In this video we go over the epic rise and fall of the fast fashion retailer Forever 21. They faced many controversies and in 2019 declared chapter 11 bankruptcy.
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What's up guys and welcome back to wall street millennial on this channel, we cover everything related to stocks and investing with the rise of e-commerce and the consolidation of brick and mortar stores in america. Many successful retailers have gone by the wayside in recent years. Sears jcpenney macy's, those that have survived to the present day are now only a fraction of their former glories. In today's video we're going to talk about one recent, such downfall, that of forever 21.
forever 21 is a fast fashion retailer that is known for trendy styles and low prices. It was extremely popular for many years, especially among young americans, in places like los angeles, but in the late 2010s, increased competition and several controversies eroded their success. They began losing popularity to other brands, seen as higher end and in 2019 were forced into bankruptcy. In this video we'll take a look at how forever 21 rose to fame and fortune and what brought it down forever.
21 was started as fashion 21 in la it is started by do won chang and his wife jin suk chang. The story was the quintessential rags to riches story of a korean immigrant as a child. Dohwan chain grew up in south korea and moved to california when he was 27 years old chain didn't go to college and work various working class jobs in the u.s. He worked at a gas station as a cleaner over the years.
He would ask customers at the gas station who drove fancy cars, what kinds of jobs they had. He noticed that almost all of them said that they worked in the garment business that inspired him. To start his own business in the clothing industry, he eventually was able to save up 11 000, which he and his wife used to open up their first store. They named it fashion 21 and opened in highland park la at the time.
The area was mainly low-income residents, because customers did not have much money to spend the change made it their motto to always have affordable pricing in their store, and the store was immediately successful just three years after he immigrated to the us. Their first store brought in 700 thousand dollars in sales. Eventually, they changed the name of fashion 21 to forever 21 to appeal more to younger generations. In chang's words, old people want to be 21 again, and young people want to be 21 forever.
Their store, targeted people in their 20s, so low price apparel with a style focused on youth, made the most sense. Their commercials give a good sense of the general style that they go for by focusing on price style and fast turnover of merchandise. The chang set their business principles, however, not everything has been smooth sailing for forever. 21..
In 2001, forever 21 was a target of a lawsuit involving an asian american garment workers, advocacy group. The suit claimed that forever 21 violated various labor laws, such as paying less than minimum wage and providing abysmal working conditions. It sparked a large-scale boycott of the company among workers. The 2007 documentary made in la covered a dramatized version of the experiences of three workers in forever 21's factories, foreign there's 19 workers. Here they weren't paid minimum wage. They didn't get paid over time since then, forever 21 has been mired in controversy surrounding accusations that they copied the styles of famous celebrities. There are rumors that forever 21 designers have gotten kicked out of fashion week, because they're so blatant about taking a photo of the runway, and then you see it two weeks later in the store forever. 21 is willing to rip off so many designers, because it's easy and it's been working, you will get something from diane von furstenberg and then all of a sudden you'll see it at forever.
21. In the exact same print, the exact same cut and the exact same style, the only difference is quality, so basically, what forever 21 is going around doing is saying i like how that looks. Let's rip it off and sell it to the masses, for example, in 2019, ariana grande sued forever, 21 for allegedly stealing her styles. Her legal team claimed that forever 21 dressed up their models in a way that deceived customers into thinking that she had endorsed the company.
They cited ariana grande's music video to her hit song seven rings, claiming that the similarities between her attire in the video was too similar to certain models that forever 21 employed ron. Stefani is another music star to have accused the company of stealing intellectual property. Yet another strange controversy happened in 2019 following a business decision, someone at forever 21 made. They started, including free atkins bars with online orders.
Atkins bars are diet, bars that are meant to help people reduce their carbohydrate intake in order to lose weight. Twitter users expressed anger at the perceived fat, shaming and speculated that forever 21 was sending these bars only to people who ordered plus size clothing, forever. 21 responded in a statement by saying quote from time to time. Forever.
21 surprises our customers with free test products from third parties in their ecommerce orders. Unquote they apologize for the oversight and promised that everyone was being given. These diet bars not just customers ordering plus-sized clothing, but perhaps the most bizarre legal action that forever 21 has faced. Came in 2007., a florida-based lawyer named caroline kellman, filed a lawsuit against the company she claimed to have bought a pair of shorts from forever 21 for 14.46, then returned them receiving only 14.45 cents.
