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[brand story] Forever 21 – fast fashion brand with an edge


FOREVER 21 – FAST FASHION BRAND WITH AN EDGE

Martin Roll

The Forever 21 brand and their associated lines operates over 480 stores selling men’s and women’s clothing throughout the U.S. and in Canada, Europe, and across Asia. Forever 21’s success stems from its ability to challenge top design houses in the rapidly developing ready-to-wear trends while maintaining some of the most competitive prices in the market. Not only has Forever 21 become one of the largest clothing brands in the world, but also prides itself on perpetuating the Christian values its founders hold so dear. These values can be seen with the printing of John 3:16 on the bottom of their trademark yellow bags.

For Forever 21’s founder, Don Won Chang and his wife Jin Sook Chang, Forever 21 is about more than selling clothing, but the personification of the feasibility of achieving the American dream. With its owners valued at $5 billion as of 2013, Forever 21 remains a privately held company. Don Won Chang remains the owner and operator, his wife continues to oversee all of the company’s the merchandise while his daughters Linda and Esther Chang are the Senior Marketing Director and head of the Visual Display team, respectively.

It is widely held that Linda Chang will take over the company at whatever time her father chooses to step down making it clear that the Chang family has no desire to take their company public at any time in the foreseeable future.

Two poor Korean immigrants, Don Won Chang and his wife, Jin Sook Chang, founded Forever 21 in 1984 as a true family run operation. The chain, originally known as Fashion 21, was intended for kids and teens in search of fashionable pieces at more than reasonable prices. The flagship store sold mostly trendy Korean designs targeted at Los Angeles’ Korean community. With their unbeatable prices, other Los Angeles teens began flocking to the store and the Changs realized the possibility for expansion.

Six years later their empire (changed to Forever 21) had grown to over 100 locations. By 2009 Forever 21 had opened 11 department store-sized locations scattered across the United States.

The Chang’s see their success stemming from their realization early on that old people want to be 21 again, and young people want to be 21 forever. They have been functioning on this model sine their first store, and still do so today as their business continues to rapidly grow.

The Forever 21 Brand Architecture

The Forever 21 brand is divided into eight sub-brands all broken up by style but housed in the same oversized Forever 21 store ranging from 5,000 sq. ft. as the smallest to 120,000 sq. ft. as the largest.

XXI Forever: The large flagship that typically houses all of the smaller labels under the Forever 21 umbrella.

Forever21 Girls: A transformation of the originalXXI Forever brand to be more suited towards a younger pre-teen audience. This line focuses on popular designs specific to the emerging pre-teen market and sizes.

Love21 Contemporary: A contemporary line for women offered at the same price point as the rest of the

Forever 21 brands. This line is aimed at the over 21 aged buyers allowing them to continue staying up-to-date on the latest trends while remaining age appropriate.

Forever 21+: A contemporary line for women designed specifically for plus sized customers. This line allows more curvaceous women to wear the same clothes as the rest of Forever 21 shoppers at the same price point.

21Men: Formerly known as Heritage 1981 Men’s, the Forever 21 line designed and tailored specifically for men also in their mid-20s. The designs follow the female models in the other Forever 21 stores of remaining on point and up to date with current male fashion trends.

For Love21: A French boutique styled accessory store with women’s jewelry, shoes, handbags, cosmetics, and more.

Heritage 1981: This particular line is an attempt by the brand to penetrate the midmarket of consumers. With a more urban feel, this line lends itself to competing less with the big name fashion houses and their designs, but what one would find at an Urban Outfitters.

SWOT Analysis

The large and often overwhelmingly oversized Forever 21 stores are already present on almost every continent and continue to multiple in number. Their department store-sized locations allow for all of Forever 21’s more specifically catered brands to be sold all under one roof. Their ability to maintain a store overflowing with different styles and target consumers stems from their successful branding of the buy it now culture.

Fresh merchandise arrives every day in contrast to other similarly modeled stores like Zara where new merchandise only arrives twice a week – a typical store will roll over 20 percent of its stock in a given week and this constant turnover is key to the chain’s appeal: If you like something, you have to buy it right now, because you may never see anything like it again.

