FINAL PROJECT

SUSTAINABLE COMPANIES: H&M vs FOREVER 21

Report By:

Krishangi Deka UIN: 664357494

Abirami Vadivel UIN:652786640

Kajol Shaikh UIN:674282235

Tejali Valkunde UIN: 659152548

Dhruv Dhami UIN:665626746

Samar Sengar UIN:660272397

Course Name: Marketing (MKTG500)

Professor’s Name: Elaine Karsaklian

March’28, 2020
Table of Contents:

Introduction...............................................................................................................................................3
Background of the companies...................................................................................................................5
Segmentation, targeting and positioning in the Marketing Strategy of H&M......................................7
SWOT Analysis of H&M..........................................................................................................................8
Competitors..............................................................................................................................................10
Marketing Mix.........................................................................................................................................11
Segmentation, targeting and positioning in the Marketing Strategy of Forever 21...........................13
SWOT Analysis of Forever 21................................................................................................................14
Competitors..............................................................................................................................................15
Marketing Mix.........................................................................................................................................16
Reasons - why Forever21 failed or declared bankrupt?.......................................................................20
Conclusion:..............................................................................................................................................21
References:...............................................................................................................................................24
Introduction

Not too long ago, in around 2018, when the giant retailer - Bloomingdale or Toys ‘R Us, were
closing their stores and went bankrupt, it was a bolt out of the blue. The news even became a
trending topic on several social media for a while. Many people named this incident the retail
apocalypse. Some people suspect that this happens because the retail industry grows too fast. The
growth rate of shopping malls was over twice the population’s growth. On the contrary, mall
visits declined by 50% between 2010 to 2013, and the trend kept going on. Other people point
their finger on the unstoppable e-commerce growth. The shift in consumer habits towards online
shopping is the impending doom for the brick-and-mortar store. There are already victims of
retail apocalypse in the United States, and there could be various reasons causing this
apocalypse, for example, rapid growth of e-commerce, growth rate or oversupply of malls, death
of middle-class customers or poor retail management.

This is where the importance of sustainability in business comes into picture. Business
sustainability, also referred to as corporate sustainability, is the management and coordination of
environmental, social and financial demands and concerns to secure responsible, ethical and
ongoing success[11]. In a broader context, social, environmental and economic demands are
considered the three pillars of sustainability [11]. Within the corporate world, they're sometimes
mentioned as the triple bottom line. Today’s executives are coping with a complicated and
unprecedented brew of social, environmental, market, and technological trends. These require
sophisticated, sustainability-based management. Yet executives are often reluctant to position
sustainability core to their company’s business strategy in the mistaken belief that the prices
outweigh the benefits. On the contrary, academic research and business experience point to quite
the contrary. In fact, embedded sustainability efforts clearly result in a positive impact on
business performance[7].

This case study analysis highlights on the marketing strategies and actions deployed by two of
the biggest retail fashion companies - H&M and Forever21, and focusses on how their business
sustainability techniques let one of them to grow bigger in the market while it let the other to
abandon the market. H&M here, is our competitive and sustaining company while Forever21 is
the one falling apart. Forever 21, the LA based retailer that helped popularize fast fashion with
its whizzing stores and $5 dresses, has filed for a bankruptcy, depicting the eroding power of
shopping malls and plazas and the changing tastes of young consumers. The private, family-held
company capped months of speculation about its restructuring efforts by saying that it has started
to cease operations in 40 countries, including Canada and Japan, as part of a Chapter 11 filing. It
will shut down up to 178 stores in the United States and up to 350 over-all.

The bankruptcy is a blow to a company that prided itself on embodying the American dream, as
well as a reminder of how quickly the retail landscape is transforming. Forever 21 experienced
big success in the early 2000s with its troves of merchandise that imitated ‘of-the-moment’
designer styles at rock-bottom prices[15]. It joined Zara and H&M in making fast and disposable
fashion widely available to shoppers, specifically young women, who were exposed to new
trends apparently every time they entered a store. But the company expanded too aggressively
just when technology was starting to upend its business. Linda Chang, the chain’s executive vice
president says, “there has been a softening of mall traffic and sales are shifting more to
online.”[15]. Its focus on expansion made it unable to invest in its supply chain, and so the
company took more time to get fresh styles of clothes to market at a time when fast fashion was
really picking up and shoppers were hungry for newness. Its sales tumbled as Forever 21 was
pitted against heightened competition from rivals like H&M and Zara.

Forever 21, which said e-commerce made up 16 percent of its sales, saw its revenue drop to $3.3
billion last year, down from $4.4 billion in 2016. Moreover, forever 21 has lost a lot of its
integrity in the years leading up to the bankruptcy file. It has tackled a trademark infringement
lawsuit filed from designer brand Gucci and a lawsuit from pop star Ariana Grande about
copyright infringement and false endorsement due to a look-alike advertising campaign. The
dissatisfaction from customers for its overly broad target market was also a major factor leading
to its descent. Analysts also say Forever 21 failed to understand part of the markets outside of
America because it opened more shops in places like China and London.

