Forever 21 Might File For Bankruptcy. Calm Down Though, It’s Not Like The Stores Will Shut Down Immediately!
No trip to the mall is ever complete without the ritualistic visit to the Forever 21 or H&M stores. We nurture a habit of “checking out the new stuff” at these fast-fashion brands, which turns into a buy more often than not. Fast fashion brands like Forever 21 and H&M turn over their stock very quickly and at set time periods. Gotta say these brands are much better than us at getting over an ex and get excited for a new boy! Having said that, it seems every college-going girl’s mothership fashion brand Forever 21 might be considering filing for bankruptcy. This will have a huge impact on the number of stores that are in operation and will affect the reach of the brand, worldwide.
Much like its contemporaries like Zara and H&M, Forever 21 has had its fair share of controversies for being in the fast-fashion space. In an expose titled “The Secret Behind Forever 21’s Dirt Cheap Clothing“, written by Melanie Hicken from Business Insider, we are forced to face some hard facts affecting the brand, like ethics. While fast fashion brands are trying harder and making strides to make their operations greener, the trend of their failures speaks otherwise. The popular retailer is quite happening among youth every where and we are wondering why it would want to file for bankruptcy in the first place?
According to reports from CNBC and Bloomberg, the company has plans to cut costs put into running stores globally by liquidating its assets. Confused? Here’s the lowdown! Big retailers like Forever 21 and Barneys (who have already filed for bankruptcy) have a huge number of stores locally and globally. In the case of Forever 21, especially, the brand saw a massive expansion in many countries due to its affordable clothing options, influencer marketing and the diverse range of collections.
But with a decrease in sales from the physical stores, it has become difficult for brands to keep paying leases and fees to maintain the stores. A process like filing for bankruptcy will protect them for any liability that might emerge when they shut down stores. Basically, they will not be accountable for the losses the others involved in the process make. The biggest losers in this scenario are mall owners who have opened these brands in their spaces and might now have to shut them. If Forever 21 actually goes through with filing for bankruptcy, it will come back with much fewer stores, maybe even limiting their global footprint and just stick to e-commerce.
While we try to wrap our heads around the business jargon of the whole thing, one thing keeps bothering us. Just exactly why are fast-fashion brands suffering from decreased sales in the retail space? Is it because online shopping is slowly becoming a popular way to shop? Or are customers are shunning these brands and their fast fashion practices for greener alternatives? It might be a bit of both but we might have to wait before we get a solid answer for this.