The fashion chain, Forever 21 said they have voluntarily filed for bankruptcy protection after they were rumours about them doing so not long ago. Forever 21 was founded by Do Won Chang and Jin Sook Chang in 1984 with $11,000 in savings. Within a year, the fashion chain had revenue of $700,000 and three decades on, the couple who are South Korean immigrants were worth nearly $6 billion.
Yet, Forever 21 had announced the closure of up to 178 stores internationally and most of the stores are in Asia. Learn why the once-thriving retailer ended up in the bargain bin:
1. Stiffer online competition
Forever 21 along with other fashion competitors such as H&M and Zara helped popularised fast fashion in the early 2000s by producing trendy yet affordable clothes before they had even made it off the runway. But, the company struggled to sustain the business when its shoppers shifted their spending online to internet fashion retailers as well as e-commerce powerhouses like Amazon.
2. They opened too many physical stores
Forever 21 aggressively expanded its store footprint in shopping malls. It also opened many big-box format stores despite the high overhead costs. The company has about $500 million worth of debt and the plans to slash costs by closing many of its stores in North America and Asia. But, the retailer will continue to operate in Mexico and Latin America. The company said they have plan to restructure and eventually emerge from court supervision.
3. Trendy cheap clothes no longer in fashion
Forever 21 aims to make shoppers feel forever youthful, hence the name of the brand emerged. Besides, millennials shoppers increasingly demanded higher-quality goods even at low prices. For Forever 21, as one of the fast-fashion retailers, they have also faced criticism for the fashion industry’s toll on the environment. According to a report from Quantis in 2018, apparel and footware production accounts for 8 per cent of global greenhouse gas emissions.