Shoppers had to face a crushing blow to their hearts when the fashion giant Forever 21 announced that they will be shutting down stores in more than 40 countries due to bankruptcy! One of the largest fashion destinations for shopping enthusiasts across the globe, the high-end fashion brand catered to a large audience that was interested in the latest trends at very affordable prices.
Hence, one wonders, why did the fashion retail giant shut down? Was bankruptcy the sole reason for its demise, or were there other underlying factors as well?
Up until as recent as 2016, Forever 21 was on the verge of expanding the business and stores, at a time when e-commerce had already boomed and was threatening traditional brick and mortar stores. Other high-street brands like H&M and Zara had already hopped on to the e-commerce bandwagon and were establishing their online presence vigorously. Forever 21, on the other hand, was building more stores across the country.
This proved to be one of the main reasons for the fall of the Forever 21 empire. In almost all business management courses, there is a concept called as marketing for e-business. In the current times, where the internet is the key to reaching the audience far and wide, e-business forms a dominant part of any management strategy. Forever 21, unlike its rivals, failed to rally to the cry of the digital world and hence, missed reaching out to their largest consumer base - the youth - who had since long shifted their shopping preferences from offline to online. For a company with such tremendously faithful buyers, this was indeed a poor course of action.
In fact, the move to bypass the internet revolution by Forever 21 was astonishing to watch! In the age of e-commerce when brands were repositioning their brand to align with new-age marketing avenues, they decided to launch more offline stores. And these stores were not small niche spaces, but massive three-storeyed showrooms, almost like a mall in themselves!
As the number of stores increased, so did the cost of maintenance of such chic spaces. Eventually, there came a breaking point when the brand was simply unable to sustain itself. The footfall in these malls-like-showrooms declined because of the shift in consumer behavior. People no longer preferred driving to the stores and waiting in queues at the trial rooms. Online shopping, with all its convenience, had already won over the majority of young audiences.
While it won’t be fair to say that Forever 21 did not pay attention to building an online presence - they had a strong customer relationship via their social media channels - what they failed to grasp was that their customers were focusing more on readily available online brands. It is bizarre that a company that had such strong offline marketing campaigns managed to overlook the paradigm shift of the entire market from offline to online.
Another probable reason for the empirical decline in the value of Forever 21 was the fact that they kept their focus on fast fashion. With an increase in a more aware and woke audience, they should have moved to long-lasting, recyclable yet affordable fashion. The Gen Z is all about sustainable fashion, with consciousness about environment-friendly products at its peak. Yet, the brand slipped, once again, and was unable to identify this shift and did not invest enough resources in innovation.
Any marketing or management course will teach you that to ensure the success of any business model, be it in any domain or sector, you have to watch the behavioral patterns of your audience like a hawk. It’s the brand that is chasing the customer and not the other way around.
To sum up, e-business concepts are extremely important in this rapidly evolving digital era. Businesses need people who are skilled at spotting such trends and patterns and can help organisations make rational, evidence-based decisions. Negligence will only result in a downfall, as is exemplified in the case of Forever 21, which is now remodeling its entire business due to unpreparedness and heedlessness towards the modern buying behavior!