Activity 2 - Forever 21 - Selecting the Business

Topic

Case study for the activity

Forever 21 is a US fashion retailer and opened their first store in Los Angeles. At the end of the first year,
they had made $700,000 in sales revenue and since then they have expanded their market to 57 countries.
Its annual sales have exceeded $4 billion (CNBC, 2019). However, due to aggressive global expansion and
fierce competition in the market, Forever 21 has failed to stay in the market and filed Chapter 11 bankruptcy
protection in the US in September 2019. It has closed around 350 out of 800 stores around the world but
most locations of store closures were seen in Asia and Europe. Fortunately, Forever 21 was rescued by a
group of buyers and new owners planned to expand its Chinese market.

In recent years, Chinese consumers' behaviour has been shifting from a price-focused buying pattern to a
quality-focused buying pattern. When Forever 21 entered the Chinese market again, they were not aware
about the shift in Chinese customer’s buying patterns, hence focused on low price strategy rather than
producing a good quality product. In addition, young Chinese customers have moved on to online shopping
from physical store shopping. However, Forever 21 had poor online shopping sites compared to its
competitors.

Another challenge for Forever 21 was the fierce competition in the Chinese fashion industry. H&M, Zara and
Uniqlo were increasing their market shares with their continuous product development, improvement in
quality and also incorporating sustainability into their business module whereas Forever 21 decided to stay
with the same product ranges of the same quality.
Adopted from CNBC (2019) It’s the last Christmas for some Forever 21 stores.

Scenario
You have been appointed as a Business Consultant for Forever 21. You were asked to present the current
issues within the company to Forever 21’s Board of Directors.

You will need to identify the current issues and decide which specific area/theme should be evaluated in
order to resolve these issues. A specific area could be technology/innovation, online marketing, marketing
strategy, product strategy, social media marketing, online shopping process, etc.

Instructions
You have 10 minutes to prepare briefing notes to present to the Board of Directors.

Reference:
CNBC (2019) It’s the last Christmas for some Forever 21 stores. Here’s why the retailer went bankrupt.
[online] Available at: https://www.cnbc.com/2019/12/11/heres-why-forever-21-went-bankrupt.html
[Accessed on 23 Mar 2021]