665 _ Forever 21 _ Problem Identification (1)
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School
California State University, Long Beach *
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Course
695
Subject
Marketing
Date
Feb 20, 2024
Type
Pages
9
Uploaded by CoachExploration14252 on coursehero.com
Nikolas Molina
Neha Singh
Sopheak Nong
Ardha Anil
Background
In 1984, in Los Angeles, California, Do Won (Don) Chang and his wife Jin Sook Chang
founded Forever 21, originally named Fashion 21. The store saw rapid success within its first
year, generating sales of $700,000. By 1989, the company rebranded to Forever 21 and
opened its first location in a mall in Panorama City, California. Over the next six years, Forever
21 expanded its business, establishing stores across the U.S. and eventually entering the
Canadian market. According to Forever 21 they currently have 540 stores worldwide which is
nearly a 30% decrease in stores since their height in 2017 when they had 790 stores. Forever
21 offers a wide range of clothing items for men, women, and children. Some of the products
they sell are dresses, shirts, shorts, pants, outerwear, swimwear, activewear, and accessories
such as jewelry, bags, and shoes. Something that Forever 21 is very well known for is its
affordability. The brand's pricing strategy targets budget-conscious consumers by offering
trendy clothing at a relatively low price. Forever 21 has a lot of competitors such as H&M, Zara,
Uniqlo, Urban Outfitters, PrettyLittleThing, and Abercrombie & Fitch to name a few. What sets
Forever 21 apart from its competitors is its ability to keep up with the latest fashion trends at
an affordable price. Since they have so many styles and ranges of designs they appeal to a
wide range of customers. They also have quick turnover on their clothes just like H&M, so they
always have something fresh.
Analyzing the Decline in Customer Satisfaction at Forever 21: Causes and Solutions
Business Concept :
Forever 21 focuses on producing reasonable, trendy clothing, whereas it frequently utilizes
materials that are counterfeit copies of high-end clothing brands. The company's original
mission was to provide fashionable apparel reachable for those who couldn't afford designer
labels. Although it has in the past led to legal problems, Forever 21, on the other hand, usually
is able to prevent any serious consequences from generally copying the visuals of other brands
(Gale). Most Forever 21 customers find this copying of creativity appealing because they are
curious about what is currently popular in the fashion world but do not want to spend money
on the designer goods that started the trends. Copying designer pieces gives Forever 21 a
false sense of luxury. Taking advantage of local vendors is another strategy incorporated into
the Forever 21 company model in order to rapidly introduce fashionable clothes to the public.
In fact, as reported by Gale, 60% of Forever 21's manufacturers are American. While originally
a successful concept, Forever 21 is now marketing to customers in the United Kingdom, which
makes this concept less advantageous. While the idea of a brand coming from the United
States would appeal to Americans, a consumer from the United Kingdom would probably not
be as interested in this idea. Finally, Forever 21's original business plan involved an exclusive
partnership with EZ Shipping. Forever 21 benefited greatly from this because the shipping
costs were reduced. Forever 21 recently lost its partnership with EZ Shopping as a result of a
decline in sales, which significantly hurt the retailer (Chung).
SYMPTOMS OF FOREVER 21 IN ASSOCIATION WITH POOR CUSTOMER
SATISFACTION:
●
Higher operational expense & Profitability under pressure
●
Low market share on E-Commerce
●
Environmental Concerns
●
Poor In-store experience
HIGHER OPERATIONAL EXPENSE & PROFITABILITY UNDER PRESSURE:
The rapid expansion of Forever 21, particularly with the opening of numerous stores,
predominantly in mall locations, proved to be a double-edged sword. While it initially
signaled growth, this extensive expansion brought about increased operational costs
and a failure to adapt to shifting market dynamics, ultimately contributing to the
company's financial woes. These challenges eventually culminated in Forever 21's
bankruptcy, further burdening the company with escalated operating expenses,
including rent and maintenance for mall-based locations. Consequently, Forever 21's
profitability has been significantly strained due to the substantial overhead costs
associated with maintaining these expansive retail spaces. Additionally, the evolving
preferences of young consumers, who increasingly favor smaller town shops and
e-commerce platforms over lavish shopping malls, have added to the company's
challenges, further impacting its financial performance.
LOW MARKET SHARE ON E-COMMERCE
Forever 21's limited market share is the outcome of a complex web of factors. The
retail sector witnessed a rapid transformation, pivoting towards e-commerce as a
dominant force. However, Forever 21 struggled to swiftly adapt, missing the boat on
the burgeoning online market. Despite its core demographic being primarily young
shoppers who were gravitating towards online convenience, the brand suffered due to
its delayed investment in enhancing its e-commerce platform. This setback was
compounded by intense competition from established online fashion retailers who had
already earned the trust of online shoppers. Moreover, the brand's failure to keep pace
with shifting fashion trends and evolving consumer preferences may have contributed
to its challenges, resulting in a lackluster market share.
In summary, the reasons behind Forever 21's meager market share include its sluggish
e-commerce adaptation, fierce rivalry with well-established online competitors, and
potential misalignment with evolving consumer tastes and fashion trends. This was
further exacerbated by a significant drop in revenue in recent years, with the
company's market value declining by 10% in 2016, followed by a 15% drop the
following year, ultimately plummeting to $3 billion in 2018.
ENVIRONMENTAL CONCERNS :
Rapid clothing production and turnover by the brand resulted in higher resource
consumption, such as water and energy use, as well as significant textile waste
production. Fast fashion is frequently manufactured using risky chemicals and
unethical methods, which further contribute to environmental deterioration. The
problem was made worse by Forever 21's emphasis on affordability, which
promoted a disposable fashion culture in which garments were worn only once
before being thrown away. The brand came under fire for not prioritizing
sustainable and eco-friendly practices as consumers and activists became more
aware of the environmental impact of the fashion industry. These environmental
issues affected the brand's reputation as well as the growing significance of
sustainability in the fashion industry, which Forever 21 found difficult to address.
POOR IN-STORE EXPERIENCE
:
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