When I heard about Forever 21, the global fast fashion empire, filing bankruptcy and closing down half of its current 800 brick-and-mortar stores, I wasn’t surprised.
I thought to myself, “…another one bites the dust!” Lol. You know the song by Queen??? I saw it as another failed retail store.
Over the years we’ve seen many decades-old businesses like Payless, Sears, Toys R Us, and Mattress Firm file for bankruptcy. I don’t know about you but it seems like everywhere I turn, I see that huge, bright yellow and red sign that says, “Store closing. Everything must go!”
Forever 21 isn’t the only trendy fashion store who’s been hit with what Vox has called the “retail apocalypse.” We’ve also seen stores like Topshop, Claire’s, Charlotte Russe, Aeropostale, American Apparel, Rue21, Wet Seal, PacSun, and Nasty Gal file bankruptcy.
So why is this happening?
And the bigger question is, what lessons can you learn and apply in your business?
Well, on the surface, many people attribute their financial struggles to the rise in competition from newer stores online, the decline of in-store retail sales because of the decline of foot traffic in shopping malls (mallpocalypse?!), and the high cost of rent for brick-and-mortar stores.
However, there’s more to it. I see two important things happening here.
1. It’s pretty obvious. People have changed how they want to shop.
2. The not so obvious one is that people have also changed what they want to buy.
Just think about your own shopping habits or of the people you know. I bet you don’t have to look far to notice what I’m talking about here.
Let me give you an example from my own life.
Ray, my partner, has pretty much shopped solely online for the last 6 years. For one, he hates shopping in stores and will do anything to avoid large crowds of people (which I think is funny!).
And two, he wants access to a larger variety of clothes that are both unique and higher-quality, even if that means paying more money. His worst fashion fear–seeing someone out wearing the same shirt, or heaven forbid, the same shoes! I’m with a real sneakerhead.
On the other hand, I love the experience of shopping in stores. There’s just something about seeing something you like, snatching it right off the rack, trying it on, and then walking right out the door with it!
However, where I shop has become increasingly important to me.
For starters, what I don’t like so much is the short lifespan of the clothes I buy from those trendy fashion stores in big shopping malls. After just 3 weeks, I notice bright colors fade, random holes showing up or a zipper off its track. They’re basically disposable clothes!
This is a byproduct of fast fashion, which I’ve taken a strong stand against. Fashion retailers have mastered their garment production process where they’re able to quickly design and manufacture the latest styles and sell them at an extremely low price.
These low cost garments make shopping at Zara and H&M tempting, however, there’s a high social cost and even an environmental cost to this. When you buy that $5 shirt, the true cost is hidden in forced labor, dangerous working conditions, and low wages for people in developing countries. Don’t even get me started…
And as for its impact on the environment, The World Bank estimates that the fashion industry is responsible for nearly 20% of all industrial water pollution annually and according to McKinsey, the sector releases about 10% of the carbon emissions in our air.
On top of this, the Environmental Protection Agency reported in 2015 that Americans sent 10.5 million tons of textiles, mainly clothes, to landfills that year. Most of the clothes contained synthetics which aren’t biodegradable.
Given this high cost of exploiting humans and the Earth, conscious consumers, like myself, have changed what we want to buy. We want ethically produced clothes!
Whether you’re someone who just loves the convenience of shopping in bed, wants higher quality clothes or actually cares about our environment and people, this craze for fast fashion is dying out!
This isn’t my opinion, it’s backed up by research. Industry analysts have noticed that people want high quality clothes that are environmentally sustainable offered by retailers who are committed to social responsibility. People want to buy clothes that are ethically produced.
The changing retail market has made many of these retail stores vulnerable and they’re not the only industry currently experiencing a major shift in the market.
So the question is, what can you learn from the retail apocalypse and thrive in ANY fast-changing market?
Well, I’ve broken it all down for you.
Here’s 3 business lessons you can learn from Forever 21’s bankruptcy and how you can apply them to your business no matter what industry you’re in:
1. You’re not for “everybody”– create a powerful brand identity.
What comes to mind when you think about Forever 21? If you think about it, beyond their main brand message to inspire people to stay forever relevant in the world of fashionable 20-year-olds, they really don’t have an obvious fashion identity. For example, when you think of Ralph Lauren, you automatically think preppy. Or when you think of Kate Spade, you think of colorful, inspired living.
Forever 21 appeals to a wide range of people and a variety of styles. When I can walk into a fashion store with my mother-in-law who just turned 50, shop right next to a 13-year-old girl, and glance over at the men’s section to see a 60-year man holding up a floral button up, and we all walk out smiling, as an entrepreneur, I’m left scratching my head.
Do Won Chang, co-founder of Forever 21 told CNN that, “Old people want to be 21 again, and young people want to be 21 forever.” That pretty much sums it up!
And for a while this helped them rise to the top. However, over time, this is what’s helped other up-and-coming fashion brands stand out.
One of the timeless principles of business success is to create a unique, memorable brand identity that communicates to the world how you’re different from your competition and who you’re for. What kind of powerful brand identity can you create to differentiate yourself from everyone else doing what you’re doing?
2. Don’t just know who your customers are– know what their intrinsic values are.
As the world changes, you have to expect shifts in consumer thinking. In this case, Forever 21 and other big retailers were late to the party as far as addressing the real cost of manufacturing its products.
H&M is ahead of the curve with it’s “conscious collection” aimed at creating sustainable fashion pieces out of organic or recycled material.
When a business is both fully aware of their customers’ deepest concerns beyond the product they’re buying and can further support efforts for what’s important to them, a power relationship is formed.
What common worldviews and values do you have with your ideal customers that you can take a stand for and support either directly or indirectly? How can you support causes they care about beyond your personal business initiatives to create a powerful bond between you and them? If you nail this, you just may have a customer for life!
3. What got you here, won’t get you there–constantly reassess and reinvent your marketing strategy.
Forever 21’s failure to adjust to their consumers’ ever-evolving behavior and desires is a huge contributor to their downfall as well as other retail businesses. In Forever 21’s case, I see too many situations where they relied too heavily on the marketing strategies that brought them success in the beginning.
For example, they relied on revenue coming in from their brick-and-mortar stores instead of investing online. They also continued to use simple social media campaigns instead of using influencer marketing like other successful, fast fashion online stores.
If you look at Fashion Nova, Asos, Missguided and Lulus, they’ve mastered making their customers fall in love with their clothes mainly through Youtube, Instagram and influencers.
If you fail to constantly reassess what’s working and what’s not working in your business, you’ll find yourself in a sinking boat! You have to be aware of your customers ever-changing behaviors and needs. How can you restructure or slightly adjust your marketing efforts to better meet your customer’s desires?
There’s a lot we can all learn from the fall of Forever 21 and the retail apocalypse no matter what industry you’re in. The reality is that markets are changing quickly which leaves unprepared businesses vulnerable.
However, even in the fast-changing markets, there’s things you can do to restructure your business for success no matter the landscape.
