Written By: Stella P.
As teens in high school, we all don’t have that much money to spend on high-end clothes like Givenchy, Gucci, Louis Vuitton, or Chanel. But ever since forever 21 came to our local malls, it was the store you wanted to go to and get stylish clothes for cheap! Forever 21 was founded in 1984 by Do Won Chang (Picture to the left). The clothing store became a fast fashion spot quickly among teens and all women. Their goal was to sell new fashion trends at a low cost. As the retail store grew, it had opened around 623 stores around the world. While teens continued to shop at forever 21, online stores were catching up and became a big competitor. With these online retail competitors, forever 21 began to lose customers. Since online retailers don’t have to pay an overhead fee (leasing buildings) they are able to have more income without much outgo. Online stores also don’t have to deal with the realities that mall stores deal with on a daily bases. That includes things such as shoplifting, robbery, and the constant hiring, training, and firing of employees.The story of the forever 21 bankruptcy began in September 2019. The company declared Chapter 11 bankruptcy which allows a company to stay in business and repay its debts over time. Forever 21 said it has borrowed $245 million in financing from JPMorgan Chase (JPM), as well as $75 million in new capital from TPG Sixth Street Partners (cash machinery, and equipment). This allowed forever 21 to operate “in a business as usual manner” during their restructuring.
Linda Chang, the chain’s executive vice president, also the daughter of the founder, Do Won Chang, states that “What we’re hoping to do with this process is just to simplify things so we can get back to doing what we do best.” She also stated that “We went from seven countries to 47 countries within a less-than-six-year time frame and with that came a lot of complexity.” Finally, she said, “The retail industry is obviously changing - there has been a softening of mall traffic and sales are shifting more to online.”The Chang family came to America to live the American dream that everyone desires. They’re not about to give up that dream. That desire, along with their strong faith (the family references the Bible verse “John 3:16” on every one of their bright yellow shopping bags) should help in their crusade to once again come out on top.
Works Cited
Biron, Bethany. “Forever 21 Could Close 111 Underperforming Stores in the US. Here's the Full List of Locations at Risk.” Business Insider, Business Insider, 31 Oct. 2019, www.businessinsider.com/forever-21-closing-stores-could-include-these-list-2019-10.Maheshwari, Sapna. “Forever 21 Bankruptcy Signals a Shift in Consumer Tastes.” The New York Times, The New York Times, 30 Sept. 2019, www.nytimes.com/2019/09/29/business/forever-21-bankruptcy.html.
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.
Naidu, Richa. “Forever 21 Closing Stores in Bankruptcy Filing Shows Limits to Fast Fashion.” Reuters, Thomson Reuters, 30 Sept. 2019, www.reuters.com/article/us-forever21-bankruptcy/forever-21-closing-stores-in-bankruptcy-filing-shows-limits-to-fast-fashion-idUSKBN1WF043.
Porterfield, Carlie. “Forever 21 Considers Filing For Bankruptcy, Reports.” Forbes, Forbes Magazine, 29 Aug. 2019, www.forbes.com/sites/carlieporterfield/2019/08/29/forever-21-considers-filing-for-bankruptcy-reports/#46b69f235bcd.
This is something that I have seen in the news recently. Forever 21 was a store that was at almost all malls, and had larger locations in cities. Like you have stated in your article, this clothing brand was meant to be more affordable but still stylish for everyone. There are some other factors that played into the company going downhill. Yes online stores have played a huge roll to the competition, but also the style of clothes took a turn. People have reported that the clothes at the stores become not as stylish as they once remembered. If people lost interest in buying the clothes, then yes the sales are going to fall, that with the combination of online sales,and new increase to high name brands at a younger age was a fatal combo for Forever 21.
ReplyDeleteThis isn't surprising at all. It goes without saying that the rise of Amazon and other relatively cheap online retailers has negatively affected physical stores like Forever 21 simply because people don't see the point in going to malls anymore. Think of all the department stores that have closed in the last few years, and Forever 21 at its height kind of became its own hybrid of a modern department store catering almost exclusively to women. It makes sense that it would go down with the ship, especially given how the Forever 21 empire was built on the idea of making fashion cheap, when nowadays, you can get cheap fashion just about anywhere. Thanks for sharing!
ReplyDeleteIt is important to remember that online stores are not bullet proof either. While they do not have to have any physical stores, they still have overhead costs, for examples amazon's warehouses and their respective utility bills. And while the online stores don't have customers stealing merchandise, there is still shrinkage when employees embezzle the products. It sounds like Forever 21 was suffering from poor management because they grew too quickly, so they experienced dis economies of scale. It was the extra competition from online stores that put the final nail in the coffin, not the fact that the stores were online.
