Soumya Dhingra 4th November 2019

Fashion Marketing Case Study #3

An exceptionally successful family business, Forever 21 has been revolutionary to the fast-
fashion industry. After decades of setting trends, multiplying the number of stores and
popularity, Forever 21's aggressive growth has finally been ceased by bankruptcy.
A combination of external and internal factors has caused this major obstacle:
1. Inefficient management
- With a family running the business, the corporate decisions were made my Do Won
Chang, the founder. The merchandise department is completely managed by his wife,
Jin Chang. Mr. Chang liked to micro-manage his business.
- Distrust in employees led Mr. Chang to ignore recommendations from his employees,
restricted him from hiring new experts
- Due to distrust in employees, Mr.chang wasn't always transparent about the company to
his employees. Former employees admit they were only given knowledge about the stuff
relevant to their sector and they weren't aware of the totality of how the company was
doing.
2. Real Estate disasters
- Real estate deals made on the basis on the chief executive's "likings" for instance buying
spaces formerly occupied by department stores like Mervyn's and Sears because he
wanted " big stores"
- Opening flagship stores without strategic planning
- Signing long leases for land during a nationwide retail apocalypse where malls have
decreasing traffic and E-commerce is rapidly rising
- Costs involved with merchandise and maintenance of the big stores
- Denial to close underperforming stores
- Expansion into new markets without local expertise
3. Merchandising
- Targeting a new audience without strategic planning to increase customers
- Losing focus from the current audience by diluting the brand's style and USP
- Lack of a structured inventory management system that led to duplicate designs and
miscalculation of inventory demand

Forever 21's biggest mistakes point to inefficient management. Lack of Board Members to give
them direction, an organization structure with experts and executives at different levels who are
allowed to make decisions regarding their sectors would be some of the basic steps Forever 21
should have taken to avoid this bankruptcy.
However, the slow down of Forever 21 does not mean slow down of fast-fashion in any way.
Brands like H&M and Zara have been reporting a 5% and 7% increase in sales respectively.
The difference lies within the business structures and marketing strategies. H&M and Zara have
stayed relevant to today's youth. They tell a story, they understand their target audience wants
sustainable clothing and most importantly, they understand the youth of today is very different
from the youth of the 2000s. Whereas Forever 21 has tried to market what they were marketing
a decade ago, ignoring their marketing experts as performer employees. The brand should do a
better job of knowing their audience. For instance, their internal marketing team proposed to
collaborate with Ariana Grande for a holiday collection in 2014. The proposal was ignored and
Iggy Azaleas was brought on board for collaboration instead. If the brand had a better
understanding of their audience, they would be aware of the fact that Ariana Grande has a
much bigger fan following than Iggy Azalea and Ms. Grande is more suitable for their target
customer profile.
I believe Forever 21 should have gone public since it got too big to be managed by one family
alone. I believe the brand could have avoided this pitfall if it had more structure and liquidity that
Soumya Dhingra 4th November 2019

can come with going public. The Chang's owning 99% of the brand equity meant complete
control over a multi-billion institution with nobody giving them a reality check from the outside.
There was no balance or structure in the decision making and hence drove the brand into this
bankruptcy. However, if the brand was public, the decision making power wouldn't rest in one
family's hands and investors would have a say, bringing in balance and expertise the brand
needed.
If I were the CEO of Forever 21, I would focus on changing the decision making process and
taking suggestions from experts.
Starting with, gathering a board of Directors with expertise in different areas and experts to head
different departments like merchandising, real estate, marketing, design, quality control, market
analysis, sales analysis. With a plan to fix the gaps in the different departments, I would then
look for investors to invest in Forever 21 to rebuild the brand. This way the investors have equity
and hence say in the decision-making process and the board can keep everything balanced and
grounded.