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Two Years After Withdrawing From The Chinese Market, Forever 21 Is Back

2022/7/1 22:37:00 0

Forever21

"2.5% off, buy one get one free", "buy another while bankrupt"

Many of the flagship stores in Hangzhou will be back in 2011. In the golden area beside the West Lake, the fast fashion brand Forever 21 shop covers an area of more than 1900 square meters. It is specially designed by a design team flying from Los Angeles, USA, but it has to close down in the end.

Now, two years after leaving the Chinese market, Forever 21 is back.

On June 18, Forever 21, the first offline flagship store in China, landed in Jingjiang impression city, Taizhou, Jiangsu Province, with an area of more than 1200 square meters. Tianxia e-commerce found that it was almost in step with the opening of the store, and the brands were launched on various major e-commerce platforms in China, such as tmall, pinduoduo, wechat mall and vipshop.

Before this return to the Chinese market, Forever 21 had been "careful trial" for many times. In August 2021, the brand tweeted on the public account, announcing that it would return to the Chinese market. The next day, the declaration was deleted in a hurry. The official explanation is that the return to the Chinese market is true, but the announcement needs further approval.

Official wechat official account of Forever 21

From having a return idea to preparing for the landing, Forever 21 has spent enough time preparing for it.

This is the third time that Forever 21 has tried to enter China. The first two stores were in 2008 and 2011. The first stores were located in Changshu, Jiangsu Province, and Wangfujing, Beijing.

Different from the previous two times, Forever 21 is more "sinking" after returning to the Chinese market, and the first store is selected in the county-level city of Central Jiangsu Province. According to media reports, the second store of the brand is KK Park, the east gate of Yancheng, Jiangsu Province. On the e-commerce platform, the price of Forever 21 is between 70 and 300 yuan, which is more user-friendly.

Facing the competition of traditional fast fashion giants and Chinese local brands, Forever 21 is trying to win a certain share in the sinking market.

In recent years, fast fashion brands, including Forever 21, have a similar fate: ASOs, Topshop, next and M & S entered China one after another, and then withdrew in a hurry. Now, will the return of Forever 21 go smoothly?

   Three in, two out, Forever 21 is coming back from the dead?

Few people know that the founders of this leading American fast fashion brand are two Asians.

In 1984, Korean husband and wife Zhang Dongwen and Zhang Jinshu set their sights on the clothing business and opened their first store in Los Angeles with only $11000.

This small shop, originally called "fashion21", is a low-cost "10000 yuan shop" with only 84 square meters. However, with the advantages of low-cost and high-speed, the sales volume of the shop in the first year is close to 700000 US dollars. In this small shop, Zhang Dongwen and his wife set a bigger goal: to get out of the Korean community and name the brand Forever 21. By 2007, the annual revenue of Forever 21 exceeded 1 billion US dollars, becoming the most popular clothing brand in the United States.

At the same time, forever has a huge customer base in China.

In 2008, Forever 21 entered China for the first time. When many foreign brands enter China, they will carry out localization adjustments such as market positioning. Unlike Zara and H & M's deep attack on Beijing, Shanghai and Guangzhou, Forever 21 has its first store in Changshu, Jiangsu Province. But in the non first tier cities, the brand did not stir up a splash. Just one year later, Changshu store stopped operating, and Forever 21 naturally ended up in failure and withdrew from China.

After 2010, fast fashion ushered in the golden age of development. In addition to opening offline stores, UNIQLO, Zara, H & M, gap and other fast fashion brands took the lead in opening e-commerce on China's official website and opened tmall flagship stores.

In 2011, Forever 21 opened the Chinese market again in the form of online stores, and opened its first offline store in Wangfujing Street of Beijing after its second return to the Chinese market. It covers an area of nearly 2500 square meters and has become a card punching resort due to the huge number of people under the huge signs. Since then, several large stores have been opened in landmark locations in first and second tier cities. For example, Shanghai stores are located near Jing'an Temple, Hangzhou stores are near West Lake, and stores near Jiefangbei in Chongqing are nearly 3500 square meters.

However, when Forever 21 returned to the Chinese market for the second time, it chose a more conservative strategy, and its number of stores was more cautious, and its performance was not ideal. In 2014, the global sales of Forever 21 exceeded US $4 billion, with more than 800 stores, but there were only 22 in China, and it also lost 24 million yuan in that year.

At the same time, in the face of fierce competition from Zara, H & M and other competitors, the price of most products is between $4 and $20, which lacks obvious difference and originality. In the concept of consumers, Forever 21 is regarded as a cheap and low-quality brand by many people, and has gradually faded out of the sight of the main consumer groups.

In the face of fierce market competition and conservative expansion strategy, the global performance of the brand has declined. According to financial data, its sales in 2017 fell 14% to 3.4 billion US dollars, with a loss of up to 400 million US dollars.