ReplyDeleteThis is so weird to read about. Forever 21 was a store in every mall and was really popular because it was so affordable but still cute. More online retailers added to the downfall of Forever 21, but also nobody wants 30 t-shirts with taco patches on them. This made a lot of consumers look elsewhere and sales started to drop. It is disappointing because it was a nice cheaper option for clothes, but it has become very difficult to find stuff that is actually in style.
ReplyDeleteIt is very interesting to see that when a company is losing customers the shop lifting increases that is something I don't understand because when you shoplift people would want to shoplift from really high end stores, but the fact that Forever 21 is losing customers means that there decreasing there security on there stores which is weird because if you had a store that was doing great then why get rid of your protection against robbery and shoplifting, however, besides that this article was really great at how Forever 21 has come to be since the beginning of it's company.
ReplyDeleteVery relevant points were made within the article while discussing the bankruptcy of Forever 21. Online shopping has become very popular, and it's not a surprise to me that online shopping is the main reason of their bankruptcy. I believe that another reason why they're losing customers is because the clothes they sell now are not in-style with most teens at the moment. These online competitors make it hard for Forever 21 to continue a successful business because of their in-style clothing and cheap prices. Knowing that their loans add up to about $320 million, it makes me wonder how long it will take for Forever 21 to pay that off. It seems like their debt is getting worse due to these insanely large loans that they would eventually have to pay back.
ReplyDeleteIt's a sad reality that online stores are becoming much more popular and convenient than physical stores. Soon these stores could become obsolete. I think the only way they can compete is if they also join the online market. Good topic! Very thought provoking and informative.
ReplyDeleteWith amazon and other online stores making it more & more efficient for consumers to get what they want in a very short period of time, the appeal of actually entering a physical store and walking around to browse is declining rapidly. Forever 21 is not the only retail store that is experiencing financial issues due to shoppers transferring to online. Stores like Macy's and the Boston Store have all had to shut down. But some stores like Kohls is making it easier to shop and buy online, which has helped to keep them afloat in the industry.
ReplyDeleteI find this article very interesting, I never knew that Forever 21 was going out of business due to more online shopping. I guess I never realized that they lost a lot of money because since it is so cheap, you would assume people would continue to shop there. Sometimes people also hate on Forever 21 because of their interesting designs and weird things on their clothing. Plus the material of their clothing isn’t all that great. I think that by people making fun of their clothes just adds on to less and less people shopping at their local Forever 21, which draws people away. Since Forever 21 has been around for so long and did so well, with many locations across the globe. Do they have enough money to pay off loans or should they just close down shop if they are no longer making profit?
ReplyDeleteThe bankruptcy of forever 21 was something I’ve heard about, but never really cared too much to read anything about it in the news. But this is actually a pretty interesting topic, especially considering how it’s a family running the business. It’s kinda sad they’re going bankrupt, but all things considered it makes sense. The addition of online retailers and their popularity make it much harder than ever for stores to get people and sell their products. Everyone is making moves to that market, even if they have in-person stores. What will shopping look like in a few years?
ReplyDeleteI have heard rumors about Forever 21 closings however because of amazon and all online stores are taking over I am not surprised. I feel as though these stores that are being closed need to embrace the online age and put themselves online so they can too benefit and stay afloat. I wonder what exact amount of money online sites are bringing in verse stores and how it has affected the American economy.
ReplyDeleteAlthough online shopping is a key factor, I think that wasn't the only factor of Forever 21's downfall. I can't recall ever seeing Forever 21 stores that are outside of a mall. The company's overreliance on mall traffic definitely could've also been a key factor, as less and less people go to malls these days due to online shopping. Although online stores aren't always perfect, they do offer a very nice convenience. So for a company who didn't modernize to online shopping it makes sense that Forever 21 would go bankrupt.
ReplyDeleteWhile reading your blog post, I thought about Boston Store and how they had a ton of money in debt and that caused them to declare Chapter 11 bankruptcy as well. Boston Store declared Chapter 11 bankruptcy around February 2018, liquidation ended a few days before Labor Day. Currently, Forever 21 has over $500 million in debt. I personally believe that Forever 21 will close a lot of their stores and move towards online retail because it’s cheaper, and the number of people who go to malls are declining. And like you said, online retail stores don’t have to deal with shoplifting, theft, hiring, firing and training employees.
ReplyDeleteWorks Cited
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.
