Forever 21 Thinks Big

Discussion
Jan 27, 2010
George Anderson

By
George Anderson

To the uninitiated, the typical Forever
21 store environment can seem pretty chaotic. But with
all the activity comes sales. Recent trips to several Forever 21 locations
over the holidays found stores jammed and registers ringing.

For
most of its history going back to its first 900 square-foot store, the
fast-fashion chain has operated smaller boxes. Until the past couple of
years, the typical Forever 21 was likely to be somewhere between 10,000
and 20,000 square feet.

All
that has changed more recently with the chain opening much bigger boxes,
including a new 85,000 square-foot store in Cerritos,
a suburb of Los Angeles. The new unit is housed in a former
Mervyns department store location.

According
to a report on the Women’s Wear Daily website, Forever
21 plans to open 30 big box locations, including a a 90,000
square foot flagship in Times Square.

A
post on AOL’s StyleList included the observation: “More
shopping aisles at the Los Cerritos store means that the retailer’s full
range such as offshoots like Forever 21 Twist and Twelve by Twelve are easily
accessible. We’re just hoping the extra square footage also means more fitting
rooms.”

Discussion
Questions: Is it possible to maintain the customer experience and other
attributes that make Forever 21 unique in a larger store environment?
What are the keys for Forever 21 to be successful as it opens bigger
box stores?

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14 Comments on "Forever 21 Thinks Big"


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Bob Phibbs
Guest
10 years 4 months ago

Forever 21, H&M and Uniqlo are in many ways becoming the hip, cheap department store for the young and fashion-forward who don’t care about quality–just how will it look on me this week. This is an evolution of the apparel business into more of a disposable knockoff industry where quantity over quality seems to be met with sales.

How this customer will bond to the brand as they age is anyone’s guess. That could be made clearer when it is their own money purchasing, not mom’s and dad’s while they live at home.

Ryan Mathews
Guest
10 years 4 months ago

It’s possible, but risky.

Paula Rosenblum
Guest
10 years 4 months ago

The biggest risk will be in maintaining the in-store experience. As the stores get larger, the payroll will get larger, and the temptation to reduce hours to drive dollars to the bottom line will get stronger.

At some point (think Home Depot of the early 2000s) you’ve cut payroll to the bone and the store’s a mess and there’s no one to help customers.

If Forever 21 can resist temptation, it should do fine.

Marge Laney
Guest
10 years 4 months ago
Forever 21 is nearly ubiquitous nationwide, but that is about to change if the expansion plans of H&M, Uniglo, Top Shop et al come to fruition. They currently have the attention of the fashion forward youth by just stacking it deep and selling it cheap. But, this strategy won’t cut it when real competition enters the picture. They must increase their personal connections with their customers to maintain and grow market share. When they’re attempting to improve customer connectivity they should absolutely add mobile commerce, social media, etc, to the mix but the in-store experience needs help especially in the fitting room. The author talks about increasing the number of fitting rooms as a move in the right direction. I say that’s just the beginning. The fitting room is where the buying decision is made or not. Currently, their fitting rooms are anti-service, negative experience zones. The fitting rooms themselves are small, poorly lit, with curtains instead of doors which offer little privacy. The fitting room attendants have no control of the area which leads… Read more »
Camille P. Schuster, PhD.
Guest
10 years 4 months ago

The current target market includes a particular age range of women. Is that age range large enough to support a larger size store? Why are consumers frequenting the current stores? Will the atmosphere of the big box store be the same?

Bill Emerson
Guest
Bill Emerson
10 years 4 months ago

This is a very risky move. Increasing the store footprint by four times is not about wider aisles and more fitting rooms, it is a completely different operating model, a different store if you will.

Take the merchandise offering, for instance. Increasing individual style quantities by 4 times to fill the larger floor will create a boring visual presentation and (take it from someone who has experienced this) will train the customer to wait for the markdowns. Just because the floor is 4 times as large doesn’t mean that the number of customers and/or sell-through will go up by 4 times. The alternative is to offer additional styles to maintain variety. This introduces new complexity (read costs) in managing different assortments by store with no guarantee of incremental revenue.

