How Forever 21 Was Crushed by eCommerce
Nearly a decade ago, even before #InstagramInfluencers existed, Forever 21 helped young girls embody teenage dreams and suit up fashion havens. Girls, young and young-at-heart, had the chance to dress up like celebrities but for an affordable price! Through the years, Forever 21 grew aggressively, but like what business analysts warned them about, if the time ever came for F21’s “coolness factor” to fade, the company will struggle to get back up. And that’s exactly what happened – now, gone are the days of Forever 21’s sunshine and la la la’s.
On the morning of September 30, an announcement struck headlines. It was F21 filing for bankruptcy, deciding to cease the store operations of over 350 branches across 40 countries worldwide. According to the company’s Executive Vice President, Linda Chang,
“This was an important and necessary step to secure the future of the company, which will enable us to recognize our business and reposition Forever 21.”
Amid speculations, theories, and gossip-mongering, what could be the possible reason as to why the once-called retail giant suddenly became bankrupt?
According to the New York Times, Forever 21 is said to be losing young shoppers. The fashion company was originally themed to be a youth-driven fashion haven which helped popularize youthful fashion in the 2000s by hawking trendy and affordable clothes before they even made it to the runway. But throughout the years, the company struggled to be in tune of what is in or out, trendy or cool and eventually the company just couldn’t figure out how to reach their young shoppers.
Unlike other affordable but highly fashionable clothing brands like Zara, Penshoppe and Uniqlo, Forever 21 lost track of the millennials and Generation Z when 90% of their population combined shifted their expenses to Internet fashion retailers and e-commerce powerhouses such as Lazada, Shopee, and Zalora. This sudden shift is what these generations call the “Retail Apocalypse”, a threatening term used to describe how the Internet has changed consumers’ shopping habits, which have, in turn, affected retail brick and mortar stores.
To stop you from wondering further, here’s a breakdown of two other reasons that might have led to F21’s downfall.
Online Shopping is Killing Traditional Retailing Because of Young Shoppers
The strong growth of e-commerce and the slow sales in physical stores threaten a doom to traditional retailing.
According to Marketingdive.com, 75% of Gen Z and Millennials combined populations enjoy online shopping more than moving around stores. In the past few years, as many retailers have moved shop online, Forever 21 continued to build more brick and mortar stores and continued to expand their footprint offline. In this regard, they have forgotten who their target market really is — the millennials and Generation Z – the generation who immediately adapted to online shopping!
E-commerce websites such as Lazada, Shopee, Zalora experience more than a hundred million monthly website traffic in the Philippines alone. This one data is a testimony that e-commerce is the only way to capture a mass market, especially the Gen Z, which are considered to be a consumer powerhouse and valued to be the biggest retail market cohort sharing $44-billion in the market yearly.
As e-commerce continues to boom, traditional retailers like Forever 21 continue to struggle to adapt to changing consumer behaviors.
Bad Publicity and Ineffective Marketing Strategy
Whether created by huge designers or small indie brands, Forever 21 has made a signature version of customer purchase. However, in recent years, F21 has been accused of a series of copyright infringement lawsuits from more exclusive and expensive clothing lines and famous celebrities. Their stained reputation is on the edge.
The clothing chain has faced more than 50 copyright lawsuits for stealing the works of designers like Gwen Stefani, Anna Sui, and Trovata and violated some publicity laws.
The world-famous singer and record-breaking artist, Arianna Grande sued F21 both under state law and federal law, claiming that Forever 21 is guilty of false endorsement, copyright, and trademark infringement. Forever 21 was set to feature Grande in one of their campaigns, however, in the end, they were unwilling to pay Grande for she was worth too much. F21 then retracted the contract but still went ahead and launched the campaign, merely substituting another model that looks like Grande, but continuing to use the posts and themes heavily related to Grande on Forever 21’s Twitter and Instagram pages.
Another lawsuit filed against F21 was by the International fashion house, Gucci. For more than half a century, the clothing line has been known for its iconic stripes in blue-red-blue and green-red-green. But earlier on, familiar designs with similar stripes were seen on F21 stores. Now Gucci is suing the fast-fashion retailer for trademark infringement, reports CBS News’ Dana Jacobson.
F21 is not alone. There are many other fast-fashion giants whose stock prices continue to plunge amid drops in revenue as young shoppers continue to shop more online. Take this case study from the once retail giant, Forever 21. Don’t disregard the shopping habits and patterns of the millennials and gen Z consumers. Don’t let your business get left behind.
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