FOREVER 21, THE TRENDY, LOW-PRICED YOUNG WOMEN'S RETAIL CHAIN, HAS 477 STORES AND $3 BIL IN REVS, PLANS BIGGER STORES

 

The Takashimaya store on Manhattan's Fifth Avenue was spare, exquisite, and often too quiet for its own good. It closed in June. Five months later, only the Japanese department store's marble floors and high ceilings remain. The six-floor, 30,000-square-foot space has been transformed into a glittery, dizzying showplace for Forever 21, the cheap chic teen retailer with sprawling ambitions, not the least of which is wanting the grown-up world to take it seriously.

On a late November morning the day before the store is to open for the first time, Linda Chang takes a moment to contemplate her family's ambitions. "It's pretty historic that we're on Fifth Avenue," she says. "We've tried hard not to make it feel like fast fashion." Chang has recently become the slightly more public face of the very private family that owns Forever 21, and she's still feeling her way into the role. Chang is 29 with an undergraduate business degree from the University of Pennsylvania, and she's been leading the marketing department for the past two years. One day she'll likely run the nearly $3 billion, 477-store, 35,000-employee chain. For now, Do Won and Jin Sook, or Mr. and Mrs. Chang, as everyone at Forever 21 calls them, are still very much in charge. Mrs. takes care of the merchandise; Mr. takes care of everything else.

He is here today, a youthful-looking man in his 50s wearing a dark blazer, jeans, and a wool scarf. No one dares approach him uninvited. Linda is far more outgoing. "This is our rock-and-roll section: sequins, black lace, leopard, some leather, a mix of the wild things, our faux fur, crochet," she says, sweeping her arm across just some of what's on the first floor. She's dressed modestly in a Forever 21 black T-shirt and jeans with a boyfriend blazer. Her necklace, of interlocking Cs, is Chanel.

A 20-foot chandelier dangles from the mezzanine above, and flecks of gold paint shimmer on the walls. On other floors, Linda points out plaid shirts, Nordic ski sweaters, sweaters with elbow pads, military-style jackets, capes, draped work dresses. On and on it goes: Forever 21's buyers—and shoppers—expect the stores to offer every trend. "Mrs. Chang oversees all the merchandise," says Linda of her mother. "But she doesn't travel to store openings. She says: 'I'll get you the product. You sell it.' "

I notice a pair of faux-leather lace-up ankle boots that look a lot like the Jeffrey Campbell ones I'm wearing: The style is the same, so are the combination of hooks and holes for the laces and the distinctively shaped heel. Forever 21 sells the boots for $35.80, less than one-quarter the price I paid. I mention them, and Linda says brightly: "You should buy another pair here." Fashion watchers will find a lot more that looks familiar in Forever 21.

On the sixth floor, we stop in front of a revolving rack suspended from the ceiling. "That's one of my sister's favorite things," Linda says. "The clothes rotate around, and you can stop it when you want. It's from the movie Clueless. My sister wishes she could have one in her room." Linda's sister is Esther, who graduated from Cornell University with a degree in fashion and merchandising and at 24 is the head of the company's visual display team. She's been up all night putting the finishing touches on the store. "Esther had one week to set it up. We're fast. Everything we do is fast. We found out we had this space six weeks ago," says Linda.

Forever 21 is very popular with young celebrities and models.  Forever 21's female customers emulate the outfits they wear.  Here are a few happy Forever 21 celebrity customers:

The store is the third the company has opened in just two weeks and the hundredth in the past year. Forever 21 has been quick to take advantage of the misfortunes of other retailers, moving into buildings abandoned by Saks (SKS), Sears (SHLD), Mervyns, Dillard's (DDS), Circuit City, Virgin Megastore, and HMV. It's staked out some of the most prestigious real estate in the world—on this stretch of Fifth Avenue, on London's Oxford Street, in Tokyo's Shibuya district. Its new Times Square store is 96,000 square feet; its store on the Las Vegas Strip is 127,000. In seven years, Forever 21 has grown from 1 million square feet of space to 10 million, from one brand of its own to six, offering clothes for kids, men, and plus-size and pregnant women. This year it plans to open at least 75 more stores in five countries. Forever 21 had a profit of $135 million in 2008, the last time it made figures public. And it did all this without selling any item for more than $60.

COMMENTARY:   For most high-end fashion designers, it takes 18-24 months to get from initial design to merchandise into the stores, while department stores need 4-6 months to get from the design room to the sales floor. The key to Forever 21’s success is their ability to spot the hot styles and trends, reproduce them, and bring them to market in six weeks or less. No longer tied down by the notion of “spring” or “fall” season, the customer can visit the same store every week and see the newest fashions, with each store carrying different fashions. And perhaps most important of all, they are able to offer well-made merchandise at prices that rival those of discount chains Target and Wal-Mart, with most items in the $5-$30 range.

Although originally catered to mostly young men and women, the fast-fashion model which transports current trends from the runway to the rack in record time has garnered mass appeal among both the young and young at heart. The concept’s broad appeal across generations is apparent within my own family. While my sister, 28, and my mom, 56, might not share the same tastes in fashion, they both list Forever 21 as their favorite shopping destination.

Among the reasons: 1) cute, trendy, well-made garments; 2) affordable prices; 3) constantly updated inventory; My sister put it best when she said “I could spend $300 at Forever 21 and walk out with a whole wardrobe – even if I only wear each item a few times and it’s not fashionable in a few months, I can go back and buy the newest trends, and I don’t feel like I spent a lot of money.”

For Forever 21, good things come in big packages. The fast-fashion chain is betting on a new super-size format that breaks ground on a fresh retail concept: the trend-driven department store.

In 2010, Forever 21 took over 15 Mervyns department stores that were retrofitted opened during the year. Other larger stores in the works include a 96,000-sq.-ft. location in Times Square.

The Cerritos, California prototype reflects Forever 21’s bid to woo a new swath of shoppers, including kids, and appeal to a wider customer base in general. “The goal was to offer a larger assortment of the latest fashion and accessories to more customers at a great value in an exciting shopping environment,” says Forever 21 Executive Vice-President Larry Meyers.

The store features a roster of newly-launched lines like cosmetics collection Love and Beauty; HTG81, apparel for boys and girls ages six to 14; and athletic wear for women.

Forever 21’s strategy to go bigger runs counter to the smaller-store trend being led by, among others, Ann Taylor and Target, but the move makes sense, says Kelly Tackett, senior apparel analyst for Kantar Retail.

“There is cheap real estate available, and they have a fast-fashion model that really works,” she says. “They have expanded into so many different categories and sub brands, so now they have the merchandise to fill those stores.”

According to Stores Magazine, Forever 21 ranks #47 on the list of the Top 100 Retailers.  Hoover's estimates their revenues at $1.7 billion in 2008.  The following graph shows Forever 21's revenue's between

 

Courtesy of an article dated January 20, 2011 appearing in Bloomberg Businessweek

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