Forever 21…Never 21
Another Retailer Sinks: Forever 21 is filing for Chapter 11 Protection
Consumer shifts drive business models into cyclical cycles, and the most recent has sent many retailers out of business. The latest to go under was Forever 21, a fashion retailer who prided themselves on having the latest styles and trends for women. Young consumers are now focusing on spending money and experiences and other experiential opportunities, rather than clothes and other material items. Additionally, with the recent rise in support for brands who care deeply about their social and ethical footprints and responsibilities, the market is becoming saturated with brands who advocate more on behalf of said causes.
Another contributing factor to filing Chapter 11 was Forever 21’s geographical retail stance – they exist primarily in malls, which has fallen on the rank list of places consumers look to for clothes. Putting convenience at the forefront of the customer is extremely important as global e commerce companies make it easier and easier for consumers to order from their couch with free shipping and next day delivery. The size of Forever 21’s stores in malls that did not drive enough traffic made it difficult to effectively manage their over 500 retail outlets in the United States. Forever 21 says they plan to close at least 178 of these stores over the next several months.
Simon Property Group and Brookfield Property Management are listed as two of Forever 21′s biggest unsecured creditors. Simon is owed $8.1 million, while Brookfield is owed $5.3 million, and Macerich is owed $2.7 million. Forever 21 was Simon’s 7th largest tenant, Macerich’s 2nd largest tenant, and Brookfield’s 5th largest tenant.