass-produced, they still felt unique because its stores only sold select styles for a limited time. The company’s aggressive expansion would also lead to its downfall.

What killed Forever 21?

Internet brands like Fashion Nova with influencer-inspired styles, rose at a rapid-fire pace. And as e-commerce has continued to boom, traditional retailers like Forever 21 have struggled to adapt to changing consumer behaviors. According to a March 2019 survey, millennials make 60% of their purchases online and prefer online shopping over going to a physical store. 

The 4500 m2 Amsterdam branch at Rokin (Now closed)
The 4500 m2 Amsterdam branch at Rokin (Now closed)

The company could shut down its least profitable stores and try rebranding itself. But, in an age of cheap internet boutiques and fast-fashion empires, this is insufficient. The brand first entered the Dutch market in 2014 with the opening of the 4500 m2 Amsterdam branch at Rokin, where it shared a building with Pull & Bear, now Uniqlo. A year later a Rotterdam branch followed, which remains open as of now.

So it turns out, Forever 21 might not be forever after all.


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