On the hindsight, H&M has managed to line itself aside from its competitors and garnered
significant attention via its high-profile designer collaborations and celebrity-fronted marketing
campaigns. Although Forever 21 has stepped out and launched many designer collaborations of
its own, like the Mel for Forever 21 capsule collection for Spring 2013 with Brazilian footwear
company Melissa and once hired British model Atlanta de Cadenet for its Autumn/Winter 2013
campaign video, their advertising campaigns and collaboration collections fall short in
comparison to H&M's marketing efforts[19].

Success in the retail business is not an easy matter to achieve lately. There are a lot of challenges
that you must overcome just to survive in this line of business. Not only that you also have to
quickly adapt amid competition against e-commerce. There could be numerous reasons for its
doom, all of which have been discussed further by studying the marketing strategies of the two
companies and the different roads they’ve taken making their business thrive and grow.

Background of the companies

History of H&M: In 1946, Erling Persson opens a women's clothing store in Sweden called
Hennes, which is Swedish for "hers." About two years later, Persson bought a hunting apparel
and fishing store, called Mauritz Widforss. When he incorporated that brand with Hennes, the
store began to sell both women's and men's clothing. That new store was called Hennes and
Mauritz-commonly called H&M today. Today, H&M Group has expanded to every corner of the
globe with 4,743 stores over-all. Despite getting its start in Sweden, United States holds the most
stores with 543. But the brand has its presence in all parts of the world, including locations like
Cyprus, Macau, Tasmania, and Iceland etc. H&M group also owns other brands like COS,
Weekday, H&M Home and Arket.

Vision: H&M holds a vision to refine its brand as a pioneer of renewable and affordable
fashions. H&M vision statement is “to lead the change towards circular and renewable
fashion while being a fair and equal company.” This statement shows how committed the
company is when it comes to maintaining the trends in fashion and their affordability. Their
vision looks at two parts, first, lead the change and second, fair and equal. To satisfy the first
part of its vision statement, H&M remains alert to emerging styles while initiating the creation of
new ones. The company keeps all of its wide range of brands up to date with what is in demand.
The fairness and equality of H&M are reflected in various forms such as its welcoming nature,
passion towards sustainability, as well as the competitive prices that it tags on their products.
Mission: On the other hand, the mission statement is all about the unmatched experiences that
the company brings to the lives of its customers through its products and services. The core
values further improve such achievements by stimulating better attitudes and performances from
all the stakeholders involved with the company. It comprises of two main parts, namely,
transforming shopping and improving lives. In the first part, H&M shows that the joy and
satisfaction of its clients is a priority in all its stores. That is why the company is organized in an
impressive way to ensure clients have maximum freedom and comfort while choosing their
products. H&M describes its outlets as welcoming for all and not just the clients, and this is what
makes it appealing to its clients. To ensure that the company meets the individual needs of
everyone irrespective of gender or age and impact their lives, H&M takes great caution in the
structuring and displaying the fashion for men, women, and kids. Such elegance makes it easy
for all clients to shop and enjoy the aesthetic look they long for.

Core values: H&M core values comprise “We are one team, We believe in people,
Entrepreneurial spirit, Constant improvement, Cost-conscious, Straightforward and Open-
minded, and Keep it simple”[13]. These are essentially the principles that guide the operations and
activities around H&M. They are attributed to the impressive culture that characterizes this
corporation, making it one of the most coveted companies over the globe.

History of Forever21: Forever 21 is an American retail chain that was once #122 in Forbes
biggest private companies list of the USA. Headquartered at Los Angeles, California, the
company has 480 branches all over the world and in 2013, they have notched up sales of
$3.7 billion. Forever 21 was established in 1984 by a Korean immigrant named Do ‘Don’
Won Chang in a small 900 square feet space. Chang and his wife Jin Sook launched
Forever 21 after three years of them migrating to the United States of America. Initially,
they sold clothing designs that were popular in Korea to the Korean-American people
living in Los Angeles, United States. The first year for Forever 21 saw $700,000 in sales [20] .
Today, shopping malls encapsulate the fashion giant in about nine-thousand square feet
area and their XXI-flagship stores are spread over a 24,000 square feet area.

Vision: Forever 21 focuses on redefining the shopping environment and giving its customer’s
memorable experiences in all its stores. The company prioritizes the satisfaction of personal
needs of all its clients by tailoring services to their needs and providing affordable and the most
competitively priced products.

Mission: The company emphasizes the importance of elements of surprise to make the shopping
experience worthwhile for all its customers. Forever 21 is a disciplined family-owned business
due to its core values. They have created a rich culture that prioritizes the customers, and this
leads to its constant growth. In all its 460 stores across the U.S., Forever 21 implements a
dynamic yet interactive shopping style for all its customers, including men, women and children.

