Forever 21 Denied Bankruptcy In The First Half Of The Year, 700 Stores In The United States Alone.

Fast fashion giants have been losing the market, and Forever 21 has been on the decline.

According to the US media USA Today, Forever Losangeles, a fast fashion retailer in the US, denied the rumors that it would apply for bankruptcy on Sunday, saying the Group intends to continue to operate most American stores and discuss international market stores.

Despite clarifying the rumors of bankruptcy, Forever 21 still faces a serious operational crisis. According to Bloomberg citing sources familiar with the matter, Forever 21 is preparing to file for bankruptcy protection, and the cash flow is about to dry up. At the same time, it is working with a consultancy team to restructure the debt and seek additional financing. However, negotiations with potential borrowers have so far stalled, and the focus has shifted to improving so-called debtor's holding assets loans to finance potential bankruptcies.

According to statistics, Forever 21 was founded by Zhang Dongwen and Zhang Jinshu, born in Korea in 1984, and has grown into one of the largest fashion chain brands in the world in more than 30 years. However, due to the failure to keep up with changes in consumer preferences, Forever 21 has been shrinking its stores in recent years.

In 2017, Forever21 closed the flagship store of 6 floors in the JINGWAH center of Tongluowan, Hongkong, when the monthly rent of the store was HK $14 million. Since the end of last year, the brand has quietly shut down stores such as Tianjin, Hangzhou, Beijing and Chongqing, including Hangzhou in 77 flagship store, Beijing APM and other important shops. In May of this year, Forever 21 officially withdrew from the Chinese market.

Before leaving China, Forever 21 began withdrawing from Belgium, Holland, the United Kingdom, Germany, France and Japan and Australia, and most of its stores in North America have been closed since 2016. According to Forbes data, sales of Forever 21 fell by 14% to 3 billion 400 million US dollars in 2017, and the loss was as high as 400 million US dollars.

In addition to the challenges facing the core clothing business, Forever 21 launched the multi brand cosmetics chain store Riley Rose in 2017 and closed the store in La Cantera, Sanantonio, USA in March this year.

Forever 21 closed more than 700 stores in the US in the first half of this year, according to the Wall Street journal, which cited the BDO USA LLP report of the US consulting firm, which exceeded its total number of stores in 2018.

Therefore, the industry is not surprised by the fall of Forever 21. According to analysis, as the leader of American fast fashion, Forever 21's biggest burden is its huge scale of physical stores. The high rental cost makes it impossible for the brand to invest enough funds in new retail and technology to cope with the changing market trend and the rapid rise of competitors such as Internet brands.

The increasingly sluggish retail environment in the US can not give Forever 21 enough traffic. According to a follow-up survey by Coresight Research, the US retailer has announced that it has closed 7062 stores this year. It is expected that by the end of 2019, this figure will likely exceed 12 thousand, setting a new record. University of Michigan reported that the consumer confidence index fell to its 7 month low in August because people heard more bad news about the deterioration of the business environment, international trade and the US stock market setbacks.

According to Bloomberg analysts, the bankruptcy petition will help Forever 21 get rid of the unprofitable shopping malls and restructure its business. However, for the shopping mall, this move is undoubtedly exacerbated, because Forever 21 is one of the largest market tenants who still exist after a wave of bankruptcies in retail business.

In addition to the trouble of over expansion, Forever 21 is also facing the dilemma of the awakening of consumer attitudes. The vast majority of Forever 21 products cost between $4 and $20, while consumers are making choices about the availability and morality of clothing, becoming more and more tired of Forever 21 inferior quality and cheap goods.

The fall of Forever 21 is not a case in point. In recent years, by the impact of the electricity supplier and the change of consumer habits, the US retail industry has deteriorated rapidly, and more and more fashion retailers have been unable to continue.

The bankruptcy petition filed by Topshop's parent company Arcadia in the United States has been approved and will close 11 US Topshop and Topman stores. In addition, apparel retailers such as Urban Outfitters and H&M have entered the field of garment leasing in search of performance growth channels.

Urban Outfitters launched a rental service called Nuuly this month. Consumers can enjoy up to 6 pieces of clothing rental services only if they pay $88 a month. However, analysts say that the group will face fierce competition from the Banana Republic and Bloomingdale rivals and Rent the Runway and other rental service giants in the field.

H&M also announced that it will launch a clothing leasing business. Members will be able to hold exclusive collections in the rental shop of Seeger Square flagship store in Stockholm. The store will be reopened in late fall 2019 and a sewing workshop will be set up. Consumers can mend or make garments here. H&M said that the development of garment rental and repair business is an important step towards a sustainable and recycling fashion future.

To reduce rent costs, H&M asked its owners in September to calculate their rents on the basis of their turnover. Meanwhile, the revenue of each store should be deducted from the loss caused by online and offline returns.

Some analysts pointed out that behind the difficulties and transformation of fast fashion, the era of volume winning and quick victory has passed. As the market becomes more saturated, consumers' desire and expenditure on clothing are becoming less and less, and the pursuit of comfort is getting higher and higher. This also explains why H&M and Urban Outfitters have been involved in the field of clothing leasing.

The fashion giant, UNIQLO, is becoming more bold. It announces the launch of the semi annual magazine LifeWear, including English and Japanese versions. It has 120 pages to display the concept of UNIQLO products and the brand "LifeWear", which is the Slogan launched by UNIQLO since 2013, so that ordinary people can live a better life. The magazine is edited by Takahiro Kinoshita, the creative director of Fast Retailing, the fast marketing group of UNIQLO parent company. It will be available for sale at all major stores next month when the autumn series is launched.

The collective fall of traditional fast fashion reflects the fact that consumers no longer love clothes so much. According to the latest statistics released by the National Bureau of statistics, the per capita consumption expenditure of Chinese residents increased by 8.4% to 19853 yuan in 2018, of which 4.1% yuan to 1289 yuan per capita clothing consumption expenditure, but accounted for 6.5% of the per capita consumption expenditure, which was lower than that of 2017.

According to the data Lab of Tencent, the growth of China's clothing retail sales slowed to the number of units in 2016, and the clothing retail sales increased by 7% to 1 trillion and 500 billion yuan in 2018 compared with 2018, while the increase in 2017 was 8%. The price range of the total annual clothing consumption per capita was 1000 to 3000 yuan, while only 13% of the total annual expenditure in the area exceeded 8000 yuan.

According to DDT's report last year, ordinary consumers spent 5.9% of their spending on clothing, but by 2017, this proportion has plummeted to 3.1%. For low-income people, the average expenditure of women's clothing is especially low, and the rise of footwear expenditure is the only bright spot.

To be sure, the apparel industry is undergoing tremendous changes, whether Zara, H&M or Forever, to relax the vigilance of changing young consumers, and the outcome can only be eliminated by the market.