Apparently, the one cent difference made her mad enough to sue the company. She found hundreds of thousands of people with similar experiences to achieve the minimum of a fifteen thousand dollar case and filed a class action lawsuit as a result of these controversies, increased competition from companies like h, m and other factors. The company's sales started to falter in the 2010s in 2019 sales plummeted and there was widespread speculation that the company would not be able to make its rent payments. In september, they filed for bankruptcy. Analysts cited a number of key reasons for their decline, their controversies and the focus that younger generations started giving to environmental concerns worked against the company. Their high turnover merchandise was often very cheaply made and naturally seems to some customers that would lead to a lot of landfill waste. Another consequence of the cheap price point of their merchandise is that it wears out very quickly, sometimes after only a few washes. With the rise of online secondhand marketplaces like poshmark.
Many people prefer to buy secondhand clothes of higher quality and similar prices than the cheap clothes from forever 21.. A third reason is that forever 21 strategy of having enormous stores with tens of thousands of square feet, saddled them with large fixed costs. As soon as sales fell below a threshold of being able to pay their operating expenses, net losses could add up very quickly. In february of 2020, forever 21 was bought out of bankruptcy by a group of three buyers: authentic brands, simon property group and brookfield property.
Simon property group was one of forever 21's biggest landlords and thus had an economic stake in keeping the stores operating. The company still has hundreds of stores across the us and other countries and the new group of owners plans to continue expanding to new markets. It remains to be seen whether or not these new owners can breathe new life into this iconic chain. Alright guys that wraps it up for this video, why do you think forever 21 fell out of fashion so quickly? Do you think they still have what it takes to be profitable? Let us know in the comments section below, if you enjoyed this content, make sure to smash the like button and subscribe.
So you don't miss future videos in the meantime. Thank you. So much for watching and we'll see in the next one wall, street millennial signing out.
Another silimilar store is called Shein, which is a private online "fast fashion" store, operated from China. It offers cheap and fast-changing clothings for young people. No transparency to their labor situation.
The owners and management treat their non korean workers like shit, let that be known. That was their dynasty.
A little bit of outdated information on your video since they were acquired by ABG and Simon Mall Properties (SPG) it seems you stopped researching from that point (Feb 2020). Since then they have rebounded quite astronomically. Bringing in the CEO of H&M since Feb 2020 they've had overall huge numbers achieving the highest sales of the last 4 years and are trending upward. 2 new store openings this month leaner stores from covid downsizing and logistical shifts in warehousing/shipping at better costs internationally, while being very in-trend with the recent baby phat release etc. ABG is a brand owner which recently acquired Reebok, Forever 21, Eddie Baur, Aeropostale and many others in this past year. If your video was titled the rise and fall and rise again.. would be more accurate
Forever 21 was the favorite of those who passed 21 long time ago. Those who were actually 21 wouldn’t be caught dead in those stores.
Most fashion business will come and go bankrupt later because they rent all the outlet, this business model bound to fail. You must own your outlet if not NEVER DO RETAIL BUSINESS even FB. It just wasting your time will finally bankrupt! 🥵🥵🥵
High fashion brands killed Forever 21. Masses loved F21 , why cant they get same design and cheaper price ?
Their materials used to be good with low prices but now I don't buy them anymore since their materials have gone down hill. Same goes with Old Navy too.
I went into one of their stores once against my will. They had a sign in the store that said "Live beyond your means". It made me want tu puke
Forever 21 was successful at the Beverly Center until Beverly Center ditched their food court.
The analysis is too shallow. Someone suing for 1 cent difference is malicious in the first place.
You could take the Victoria Secret video and change VS for Forever 21 and you will not tell the difference
They just had to make quality clothes to win but they were too worried about costs. lmao
You declare bankruptcy and you can keep part of their assets, you got benefits you dont paid to your vendors,you keep some cases with the real state depend of the lawyers,they are smart find the law that they are favor to them.