Core values: Forever 21 core values comprise “Encourage giving, help the needy, time
[14]
consciousness” . As a family-owned company, forever 21 values its impact on everyone,
including those who need help the most. This is what its values guide it to do, and that explains
why it has the most accommodating and friendly environment.

Segmentation, targeting and positioning in the Marketing Strategy of H&M

In order to reach all its customers, the bases of H&M’s segmenting consumer markets are
demographic and psychographic segmentations. Since H&M is spread throughout the world
across various cultures and lifestyle, the segmentation is different in different areas. The main
areas of segmentation are by class, age, gender and family life. H&M’s strategy is to provide
high fashion products at low prices thereby targeting the working/middle class. Women between
the age of 15 and 30, be it the students or working women are the main segment areas.

Target customers of H&M are the ones who want to want to keep up with the fashion trends and
yet spend very little. These target customers see shopping as a pleasurable activity. Even though
H&M provides apparels for all ages, their target market is prominently the young women. As
women shop more, H&M targets working lower-middle class women who may be either
married, single mothers or daughters. The married section of women often buys clothes for their
family members. The customers are usually loyal to particular brands, hence attractive sales and
low prices all around is an area where H&M focuses.
H&M offers fast-fashion clothing typically trying to sell the European styled clothes to the
American market at a low price. H&M has positioned itself based on its visionary outlook on
being ahead of the trends offering style and quality at best price.

SWOT Analysis of H&M

Strength:

 H&M is a brand that has a diversified global presence. With its brick and mortar stores
being operated in more than 70 countries spread over 6 continents, H&M is expanding in the
potential markets like Africa and Asia. The associated business risks have reduced and
increased the company sales with a strong foothold of H&M in the global market.

 The company has a strong digital presence with its availability in 51 online marketplaces.

 They offer a wide portfolio of products including apparels, cosmetics, shoes and accessories
to its customers. Also, home products such as blankets, vases etc. are available under the
brand name of H&M.

 H&M is known as a renewable brand promoting sustainable environment. Being one of the
largest users of organic cotton, leucyl and recycled polyester, H&M as a fashion brand is
trying to achieve a good reputation within its customers for being a renewable, recyclable
resource in the business operations.

 The group has several well-established brands like H&M, COS, Monki etc. which target
different customer segments.

 Competitive pricing is a strength for H&M as it is perceived as a price friendly brand which
offers fast delivery of products along with strong brand campaigns.

 H&M has been collaborating with celebrities like David Beckham, Lady Gaga to draw
attention from its customers. Along with celebrity endorsements, H&M is also known to
attend events like Lady Gaga’s concert to celebrate and entertain at their grand release.
Weaknesses:

 Legal and unethical issues: H&M has been involved in legal issues which has affected the
company’s reputation. Been accused of child labor and labor exploitation in countries like
Cambodia, Bangladesh where the factories producing products for H&M were found
employing children for up to 14 hours a day with meagre wages.

 Dependence on third party suppliers: H&M heavily relies on external suppliers for its
products, and thus has less control over production. H&M follows outsourcing strategy for
its product manufacturing to over 800 independent suppliers, this overdependence can affect
H&M’s order commitments & any bad consumer experiences which in turn might affect its
brand image.

 Affordable pricing over quality: H&M is mostly popular for affordable apparels, which
sometimes might affect the quality of its products.

Opportunities:

 Expanding ecommerce: H&M currently is spread up to 51 online markets but can further
expand to other markets in order to serve a larger customer base. Ecommerce being the
future of apparel industry, H&M needs to take advantage of this platform.

 Expanding in emerging markets: Discovering the emerging markets in Africa and Asia will
help H&M take the advantage of the growing demands and increased sales as these
emerging markets have a huge potential for apparel industry.

 Emerge as an organic clothing line: Branding themselves as an emerging organic apparel

brand to create a brand image as a renewable, recyclable brand, showing concerns regarding
environmental hazards and following sustainable practices will help H&M gain a brand
image in its customers’ mind.

 Improving H&M customer loyalty programs will help keep the customers more engaged and
loyal to the brand.
Threats

 Increase in competition: Over the last two years, stable profitability has increased the
number of players in the fashion industry, which has put downward pressure on not only
profits but also overall sales. Ecommerce provides an advantage as well a big threat for big
brands like H&M as this platform allows new brands to compete in the same arena as these
popular brands which could affect the business of these companies.

 Rising labor costs: One of the main strengths of H&M is its affordability which would be
affected by changes in cost of production mainly labor cost. H&M heavily depends on its
suppliers for its product manufacturing, the increasing labor cost in Asian and European
markets will impact the profit margin of H&M.

 Risk of foreign exchange fluctuations: Being a global brand H&M is exposed to currency
effects, export-import policies of the countries. One such example, in 2015 H&M incurred
huge losses because of the strength of dollar. Changes in the import-export policies largely
affects multinationals like H&M, e.g. USA levies heavy taxes on imported products from
Asian and European countries.