Forever 21’s strengths lie largely in their production model. Typically, midmarket competitors need three to six months to take an item from design to rack but for Forever 21 the cycle is reduced to weeks. Forever 21’s use of larger fashion houses’ designs allows them to produce so quickly. Immediately after the season’s latest styles hit the runways or trade shows, they are duplicated by the company’s journeyman designers around the world, and often arrive on shelves before the originals do.

However, as Forever 21 uses almost identical designs they continue to face lawsuits from other brands, designers and production factories for copying the physical patterns of the designs. These constant piracy lawsuits may shed a negative light on the owners, but it has yet to affect the company’s revenue, particularly because the Forever 21 customer base continues to get expensive designs at unbelievably cheap prices.

Forever 21’s Future

Forever 21’s production model allows the company to overtake many of the brands offering clothes at a similar price point. Not only can Forever 21 undersell most other companies, their ability to rapidly change their products gives them an advantage no other company has been able to successfully match yet.

As Forever 21 continues to build its client base with the developing of new brands and products they simultaneously threaten any foundation their competition mistakenly believed they had.

Also, Forever 21’s focus on retail locations rather than marketing has allowed them to occupy some of the most sought after real estate in major cities around the globe, bringing their products to almost every market available. As they continue to expand they will also continue acquiring knowledge about the evolving global fashion landscape, and in particular about competitors like ZARA, Hennes & Mauritz (H&M), Uniqlo and many other competitors.

Forever 21’s Key Challenges

Labor disputes:

Forever 21 recently faced disputes over their workers’ labor conditions and pay. The Los Angeles Labor Department reported than an investigation into Forever 21 uncovered evidence of “significant” violations of federal laws on minimum wage, overtime, and record keeping by vendors supplying the company. The suit is ongoing, which means that it will continue to tarnish the brand’s reputation as well as limit desire to work at the company.

Piracy lawsuits:

While Forever 21 has already faced a multitude of piracy lawsuits they have made no changes to their design and production practices. Unless they begin using more unique designs or make deals with some of the designers they are “inspired” by they will be forced to pay settlement after settlement until enough designers find a way to protect their designs more concretely and at that point Forever 21 will have to completely re-approach their production model.

This may include a transition closer to that of Zara’s in which they have over 200 designers but participate in the same streamlined production process. Forever 21 does not need to change their production model; they simply need to expand the designs of what they produce.

Product quality dilution:

As a company whose defining quality is its price point Forever 21 will need to maintain a competitive price despite changes in the market. This will force the company to find ways to save money in facets of production and historically when this occurs the quality of the product often declines drastically. Managing brand architecture: As Forever 21 continues to grow they are constantly developing their sub-brands and their themes. If these changes become too frequent customers will lose their loyalty to the brand as the brand loses and identity.

Transitioning power:

As a business based largely on family Forever 21 remains a privately held and owned family operation. As the daughters have graduated from their respective universities they are taking on larger roles within the operation, clearly being groomed for an eventual transition of power. The older daughter is said to eventually take control of the company but this will inevitably lead to changes in the management and possibly operation. Forever 21 needs to make sure that even under new and younger leadership they maintain the brand the founders so tirelessly built.

Competitors:

While Forever 21 has been extremely successful at maintaining its unbelievably competitive prices, significantly lower than that of Arcadia Group Ltd.’s Topshop and Inditex SA’s Zara, both of which target a slightly older consumer.

And in many categories, Forever 21 is even less expensive than Swedish company Hennes & Mauritz AB’s H&M, but as the fashion landscape continues to shift towards an immediate transition form runway to wearable other brands are entering the market Forever 21 previously dominated.

If Forever 21 continues to focus on location and store development they will be able to combat this change head on as their customer reach is significantly larger than its competitors.

Conclusion

Forever 21, like its owners, developed from one small storefront to one of the world’s largest fashion retail companies. Forever 21’s production model and price points set them apart from almost all other members of the fashion industry allowing them to continue to grow at the exponential rate they have for the past 20 years. While their quality might not compare, their ability to replicate the most current trends has even the most brand-conscious flocking to their stores.

While they have been extremely successful in the past with their rapid expansion and international development, they will need to start paying more attention to their design piracy or eventually they may no longer be able to simply settle.

A successful solution to this issue will mean a subtle shift in brand identity and a necessary focus on authenticity and originality in designs, but as long as the Forever 21 brand is able to maintain their price point, merchandising, and focus on location investment they are likely to remain at the forefront of the affordable designer transition.

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