Forever 21's grand opening on June 25, 2010 at their new store located in Times Square, New York City (Click Image To Enlarge)
Forever 21 is growing like crazy, and the fast fashion retailer is becoming a major threat to the rest of the industry.
Analysts Lorraine Hutchinson, Paul Alexander, and Jessica A. Lebo at Bank of America warned that competitors need to start paying attention to the privately-held retailer right now.
Forever 21's grand opening on June 25, 2010 at their new store located in Times Square, New York City (Click Image To Enlarge)
They declared Forever 21 "the most transformative retail concept" in a note to clients.
The analysts wrote.
"Forever 21 is becoming too big for the specialty retailers to ignore. At this size, rapid growth could have ripple effects on the other retailers as Forever 21 takes more share."
Forever21 oepns New York's largest clothing store in Times Square (CLICK IMAGE TO VIEW VIDEO)
Back in 2008, Forever 21 SVP Christopher Lee told the Los Angeles Times that the company's goal is to become a "global retail conglomerate."
And it's well on its way.
Don Chang (right) and wife Jin Sook Chang (left) opened the first Forever 21 in 1984 (Click Image To Enlarge)
Forever 21 has expanded to more than 450 stores in the U.S. and nearly 100 locations internationally. It charged into Europe, put its foot into China, and now has its sights on Latin America. Bank of America estimates the company's sales at upwards of $3.5 billion — in line with many big teen retailers.
Don Won (Don) Chang founder and CEO of Forever 21 and daughters Linda Chang who is the Marketing Director and Esther Chang who is the Retail Merchandising Director (Click Image To Enlarge)
The big players in teen retail, like Abercrombie & Fitch, Aeropostale, and American Eagle, will feel the pressure. Gap has also been squeezed by Forever 21, as it sees revenues and margins getting eaten away, according to ACM Partners' Margaret Bogenrief.
Don Chang, Founder and CEO of Forever21 speaks about his company (CLICK TO VIEW VIDEO)
Why should they be worried?
Forever 21 is faster and cheaper — It uses the fast fashion model, getting new fashion trends to stores as quickly as it possibly can, then selling at a low price. Traditional retailers try to establish a brand with a signature look, so it's very unlikely that others will try to copy Forever 21 after spending so much time and effort building their own brands.
And it simply sells clothing for less than its rivals do. "Forever 21 sells jeans for as low as $15, where teen retailers generally start at $30 for this important category," noted the Bank of America analysts.
Forever 21 is expanding its customer base — Forever 21 is becoming a fashion department store that caters to all members of the family — not just teens.
That means a broader set of customers are being gobbled up by the retailer as it releases new lines targeting men and older demographics. Yet, at its core, Forever 21 still has a similar target as the big teen retailers – 18- to 24-year-olds.
Forever 21 is fighting its competitors head-on — The retailer used to settle for second-tier malls and mediocre space in the big malls. But now, Forever 21 is done being timid.
Wrote the analysts.
"We have seen Forever 21 take on much better located spaces and often larger sized stores."
It even has a Times Square flagship directly across the street from both Aeropostale and American Eagle.
COMMENTARY: In a blog post date Janaury 21, 2011, I profiled Forever21 for the first time. The company had revenues of $3 billion at the end of 2010, and has probably reached $4 billion plus in revenues by the end of 2012.
Forever21 has now become a mainstay in every budget stylista’s shopping arsenal, yet few know the beginnings of one of the most popular stores in America. In this “History of Budget Fashion”, we explore the beginnings of the retail chain as well as some of the challenges faced by the store.
The first Forever21 store, originally named “Fashion 21”, was founded in 1984 by Korean immigrant/entrepreneur Do Won “Don” Chang in the community of Highland Park, with the goal to sell Korean fashions stateside. According to a 2010 Los Angeles Times article, Chang got the idea for a retail store after he noticed “…the people who drove the nicest cars were all in the garment business”. Soon the store became popular and started to expand into other areas of Southern California.
While Chang’s interest was more economic than sartorial, he was unknowingly at the forefront of a new trend (along with Halston, Jaclyn Smith, Wal-Mart, etc) in retail– the bridging of the gap between high fashion and the American mass market consumer. During this time period, the rise of networked computers and retail technologies reduced the “supply chain”, which meant the time and cost it took for a piece of apparel to go from production to the store was significantly reduced. So, that shirt on scene during New York’s Fall 1984 fashion week could go from concept to reality in a significantly faster time.
Fashion became faster, allowing chains like Forever21 to deliver high fashion (at least in concept, if not in quality) to consumers in a matter of days.
Forever21 and It’s forever list of issues
Forever21's incredible success has not come without controversey. According to Forbes, the company has been sued for copyright infringement dozens of times from “borrowing” heavily from established designers like Diane Von Furstenberg and Gwen Stefani. Designer Anna Sui has also filed a lawsuit against Forever 21 alleging that Forever 21 sold and offered for sale numerous women's fast fashion clothing items bearing a striking similarity to her products featured at the most recent New York Fashion Week shows. The suits could stem from the fact that Forever21, unlike H&M, the company didn’t hire designers to “alter” designs, so the resulting pieces were extremely similar to the originals by top designers and brands.
Forever 21 has recently been subject of additional controversy, stemming from an interactive billboard installation in Times Square, in New York. It is alleged that Forever 21's advertising agency, space150 and director Nicholaus Goossen, copied a similar piece - created in 2009 - from London by interactive artist Chris O'Shea. These allegations have led to heated exchanges on the Vimeo page showing the work between Goossen and other users, including well-known members of the interactive and new media art communities. Both space150 and Goossen have since apologized publicly on Vimeo.
In January 2012, a class action lawsuit was filed against Forever 21 by its employees stating that Forever 21 systematically failed to pay them for hours worked. Employees of Forever 21 are required to subject their personal belongings to a "Bag Check Policy" to ensure there is no stolen merchandise. As part of this policy employees are required to have their belongings checked while still clocked in, however according to former and present Forever 21 employees the bag check has been done while clocked-out resulting in unpaid time while working.
The store also experienced worker rights issues in California (note: most of Forever21’s items are made in their factories in Southern California), which have been resolved and several shoppers have complained about the perceived overt Christian ties of the store (Chang and his family are devout Christians and a reference to the bible passage John 3:16 is printed on the bottom of every bag).
The Future of the Store
However, these problems have not slowed down the rocket growth of the company, which is one of the fastest growing retail chains in the world. The chain has purchased several spaces once occupied by the old Meryvn’s department store chain to turn into large Forever21s.
Forever21 Forbes Ranking
According to Forbes, Don Won Chang and Jin Sook Chang have an estiated combined net worth of $4.5 billion as of March 2013, and they rank #276 on Forbes Billionaire list for 2012 and rank #76 on Forbes 400 List.
Courtesy of an article dated March 11, 2013 appearing in Business Insider and an article dated August 21, 2011 appearing in The Budget Fashionista and Forbes 400 List an Forbes Billionaire List for the year 2012
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