In the immortal words of Josh Homme from Queens of the Stone Age – “First it giveth, then it taketh away.”
In short, this is what happened to Forever 21 clothing store chains as they recently filed for bankruptcy.
The demise of Forever 21 is a true American Dream story of two immigrants who came from South Korea looking for a better life. However, nothing is meant to last forever and like so many, this story had its Shakespearian downfall in the end.
The Ascent of Forever 21
Forever 21 was founded by a South Korean couple, Jin Sook and Do Won Chang, who moved to the US in 1981. They arrived in Los Angeles without any money, no formal education and very little knowledge of English. Thus, they were forced to work menial jobs to get by.
However, Do Won started noticing that people with the most money usually work in apparel stores. So an idea was born. The couple eventually gathered their savings and opened up a small clothing store. Their advantage lied in the fact that they bought merchandise from manufactures at discount and later sold them for more.
Little by little, they started to garner success. Initially, they were most popular with other Korean Americans from their community but it quickly expanded to everyone.
Eventually, they started opening stores at a fast pace all across the country. They even advanced to other markets and opened stores on other continents. It all resulted in an income of $8 billion in 2017.
The Descent of Forever 21
Diamonds may be forever, but Forever 21 isn’t.
The struggle started with their enormous expansion and their search for wealth. The chain may have gone bigger but the brand was noticeably affected by uninspiring and “cookie-cutter” products. The clothing that Forever 21 offered was mass-produced but in a rather unique way. However, when they lost touch with uniqueness and celebrities giving shout-outs to other brands it all started to fall apart.
Not only that, but other brands started to gain track. H&M and Zara, in particular, got more attention from the public.
Additionally, former employees anonymously reported that Forever 21 didn’t have equity analysis to warn them on time and that the downfall was inevitable.
This meant that all of those stores became unsustainable and Forever 21 started losing more money than they could earn.
The idea initially was to close stores in Europe and Asia, but keep the ones in Mexico and Latin America. The US stores will continue to be key but only the most profitable ones will be kept.
Bankruptcy doesn’t have to mean the end. It can be a fresh start for the brand as long as they change their business model and stop making the same mistakes as before.
However, online shopping is slowly replacing traditional retail so their business model is slowly going extinct. In fact, it is probably one of the reasons that led to their demise in the first place.
If they are to continue doing business, they will need to adapt to the contemporary market and evolve with it.