When I was 21 I was naive and did shopping at forever 21 but then turned 22 realised, this shop is as bad as a sexist boss, and never returned. First they should change the name if they want to be in business and respect women and workers.
Sounds like what really Changed is people stopped going to their sweatshops and starting buying from the sweatshops directly. And with the reduced labor cost the new sweatshops increased the quality a little bit.
Quality was always an issue with this company. A lot of the women I know who shopped there all told me the same thing: cute clothes, but they're ruined after one wash.
"Customer Retention" – is the key to any business, they should start "again 21" or "super 30" "mind blowing 40/50" something …
I would not be surprised if this case was a direct attack on this company, the protesters and the other details seems really sketchy compared to the other bankrupcy videos. Strange but mark my word when you discover the truth behind this hostile twisted takeover. Never bought clothes from this store though, but recently even if you buy Adidas or any major brand you should not expect a long life, for example the superstar brand lasted 10 years when i first bught it, I purchased the same shoes 1.5 years ago as i trusted the Adidas brand and it is already degraded to needing a replacement. My habits did not change, even i got more passive compared to my youth.
Mr Eddie Dewayne is the best, recommending him to all beginners who wants to recover losses like I did.
Most complaints and lawsuits described in this video like sweatshops, copying designs, etc…this is how this industry works, H&M and Zara (Inditex) have been doing the same for years.
what really broke forever 21 is the fact that they tried to apiece to the younger audience, they totally forgot what made their brand popular in the first place, and that was their cute casual subtle princess Disney style clothing, clothing that you could combine with everything, they became greedy and instead of keeping up with current trends they instead introduce the MTV style type of clothing, they ignore their clients protest against this type of trashy clothing and continue trying to attract younger shoppers. their clothing came to be known as the ghetto style clothing, if you wanted to dress ghetto trash for a party forever 21 was the clothing store to go to, they also starting to neglect the quality of their clothing, sadly by doing this they ignore their core clientele that made them rich in the first place, by not listening to their clients they boycott themselves, but it as not only forever 21 who destroyed itself, they were also targeted by jealous rival companies who used malicious lies to destroy them, forever 21 was on of the biggest clothing store chains in America that were owned by a foreigner, I bet that alone must have infuriated a lot of racist rival businesses out there, I wouldn't be surprised if they were the ones who started the online hate campaign against forever 21.
Samsung Galaxy copies from Apple Iphone?
Hyundai copies from European luxury cars?
Forever 21 copies from western designers' hit merchandise?
😀 😀 😀
I like your videos – but the sound quality for your channel is always inferior to other videos I watch on youtube. PLEASE invest into a professional microphone and keep up the good work!
Twitter complaining about diet bars cause of fatshaming, the most twitter thing to do. Why did they even react to that.
Let that be a lesson to us all: don't do more than four scummy, unethical, probably should be illegal things at a time.
The first time i am actually sad for one of these and its for a clothes store, so much targetted action.
In the early 2010s I used to love Forever 21. Their clothing lasted (I still have some tops.) and they back then had a sort of subtle princess disneyesk style that was easy to mix with a cardigan making it both comfortable, pretty, fun, and business casual.
Right around the mid 2010s F21 started selling MTV style clothing that imo came off somewhat trashy. Long gone were the days of being a business casual disney princess and now were the days of ripped sweat pants t-shirts and gold chains. The quality of their clothes went down too.
I have not shopped at F21 in over half a decade. Maybe this new F21 can fix its issues, but I'm not holding my breath. F21 losing its customer base was more than just scandals. If you make bad products no one likes no one is going to buy your products.
There was one in my mall and I thought it was XXL forever and I thought it was a store for fat people. Turns out it was XXI forever.
the market speaks, you do bad things(sweatshops) and only produce junk, it'll catch up to you
if you have a good product, people will look past the sweatshops (Nike)
I only first heard about Forever 21 after the Great Recession. I guess people were looking for cheaper clothing
The refund scam is actually really terrible. Stealing only a small amount at a time to not be sued. I’m glad someone took them to court if that was true
It feels like forever 21 was targeted by a nasty propaganda from other competitors, the Labour problems and environmental issues exists in almost every low cost clothing brands factory, why no one pointed to them !!! It smells nasty here