The Chinese market, which is not the main revenue source, has been closing stores. In 2017, Forever 21 closed its 6-storey flagship store at Jinghua center, Causeway Bay, Hong Kong, China. Next, it also closed stores in Tianjin, Hangzhou, Beijing and Chongqing. In May 2019, Forever 21 once again announced its withdrawal from the Chinese market.

The fast fashion brand, founded in the United States, even after constantly adjusting its positioning, entered the Chinese market twice and ended up withdrawing.

   China's market, which cannot be abandoned, continues to sink

In the second year after Forever 21 filed for bankruptcy reorganization, there was an unexpected turnaround.

In February 2020, Forever 21 was acquired at an ultra-low price of US $81 million (about 523 million yuan) by a consortium of Simon real estate group, Brookfield real estate company and brand management company ABG.

ABG, one of the new owners, as a well-known brand management company of ready-made clothing and accessories in the United States, has been named "miracle doctor Huatuo" by the industry as a bankrupt brand. Last year, the company will sign a $0.5 billion distribution agreement with Reebok in China, from $4.5 billion to $0.8 billion in China.

Forever 21 changed hands and got a reliable new capital injection. After returning to blood, it still can't give up the Chinese market.

After many explorations, the brand has entered China again. Lasonic limited Xusheng Co., Ltd. and its subsidiary Xusheng electrical (Shenzhen) Co., Ltd. are mainly responsible for the operation in China.

According to the enterprise investigation, lasonic limited Xusheng Co., Ltd. is a Hong Kong enterprise in China, whose main business is the development of IP products, such as taking the agency rights of international brands such as Pepsi, Juventus, Hello Kitty, etc., to develop clothing, candy toys (candy toys) and other commodities. Xusheng electrical appliances (Shenzhen) Co., Ltd. was established in 2013, and its business scope includes electrical appliances, electronic products, household products, etc.

In this return, Forever 21 has chosen a more sinking route, which indicates that one of the sales strategies of Forever 21 is still to focus on "low price", which is also the main target of vipshop and pinduoduo.

Although Forever 21 has not yet announced in detail the offline channel arrangement after the handover, from the perspective of two landing stores and e-commerce channels, the world online business speculates that Forever 21 may want to take the second, third and fourth tier markets and even county-level markets as its main market in the future.

The industry is not so optimistic about the return of Forever 21. A new clothing brand merchant said that Forever 21 changed its ownership to ABG, which belongs to sister brands with Nautica, seven and aeropostal, which is better than the private mode of fighting alone before. Insiders think it is lucky. But once again, brands still have the same worries. The era of winning by quantity and by speed has passed. With the awakening of consumers' concept, consumers' pursuit of comfort and style is higher and higher.

"Some foreign fast fashion brands can't do Zara and UNIQLO in terms of market popular elements and in-depth development of basic models. In the current consumer driven era, it may be difficult to survive." The industry said.

   Some retreat, others enter

The market that Forever 21 faces today is not what it used to be.

On the one hand, fast fashion brands are facing a dilemma. In the past two years, many overseas clothing brands have withdrawn from the Chinese market. In March 2020, Old Navy, a brand of gap group, withdrew from the Chinese market due to poor performance; In 2021, INDITEX, Zara's parent company, announced that its three major brands, Bershka, pull & Bear and Stradivarius, were fully withdrawn from China's offline market; This year, selected closed more than 1300 offline retail stores in China; H & m also recently closed its first store in China on Huaihai middle road in Shanghai.

The damaged businesses of these brands tend to be concentrated in offline stores with high rents. In addition, the failure of fast fashion mode - rapidly re create international fashion, and then sell them at low prices. "First class design, second-class price and third class quality" are no longer applicable in the current market. Under the multiple pressures of overstocking, the continued weakness of sales has brought greater pressure on brands, Shop closures have become the norm.

On the other hand, the rise of Chinese halberd brand is corresponding to the rise of fashion. Under the general trend of the national tide, old brands such as Li Ning and Anta have turned red, while the rising stars such as beaster and bosie are catching up. From sports to fashion brands to functional clothing, the entire clothing industry is being reshaped.

Today's Chinese consumers can choose basic items such as UNIQLO, which are comfortable in fabric and cost-effective, or luxury goods with strong brand power, or independent designer brands with more characteristics in fashion style clothing on Taobao IFashion, as well as new tmall brands that can tell stories, such as white little T, which grew up from ordinary consumer brands, and bosie, which focuses on gender differences

On the clothing track, no matter whether it's gender free, fashion brand, or hot Hanfu, JK, yoga, etc., each category is more and more detailed.

When the concept of consumers is constantly changing and the taste is gradually raised, in the broad industry of clothing, no one may be able to take the top position, and the new and old brands are bound to carve up the market again in the new situation.


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