Forever 21, once a prominent fast-fashion retailer, has filed for Chapter 11 bankruptcy protection for the second time in six years and plans to close all 350 of its U.S. stores. The company cited diminishing mall traffic and heightened competition from online retailers like Shein and Temu as significant factors leading to this decision.
Store Closures and Liquidation Sales
Liquidation sales have commenced across U.S. locations, with closures expected to start on May 27 and conclude by June 10. While U.S. operations are winding down, international stores operated by licensees will continue their regular business activities.
Partnership with Shein
In an effort to adapt to the evolving retail landscape, Forever 21 entered into a strategic partnership with online retailer Shein in 2023. This collaboration led to the creation of a co-branded apparel line, “Forever 21 x Shein,” leveraging Shein’s on-demand production model to reduce inventory waste. Additionally, the partnership enabled customers to return Shein online orders at over 300 Forever 21 retail locations, aiming to enhance the shopping experience.
Impact of Online Retailers
The rise of online fast-fashion retailers, particularly Shein and Temu, has intensified competition in the fashion industry. These platforms offer vast selections and rapid product turnover, challenging traditional brick-and-mortar stores like Forever 21. The shift towards online shopping, coupled with economic challenges and changing consumer preferences, has significantly impacted mall-based retailers.
Future Prospects
While Forever 21’s U.S. stores are closing, the brand’s intellectual property remains under the ownership of Authentic Brands Group (ABG). ABG may license the brand to other operators, potentially allowing Forever 21 to maintain an online presence or re-enter the U.S. market through different channels in the future.