When I heard that forever 21 was filing for bankruptcy I didn’t really realize who they were because when I went to the mall I never went anywhere near them due to them being to weird
ReplyDeleteI love that you chose a topic that applies to our age group as teens and we all are familiar with! I personally like an dislike Forever 21. I like it because it is so cheap and they have pretty good clothes, but I don't like it because it is generally really dirty and a lot of their clothes is tiny and not made for all sizes and fits very badly. I also agree that they might be going bankrupt because they have a lot of competition, but I also think it is because they are unorganized and might not be making enough money seeing that everything there only costs like $5. Overall, I feel bad that they are going out of business but I think that the business already had a bad reputation that would hard to get out of and hopefully they can start something new and better.
ReplyDeleteIt is so disappointing that shops are leaving the mall industry. Forever 21 was trying to restructure itself, but they couldn't successfully do it. With amazon being super strong, other shops are leaving the industry along with Forever 21.
ReplyDeleteI really like how you took a topic that was interesting to atleast most girls and also added in reasons for why they were shutting down, because not everyone knows why but they all wonder why and you did a good job applying the statistical reasons for it.
ReplyDeleteI like that you explained bankruptcy because I've never really understood it. It seems like a pretty big deal when a company declares bankruptcy and I actually had no idea Forever 21 had declared it. I always thought they were doing fine and it'd be interesting to know how they ended up with so much debt. Obviously, having a real store with real employees will cost more than online stores but there are a lot of retailers who have store chains that aren't in debt. Especially since Forever 21 is in so many different countries and seems to be very successful (and admired gathered by how you describe them). What made them specifically fall into bankruptcy? What should other companies do to avoid bankruptcy?
ReplyDeleteI feel bad that they are going out of business but I also think that some of their clothe shave gone out of style. They have phrases on the shirts that people wouldn't tend to wear. This could effect business and make them lose sales. I feel as thought they have a minimal amount of clothes that someone like me would actually wear. I don't really like some of the trends that are going around right now. I know that there are also people who don't follow the trends and their clothes don't last a super long time. Overall, it could be a waste of money depending on what you get. This could make someone not really want to shop their again because of the low quality.
ReplyDeleteOverall, I think it is unfortunate that cheaper shops are leaving the mall. With the internet, and amazon which delivers in one or two days, why not online shop? Also there is bigger competitors at a mall such as Pacusn,Hollister, and others.
ReplyDeleteI'm glad you decided to elaborate on this topic because like many others I heard rumors about forever 21 closing. It's interesting that this store is going out of business because it's so unique and there isn't really one like it around, making me think it would stay in business because it sells such vivid clothing styles. However, because they are going bankrupt but the owners are still trying to salvage the company I wonder if they could not have retail stores and simply have an online store as many shoppers are shifting to online purchasing.
ReplyDeleteThe one question I have is why hasn't Forever 21 tried to have online shopping? I seems like they didn't catch up with the times taking advantage of the online retail. I don't know if I have the full story from this blog post but an obvious solution to their bankruptcy is by getting a online platform for them to sell clothes on in order to become more competitive. But, on top of that, I've never seen a Forever 21 store in a mall and like many others in the comment section can agree that they never knew what Forever 21 was until they read this blog post. It may be too late for them to modernize in order to become more competitive especially with the debt Forever 21 has.
ReplyDeleteI really enjoyed this topic and it's something that I think a lot of us can relate to. I shop at Forever 21 every once in a while, but I have to be in the mood to look through all the clothing. It is interesting to see companies that were once on top decline so quickly. I think part of the reason is that people want better quality clothing that will last longer, and Forever 21 has always been a store that has more of a reputation of having cheaper clothes that do not last as long. I also think that the competition of other stores such as H&M and other online stores are taking over Forever 21.
ReplyDeleteI agree that all in store purchases are becoming "out dated" and that everything if becoming online. If this trend continues then not only will Forever 21 go out of business but many other stores too. Just like how Boston Store went out of business.
ReplyDeleteI had heard about the Forever 21 bankruptcy, mostly because I was excited for a sale, but I didn't put too much thought into why they were going bankrupt. I didn't realize it was because of the rise of online shopping. I wonder if Forever 21 is shifting more towards online sales so that they can also make those same profits.
ReplyDeleteI think Forever 21 definitely had trouble keeping up with the ever changing retail scene. They never, at least in my experience, had a large online presence or great clothes. Their clothes were cheap, the stores were always unorganized and it was always hard to find what you needed. I also thought it was interesting to think about the fact that online based stores do not have to pay for space in a mall, constantly train employees and stuff like that.
ReplyDeleteI think this is really interesting, and brings up a new idea of the thought that online business may conquer all tangible stores and other shopping centers. The idea that online shopping can rid of many fixed costs including leasing a building or the standardized training for workers, gives it a clear advantage over physical stores. This looks to be a new wave of business through online shopping and distribution, and Amazon is leading the charge, essentially the largest business in America and continues its dominance in delivery and abundance of products.
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