 Evolving trends in Fashion: The trends keep changing quickly in apparel industry, online
presence of the fashion markets also quickens this process of evolving trends. H&M needs
to keep up with these trends or else their customer base would be taken over by its
competitors.

Competitors
The main competitors of H&M are Macy's, Zara, Forever21, UNIQLO, etc.

ZARA:

One of H&M's top competitors’ is ZARA. ZARA was established in 1974, and is headquartered
in A Coruna, Other. ZARA generates $612.3M more revenue as compared to H&M. As of early
2019, H&M has 4,968 stores open worldwide, far more physical stores than Zara. At the same
time, H&M had to close select stores as many customers were purchasing online, reflecting the
broader transition in the retail world from physical sales to a more eCommerce-based model.
UNIQLO:

In Japan 1949, Uniqlo was founded and in November 2005, Uniqlo was purchased by Fast
Retailing Co. Uniqlo's distribution strategy has centered on the timing of its products'
introductions into stores, with new products created as a function not of quantity, but of demand.
Uniqlo responds to changing trends in Japanese fashion and specifically caters its designs to
mimic the minimalistic style that is popular in Japan. This affects the appeal that Uniqlo may
have for western distribution channels, and might be the determining reason behind its low
number of stores in the U.S. The adapted strategy from The Gap that Uniqlo employs is to
position its brand as private-label apparel; the company creates its own clothing, and only sells it
within the confines of its brick-and-mortar stores and on its website. The company also uses
sporting events to appeal to the masses. The designs that Uniqlo creates tend to be more
simplistic and practical than those sold by Zara and H&M, and as a result they appeal to a
different set of audiences.

Marketing Mix

Product:

H&M offers decent quality products at affordable prices. The attractive features of its products
entice the consumers to purchase items which weren’t in their plan. H&M keeps up with the
latest Catwalk trends and incorporate a wide portfolio of products from various departments in
one store offering a large Product mix. It has a variety of categories ranging from women’s
casual apparel to men’s business apparel to children’s apparel, footwear and accessories.

A product life cycle includes 4 stages – Introduction, Growth, Maturity and Decline stage. Since
the fashion industry has a short product lifecycle, innovations and developments of their products
and services hold high priority. Decision makers use this cycle to forecast the products future and
develop a marketing strategy as effective as possible for that particular product. They make sure
that before the product reaches its maturity stage, the product is sold at dirt cheap prices to make
space for the latest fashion. H&M focuses on the stages for staying at the top of the fashion
trends.
Place:

H&M is the second ranked retailer clothing line in the whole world with a network that spreads
through 55 countries. Germany is H&M's largest market. In 2019, 3.5 billion U.S. dollars were
generated from that country alone. The company operates over 5,000 stores
worldwide and employs over 120,000 people. H&M is the fourth most valuable apparel brand in
the world, just behind Nike, ZARA and adidas as of 2019. Most of these stores are in big cities
and shopping malls. This is targeting the appropriate segment of customers through their brand.
H&M has followed an omni-channel strategy where it has used both online channels and
physical stores to grow its reach. This extending presence of H&M has gifted it new
opportunities and opened doors for further growth and revenues.

The products are manufactured in Asia (offering cheap labor) and Europe (Turkey: for latest
trendy products). Since H&M has their own outlets, its success lies in its distribution strategy.
H&M’s distribution channel is a direct distribution, from manufacturers to customers. By
eliminating the middleman transactions, it reduces cost and assures quick delivery. H&M
chooses to sell its products through its stores physically as well as online. Store selling, on one
hand, assures basic access to customers and helps the command from headquarters go to outlets
efficiently and correctly. Because the inventory for H&M is refreshed every day, direct
command is important for appropriate adjustments in the stores. The clothes are designed by
H&M and its other brands according to the segment they are targeting. H&M has developed an
excellent supply chain over the years. The delivery time is minimal, and the transportation costs
are kept minimum. The manufactured clothes are directly transported to the warehouse from
where they are distributed to various stores.

Price:

The price strategy of H&M is designed based on their customers’ needs which is low price and
high fashion. H&M products are priced relatively low as a part of it marketing mix pricing
strategy. These is due to lower cost of manufacturing and transportation costs for H&M (Main
focus is given on cost minimization). As compared to Zara, H&M offers a wider variety of
products. On an average, H&M products are priced at $25 whereas that of Zara are $45. High
quality and considerably lower prices attract the youth and hence leads to increase in sales for the
company. The company also conducts strict cost control strategic plans. For example, very few
executives have secretaries or have cellphone privileges.

Promotion:

In order to develop a promotional strategy, one needs to identify its target audience. Since
H&M’s target audience is the young generation, so digital marketing has been a major area of
focus. It follows a multi-channel promotional strategy that includes TV advertisements, Digital
marketing, internet promotions, Sponsorship etc. These multichannel strategies have increased
the exposure of H&M vastly.

