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  • Forever 21 was once among America's fastest-growing fast-fashion retailers.

  • It transformed its once penniless founders into billionaires.

  • Established itself as a powerhouse in the fast-fashion world.

  • And, at its peak, made $4.4 billion in revenue.

  • But the once flush company is now preparing to file for bankruptcy.

  • So, what happened?

  • Back in the day, Forever 21 embodied the American dream.

  • In 1981, Jin Sook and Do Won "Don" Chang moved to Los Angeles from South Korea with no money, no college degrees, and speaking little English.

  • To make ends meet, Jin Sook worked as a hairdresser while Don worked as a janitor, pumped gas, and served coffee.

  • Until he noticed that "the people who drove the nicest cars were all in the garment business."

  • So three years later, with $11,000 in savings, the Changs opened a 900-square-foot clothing store called Fashion 21.

  • The couple took advantage of wholesale closeouts to buy merchandise from manufacturers at a discount.

  • Their system worked.

  • The store made $700,000 in sales its first year.

  • Fashion 21 was initially only popular with LA's Korean American community.

  • But the Changs leveraged their success, opening new stores every six months, which broadened the company's customer base at the same time.

  • They also 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."

  • The company's key to success was simple: cultivate a huge following by selling trendy clothing for low prices.

  • While this is something that today's consumers pretty much expect, Forever 21 was one of the first to do it.

  • And they were the fastest.

  • Jin Sook was eventually approving over 400 designs a day.

  • Which meant the company could sell trends as they were happening.

  • Even if some of those designs landed Forever 21 in trouble.

  • But while other brands and designers might not have been Forever 21's biggest fans, customers couldn't get enough of their 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 booming.

  • Forever 21's sales peaked, with $4.4 billion in global sales that year.

  • As for the Changs?

  • They became one of America's wealthiest couples, with a combined net worth reaching an estimated $5.9 billion in March, 2015.

  • Forever 21's goal was to become an $8 billion company by 2017 and open 600 new stores in three years.

  • But the company's aggressive expansion would also lead to its downfall.

  • Part of what made Forever 21 popular in the first place was its 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.

  • However, as the company focused on growing bigger, its styles became more cookie-cutter.

  • As a result, Forever 21 started to lose touch with its core customers, while competitors like H&M and Zara rose.

  • No longer the trendsetter, Forever 21 became the butt of the joke.

  • It's also no longer the fastest in the game.

  • Internet brands like Fashion Nova churn out celebrity and influencer-inspired styles 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 overall, prefer online shopping over going to a physical store.

  • Yet, Forever 21 continued opening new stores as recently as 2016, even expanding existing stores to take over multiple floors with men's, children's, and home-goods sections.

  • Which could help explain why Forever 21's sales are estimated to have dropped by 20% to 25% in 2018.

  • On top of that, the Changs, who still own the company, have lost more than $4 billion from their personal net worths.

  • The company overall is now $500 million in debt and considering filing for bankruptcy.

  • Forever 21 has already started downsizing its stores.

  • And as one of the largest tenants of America's malls, a widespread shutdown of Forever 21 could exacerbate what's already being referred to as the "retail apocalypse," which has already closed more than 15,000 retailers across the US.

  • And could shut down 75,000 more, according to investment firm UBS.

  • But bankruptcy doesn't always mean the end for a company.

  • In fact, it could give Forever 21 time to restructure and bounce back.

  • 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 might not be enough.

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

Forever 21 was once among America's fastest-growing fast-fashion retailers.

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The Rise And Fall Of Forever 21

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    up1217home posted on 2019/10/31
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