Just a few years ago, Forever 21 excited and attracted shoppers all over the country, and was one of America’s fastest-growing fashion companies. In fact, within three decades, the expanding retailer’s profits transformed its once poverty-stricken founders into one of America’s wealthiest couples.
At its peak, the company made $4.4 billion in revenue and had 723 stores worldwide.
Unfortunately, Forever 21is now on the verge of filing for bankruptcy and planning to close over 350 stores globally. After all of this, can Forever 21 truly last “forever”?
Forever 21 was founded in 1984 by a pair of South Korean immigrants, Jin Sook and Do Won “Don” Chang.
The Changs arrived in Los Angeles in 1981 with poor English, no college degrees, and virtually no money. To provide for themselves, Jin Sook initially worked in a salon as a hairdresser while Don worked as a janitor, gas pump attendant, and waiter.
Three years later, with $11,000 in savings, the ambitious couple opened up their first store, Fashion 21, in a small 900-square-foot shop.
The Changs took advantage of wholesale closeouts, purchasing products for their store from manufacturers at the most affordable prices.
Though at first their customers were primarily of Korean-American descent, the couple was able to diversify its clientele, making $700,000 within the store’s first year. Soon, the Changs began constructing their path to success, opening several new stores in the following few years.
Forever 21’s success came through gaining a large following by producing and selling clothes at low prices. Although this practice has become common in recent years, Forever 21 was among the first retailers to adopt this model. Forever 21 also prioritized manufacturing their clothing to meet consumer-style demand. At one point, the company was approving more than 400 designs a day. By the year 2015, sales had peaked, which resulted in Forever 21 becoming a staple in malls everywhere.
Because one of Forever 21’s most important goals was expansion, it still kept up its aggressive development throughout 2017. This development included the construction and the addition of new stores as well as the expansion of existing stores. For instance, several extra sections were added to many existing stores including levels for menswear and home decor.
Thanks to its speedy growth and efficient manufacturing process, Forever 21 became an $8 billion company in 2017 and was projected to open up to 600 new stores before 2019. Despite this, Forever 21’s sales dropped by up to 25% in 2018 alone. The company’s rapid expansion also became the source of its downfall.
To those who are accustomed to seeing Forever 21 in malls everywhere and love its trendy products, Forever 21’s bankruptcy may come as a surprise.
As the years passed and online shopping became more popular, Forever 21 no longer stood out as the only cheap and fashionable store and continued to pay rent prices where their competitors did not. Online companies such as Fashion Nova, Romwe, and others, were able to produce new styles at an even faster pace than traditional mall retailers because they shipped directly to consumers rather than going through a brick-and-mortar middleman.
Forever 21 is downsizing in order to survive. Despite declaring bankruptcy, Forever 21 could come back stronger and better than before after restructuring and reconsidering switching to a more online-based model.
Nguyen, Terry. “Forever 21 Is the Latest Major Retailer to File for Bankruptcy.” Vox, Vox, 30 Sept. 2019, www.vox.com/the-goods/2019/8/29/20838793/forever-21-consider-bankruptcy.
Meyersohn, Nathaniel, and Chris Isidore. “Forever 21 Files for Bankruptcy and Will Close up to 178 US Stores.” CNN, Cable News Network, 30 Sept. 2019, www.cnn.com/2019/09/29/business/forever-21-bankruptcy/index.html.
Kim, Irene. “At Its Peak, Forever 21 Made $4.4 Billion in Revenue. Here’s What Led to the Brand’s Downfall and Bankruptcy.” Business Insider, Business Insider, 30 Sept. 2019, www.businessinsider.com/forever-21-bankruptcy-rise-fall-retail-apocalypse-fast-fashion-2019-9.
Copyright Emily Wang 2019