Internet has also played a crucial role in the international expansion plan of this highly sought-
out brand. Their ads have appeared on famous magazines like Vogue Netherlands, British Vogue
and British GQ. Targeting and sponsoring the appropriate TV shows like MTV that is mostly
viewed by the youth. They have heavily focused on getting high profile celebrities and social
media influencers to advertise for their products and this has helped them market their products.

A new marketing strategy that was recently implemented by them was to reach out to their
customers via SMS which could be treated as coupons and could be redeemed at any H&M
outlet. H&M conducts eye-catching event promotions wherein they invite top fashion designers
to design apparels and accessories for them. This strategy is not only to improve the product but
also to enhance the its image as a top-notch trendy brand.

Segmentation, targeting and positioning in the Marketing Strategy of Forever

21

Forever 21’s consumer markets are segmented on the basis of demographic, geographic and
psychographic segmentations. The variables like age, expectations, gender, income group,
region, family size, loyalty, social class, price sensitivity, personality attributes, and lifestyle are
used for the same. On the basis of these variables, Forever 21 targets men but mostly young adult
females with an average age from 18 to 35 years, who are pursuing college or are young
professionals and have an income from lower to middle ranges. These targets are ‘fashionistas’
who are motivated by the trendy and fashionable clothing styles on the market and they want
runway looks for a reasonable price since they are on lower budgets. Forever 21 uses the
geographic segmentation and it targets shopping malls, people living in the CBDs main cities
and urban areas. The company has positioned itself based on value-based positioning strategy. It
has chosen to position itself based on culture, based on young, trendy and fashionable offerings
which create the image of being young or ahead of fashion. Their positioning statements are
“always changing and always in style”, the company that keeps you up-to-date with style trends
and keeps that young person inside you alive (Official website).

SWOT Analysis of Forever 21

Strengths:

 Forever 21 has positioned itself as a retailer that stays on trend and true to this it has
fashionable styles for every season for its shoppers in all categories. It has affordable
clothing for everyone be it kids, ladies, men or youngsters since it has different branches, for
example. Forever 21+, Forever 21 Men and 21 Girls, Love 21 Contemporary and Maternity.
 Forever 21 is associated with a lot of new generation celebrities like Justin Bieber, Lady
Gaga, and Emma Watson. Thus, the brand is seen as a trendsetter by the younger generation
and is hugely popular amongst them.
 A recent research by Forbes indicated that Forever 21 is one of the country’s most customer-
friendly brands. Designers who work with the brand vouch that most of their designs come
from the customers themselves and the company has a very storing system for recording the
voice of the customer and ensuring that feedback is translated into reality in all their designs.
The company focuses more on getting feedback from customers and implementing it at the
earliest possible instance.
 It has lots of locations (around 600 in total) there by making their products accessible to
anyone.
 Forever 21 has a good design and user interface for shopping online and thus, it has a strong
online presence.
Weakness:

 The company has limited number of stores in Asia and Europe regions there by failing to
capture potential audiences
 Clothes are low priced but the quality is sometimes less than the expected.
 The company pays low wages to its employees and sometimes the stores are understaffed,
which can cause long lines and decreased quality of service
 There are flaws in their online shopping system like undelivered and canceled order cases
 It lacks in creativity. It is said that they copy designs from other companies and has been
sued on several occasions.

Opportunities:

 In an urban setting the young adult is not just focused on trends but is forced to dress
accordingly primarily because of peer pressure to stick to fashion norms. For Forever 21,
which is all about trendy clothing, this presents a huge opportunity.
 The company can capture market by opening more stores in Latin America, Asia and Europe
regions.
 It needs to improve its customer service by having a reward or coupon systems like other
clothing retail companies.
 It has an opportunity to expand its internet presence by more online marketing which can
help in promoting lower prices.

Threats:

 Changing economic trends can be a threat since there is an increased importance given to
how clothes can be recycled to avoid their carbon footprint and the next huge trend will be
recyclable clothes for which costs may be high and also there is a big trend on online
shopping.
 As we can see that there is an immediate transition/shift from runway to wearable, other
brands are entering the market and competing with Forever 21. If Forever 21 continues to
focus on location and store development only and not focus on adapting the trend and
 making changes in their strategies, they will not be able to combat this change head on even
when their customer reach is significantly larger than its new competitors.
 Bad publicity can lead to negative perception of the customer.

Competitors
The main competitors of Forever 21 are H&M Group, ZARA, ASOS, FASHIONNOVA, etc.

H&M Group:

H&M is one of Forever 21's top rivals. H&M is a Public company that was founded in 1947 in
Stockholm, Stockholms län. Like Forever 21, H&M also works within the Retail Distributors
industry. In 2015 this company became the world’s second largest retailed clothing company
after the Spanish company Inditex (the owner of Zara) (Eliasson, 2018). Numerous fashion
designers of UK like Matthew Willimson, Stella Mc Cartney, etc. have launched their clothing
collections collaborating with this company. Compared to Forever 21, H&M has 93,576 more
employees.