In the words of an old politician – “If it ain’t broke, don’t fix it.” Like I said, very risky.

Doug Fleener
Guest
10 years 4 months ago

Great strategy when you’re in. Not such a great strategy when you’re out. (Can you hear the Heidi Klum accent?) And we know the cyclical nature of teen fashion. I guess one upside is the plethora of available big box spaces at a great price.

I applaud Forever 21 for thinking outside the box, but I’m not sure how many of these big box spaces I would do.

Jonathan Marek
Guest
10 years 4 months ago

This is one of those situations where execs need to be brutally honest about what is going on. I don’t know about this particular case, but too often these types of concepts are predicated on unreasonable assumptions about future growth.

This business is cyclical at best (and at worst you only get one up cycle!). Maybe Forever 21 will get a sales pickup on an economic rebound, but there’s just as good a chance that someone else will steal that bump. The real estate costs on this type of space are also cyclical–and they are at the best point in the cycle. So Forever 21 ought to assume the economics of these stores right now are about as good as they will ever get. If they look great, even with reasonable assumptions, then great. If not, then I’d have to agree, it’s too risky.

Craig Sundstrom
Guest
10 years 4 months ago

There is currently airing on the radio a (rather obnoxious) ad where a helicopter father quizzes his daughter what she bought at a store called “Teen Hottie”; the daughter responds to the effect “oh Dad, don’t worry, I saw three girls with the same outfit, so I brought it right back…TH is SO last week.” And though I wouldn’t be caught dead in one (I’d much prefer my lifeless body be left on the sidewalk, thank you) I would venture THAT is the real danger FE21 faces: it will be increasingly hard to always be the “latest thing”…especially when you aren’t.

Lee Peterson
Guest
10 years 4 months ago

XXI has had big stores out there like Michigan Ave. in Chicago or Polaris Center in Columbus Ohio that are multi-floored, mega-merchandised behemoths…so I’m sure they know already that the idea works on the business side. But on the experience side, I just have to say that the big stores are fun, create endless exploration opportunities, have gobs of great fashion and are just downright cool to be in. And to boot, the prices are fantastic. I personally am very impressed by XXI as a merchant and a business. Wow.

And aside from Walmart and Apple, who’s a better candidate for “best retailer of the recession”? (If you want to gauge just how good they are, walk into an Express store right after visiting a XXI–sad!)

Ralph Jacobson
Guest
10 years 4 months ago

Of course, there are three age-old keys of success here: 1. Location, 2. Location, 3. Location. I went into the Uniqlo, Top Shop SoHo, and other similar stores while at NRF and they were all packed, jammed full of customers with bags full of merchandise. Like it was Christmas all over again. I know the new Broadway/Times Square Forever 21 store will do well. However, we are talking location, here, again.

Tim Henderson
Guest
Tim Henderson
10 years 4 months ago

The store’s actual square footage is actually part of the shopping experience. So whether a small store is going large or a large store is going small, it’s the overall shopping experience that retailers need to focus on. And that means creating a new store experience that, while adhering to the brand’s core image, results in an experience that’s different from the original concept but still makes loyal consumers feel at home. Admittedly it’s a fine line, but not impossible to navigate.

Flagship stores are a perfect example of creating a new store that adheres to the brand’s long-standing image but also torques the offering for shoppers.

Mark Johnson
Guest
Mark Johnson
10 years 4 months ago

The question I see is that in the age of small/more intimate retail locations, how are the new huge footprints going to be able to retain the same CEM, loyalty, and interactions of the past?

Are you going to hear crickets chirping or will the the isles be full of hustle and bustle?

As referenced earlier, you do not want empty isles with workers who have no idea what the product offering is.

Justin Time
Guest
10 years 4 months ago

FE XXI mega store concept will succeed in the mall setting for the following reason: they will supplant Macy’s smaller trend-setting departments and definitely beat them on price and selection.

Teens and tweens will go there first and never shop the much smaller mall specialty clothing stores or high priced A&F.

As long as FE XXI stays ahead of the trends and hedges its bets, doesn’t make ginormous mistakes in style choices like trend setting mall clothing outlets of the ’80s, Silverman’s etc. did, they should fare well.

wpDiscuz

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