ZARA:

ZARA is seen as one of Forever 21's biggest competitors. ZARA is a famous Spanish
accessories and clothing brand, founded in 1974. Like Forever 21, ZARA also competes in the
Apparel Retail sector. It has now become one of the most reputed fashion brands all over world.
They are actually a part of a large fashion group named as Inditex. Zara products are famous for
their uncommon and rare designs. Various famous designers are associated and designed cloths
for this brand. ZARA generates $17.9B more revenue than Forever 21.

Marketing Mix

Product:

Forever 21 is a fast fashion retailer that caters men, women, kids and even toddlers as its target
customers but mostly targets teenagers and women in their youthful stages. This target market,
which firm refers it as the “demographic that is neither too young nor old,” proves very lucrative
to the brand. Clothing lines include Heritage, Love 21, XXI Forever and Forever 21. They
manufacture a line of up to date fashion comprising clothing, bags, accessories and shoes. Its
unique product offering encompasses a full variety of disconnects, tops, dresses, and add-ons in
various lifestyle classes, which include profession, active, informal, and evening.

As per an article published by Forbes, Zara leads the fashion industry, followed by H&M while
Forever 21 ranks last amongst the three, in terms of the popularity of the brand. Forever 21 has
mastered the art of offering stylish and very low-cost clothing, hence, it is a popular brand
amongst the teens, who are always keen to experiment with their looks and style but are always
low in their budget. But still the brand is falling due to low quality of its apparel compared to its
competitors. This is one of the main reasons; it is not being able to retain its customers for very
long. Hence, in order to survive, Forever 21 will have to focus on the quality of its products.

Place:

Forever 21 started as a store of 900 square foot in Los Angeles and since then, Forever 21 has
enjoyed immense success. This is demonstrated through the reality that the company is presently
operating over 600 retail stores in Africa, Europe, America, Middle-East and Asia. The average
size of every outlet is at least 38,000 square-feet. The company is also planning to go to the
countries like Israel, Malaysia, Costa Rica, Russia and Greece. Forever 21 stores are easily
accessible to customers since they can be found in shopping malls, outlet plazas and in
directories, which are accessible on request.

Forever 21 follows a one level distribution channel, with most of their manufacturers being in
India and China, from where the merchandise is made available to the customers through their
retailers which are available around the globe. On average, nearly 60% of the total products are
manufactured in the plants located in China. In Middle-East, Forever 21 has a joint partnership
of 50% in its stores but in rest of the countries, it has sole ownership. The company has a wide
distribution network and includes vendor and supplier manufacturing services and franchise
options. This has helped in distributing its products to various outlets with quick results.
The company has a zero-level distribution channel by going online, in 2008 and by launching
their mobile app. These modes do not require a retailer and a customer can choose and buy the
products directly from the sites which will be sent straight from the manufacturers to customers.
This introduction of channel makes the distribution system even faster and convenient. The retail
stores of the brand are the specialty stores i.e. at these stores we find clothes from no other
brands but Forever 21.

Forever 21 invests in the store location and ambience. The music played in the store is usually
rock and fusion and not very loud. The company was part of a controversy which was caused due
to their negligence. According to the reports, a well-known actor’s daughter visited a store in
Singapore and was offended with the music that was being played in the store. She released an
open letter which was viral online, criticizing the music played at the store, according to her, the
music was disgraceful to women. Forever 21 apologized but this is a huge lesson for the
company that the ambience of the store is an image of what the brand represents. Hence, it
should be appealing to the target audience.

Price:

Forever 21 is known for its pricing strategies. It has a great reputation for meeting the fashion
demand of its customer at an economical price tag. This is evident from the Mission Statement of
the company, “The company’s mission is to provide shoppers with an unprecedented selection of
today’s fashion with affordable prices” and the same is denoted by its Tagline, “Fashion is for
Everyone”. The pricing strategy in its marketing mix is that to compete in the aggressive
industry. The company has adopted an economic pricing policy that makes its product pocket-
friendly. As the prices are lower than the other brands, customers prefer purchasing in bulk and
this has led to larger sales and revenues for the company. The general price range for the product
in a Forever 21 store is from $2 for accessories and is hardly over $100 whereas H&M’s apparel
pricing spans from $2-$299and for Zara the range is $5-$399. It can be seen that, even though
Zara and H&M are also based on the same ideology of providing runway trends at the affordable
prices, there is a difference in the prices offered by the three brands. However, the prices of these
two brands are comparatively higher than Forever 21, so is the quality as per most customer
reviews.

The various Pricing Strategies used by the brand are as follows:

 Product Bundle Pricing:

Forever 21 uses this strategy by bundling a number of different styles of a product which can be
purchased at lower price as against the total price when each product is bought individually.
Example: If you buy 1 Denim Jean, it will cost 15$, however if you buy 3 different jeans it will
cost 40$ and not 45$.

 Promotional Pricing:
Forever 21 organizes a sale where some products are priced as low as 10$ for a temporary period
and they also have other products priced at regular prices during the sale in order to increase
short-term sales. As the promotional pricing brought a lot of footfall, people also bought the
regular priced products along with the discounted products.

 Psychological Pricing:
Psychological pricing is a marketing strategy based on a theory that certain prices have a
psychological impact on the consumer’s behavior. This pricing strategy is used by Forever 21 by
expressing the retail prices at an odd number which is a little less than the round number,
example: 19.99$

Forever 21 can use one more pricing strategy, Optional Product Pricing. Since the company
invests in visual merchandising, they can provide a discount when customers wish to buy the
clothes and the accessories or bags that are used by the mannequin. This can help in selling more
products rather than just one product.

Promotion:

Forever 21 has an international presence and in order to maintain the loyalty of its customers,
company has adopted several promotional policies. Promotional policies are required to
maximize the reach of the brand and to capitalize market share. The rise of social media has been
a biggest plus for the company. With the help of various social media platforms, like Facebook,
Twitter, Pinterest and Instagram, company is spreading awareness among the masses by each
passing day. The increasing popularity can be measured by its increase in number of followers of
the company’s official social media pages. The company’s official website has been constantly
upgrading to become more user friendly to provide all the necessary information to the existing
and potential customers. They use a promotion technique called Marketing Public Relations
where they invite VIP guests and media to witness the ceremonial ribbon cutting and also
organize a grand tour by celebrity hosts, organize a fashion parade and photo booths to engage
people. The brand also engages in Sales Promotion where it regularly provides its app users with
discount coupons and promo codes that can be used during online shopping.

Although, the company is making an excellent use of social media to create brand awareness, it
should give importance to offline media to attract the attention of additional potential customers
like through newspaper or magazine advertisements, running television ads, etc. Forever 21
could benefit through offline media.

Reasons - why Forever21 failed or declared bankrupt?

1. Physical space extension - Not up to date with the current trends

Rental apocalypse as created by Amazon made customers embrace the digital world. Most of the
young shoppers’ behaviors changed dramatically. Physical space expansion was a business
mistake made by Forever21 They had to pay more or rent but did not expand business online as
their competitors H&M did.
The physical stores were understaffed and in a constant state of clutter, and the website was a
chaotic muddle of sales and styles that failed to lead to a clear choice.
Forever21 rapid expansion in recent years is opposite to the business strategy then being
deployed by retailers trying to save themselves from extinction.

2. Less Digital and Unhappy In-store experiences

An improved in-store shopping experience with digital blend online and offline sales was quite
needed. But Forever21 failed to update its store experience in a changing, digital-first landscape.
Forever 21 opened an eCommerce site but still remained stuck in a mall mindset
BOPUS (Buy Online - Pickup in store) services were offered by H&M which is not provided by
Forever21. This resulted in stagnant and outdated in-store experiences.

3. Less focus on fashion updates

Forever 21 sold clothes that were unappealing and generic. While their customers’ buying
behaviors were changing, they sold clothes like it was still the 1990s.

4.Copyright infringement cases - Loss of exclusivity

Being a no stranger to controversies, it is reported that the brand has embroiled in more than 50
lawsuits involving celebrities, luxury brands, union groups, its own employees and independent
designers.
H&M claimed Forever 21 ripped off one of its tote bag designs, which featured a row of palm
trees with ‘Beach Please’ written across the front. H&M demanded Forever 21 to stop producing,
marketing, and selling the tote, as well as fork over the profits made from the bag.
Some of the popular brands which has copyright issues with Forever21 are PUMA and Adidas.

5. Failed to move towards sustainability

Forever 21 did not realize that younger consumer is so attentive to sustainability issues and care
about the environment. Customers that once flocked to fast-fashion stores like Forever 21 are
abandoning them in favor of clothing that is not disposable. H&M is moving away from its fast
fashion roots with the Conscious collection, made of materials like organic cotton and recycled
polyester. By using eco-friendly fabrics and more sustainable production methods, the company
hopes to reduce its environmental footprint. Customers can also recycle unwanted garments at
H&M stores and get a discount for a future purchase. As a whole, H&M has a goal to use only
sustainably sourced materials by 2030.

In September 2019, H&M halted its leather purchase from Brazil in response to 2019 Amazon
Rainforest Wildfires. The company issued an email statement on the halt, "The ban will be active
until there are credible assurance systems in place to verify that the leather does not contribute to
environmental harm in the Amazon". The company imports only a small fraction of its leather
needs from Brazil.

6. Overseas shipping cost

Forever21 is renting bigger spaces and stocking rack after rack of cheap clothes from China
leaving them with a high overhead cost and excess inventory. The cost exceeded the sales of
Forever21 leading the way to bankruptcy.

Conclusion:

 Moving targets.
One needs to keep updated with the changing trend in the market and accordingly change its
target customers. H&M for example that started as a brand catering only to women, with time
now also providing apparels for men and kids. In China, one of the most important trends to
watch is the increased purchasing power of men, as more Chinese men become interested in
clothing and fashion.
With the global economic base shifting from the west to the east and worldwide economic
growth, the total population and expenditure has increased, hence targeting countries like China
would provide a strong market. With the increase in migration of people in America and around
the world, understanding their demographics is key, like the buying power of Hispanic
Americans has tripled since 2020.

 Global-local brand management

Large bands like H&M and Zara have relied on uniformed brand identity. They export their
Scandinavian or Mediterranean lifestyle around the world. This works well if the customers are
well aware and are inspired by the west. However, in places where the western culture does not
have a strong foothold, relying on local products or products inspired from locally popular
brands should be a path to move, develop and expand. Like it or not, global players will thus
need to prepare for much more agile local competitors.
The buying power and customer preferences are very diverse within one country, hence catering
to maximum population and providing appropriate products for all should be carefully managed.
  
 Eco friendly:
The fashion industry is one of the largest polluting industries in the world and the damage keeps
increasing as the industry grows. The industry accounts for 10% of annual global carbon
emission and with this pace is likely to reach 50% by the end of 2020. A sustainable solution is
the need of the hour. In many countries there are legislations that require companies to create
more sustainable products, by prohibiting use to certain harmful dyes. Consumers are gradually
realizing this and also expect ecologically unobjectionable fabrics, a conservation-minded use of
resources, reduced emission of pollutants, greater social commitment, and fair treatment of
employees in production facilities. But not all willing to pay a higher price for these greener
products.
Stella McCartney who forgoes using leather in the bags leading an example towards
sustainability. MUD Jeans, Bumi, VAUTE, Linenfox and Tree Tribe are few of the companies
that provide you with sustainable products.
Environment friendly products usually require the correct commodities like organically grown
cotton, which has a scarce supply, or a complete overhaul of the manufacturing processes to
decrease the huge amount of water used for apparels. For products to be considered ethical they
require appropriate working conditions with a fair share in profits across its supply chain. It
basically involves a broad reconsidering of processes and their functions. 

 Store design and shopping experience: 

Store design and layout are the first impressions created in the minds of the customers. Retailers
use layout to influence customers' behavior by designing the store's flow, merchandise placement
and ambience. Layouts benefit retailers in understanding the revenue per square foot they would
be generating; using this, a proper assessment of their strengths and weaknesses in
merchandising mix. One of the reasons for the importance of store design would be, the flow of a
store's layout would determine how the customers usually shop. The longer a customer is in a
store, the more likely he/she is to buy — therefore, the goal is to keep her shopping longer. Most
importantly, the layout can help organize product categories together, so customers find what
they are looking for within the same section, easing out their shopping experience which is one
of the most important driving factors for any retail store. Equally important is the layout's ability
to display complementary products and the similar brands in close proximity to entice a customer
to buy more products associated to the ones they are shopping for. This “organization” can be
called a cross-category or a cross-brand sale strategy, which could very well drive more revenue
for a company. Established brands and department store retailers should take a critical look at the
shopping experience they offer and modernize it. 
 
 Digitization and channel convergence: 
Young customers readily try to use a spectrum of ecommerce platforms available to get
information on the latest trends, exchanging experiences, or comparing prices. Within these
customer journeys, social media plays a key role. Up to 35 percent of consumers indicate that
they rely on recommendations from social networks. Hence, the importance of social media in
business is growing at warp speed. As more and more businesses successfully experiment with
digitization, they would realize that taking the social media advertising route actually would
make it much easier, because of lower advertising costs, better target reach, real time
performance analysis, boost brand awareness, increase inbound traffic, increase conversion rates
etc.  
Moreover, digital channels no longer only serve to provide pre-purchase information; they have
become standalone transaction platforms. Primarily thanks to mobile devices, global online
clothing and shoe retailing is growing at a rate three times that of the market overall. Jumping on
the social media bandwagon and channelizing it is no longer a matter of choice for a business to
thrive, all businesses need it.
 
 Customer data analysis: 
Retailers, Manufacturers, and service providers try to compile all the customers data at all kinds
of new/old touch points – right from the users accounts to their social networks. Based on this
data, data mining algorithms can calculate the time, type, geography and scope of the customer's
purchases with high precision and probability. This might help in yielding diverse ways of
personalized advertising, new ways for customer interactions, and its product offerings. Studying
customers and their behavior not only lets a company stabilize their business model but also
helps in attracting more potential customers and making more profits. Forever 21’s doom
followed as a result of them taking their eyes off the ball. They failed to understand and follow
the market’s trends and could not keep track with the ever-growing needs and expectations of
their customers. Also, they failed to tailor their designs according to the geographical
differences. They were so focused on trying to fill in gaps that were created as they were
expanding in all the different countries that they lost focus on what their customers were asking
for. Moreover, their stores were not set up with the supply chains to support the expansion.

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