On Sunday, Forever 21 joined the increasing list of retailers who have signed off in business as a result of ever growing oppression of e-commerce giants. Mainly, Amazon and Alibaba.
The 35 years old clothing retail company filed for bankruptcy in the face of overwhelming struggle to stay in business. Forever say it’s closing its 178 stores across the US.
The “fast-fashion” firm Forever 21 has filed for Chapter 11 bankruptcy protection. It wants to close up to 178 U.S. stores, though it does not want to leave any major markets in the country. If the plans go through, Forever 21 would mostly pull out of Asia and Europe, while continuing operations in Mexico and Latin America.
“We have requested approval to close up to 178 stores across the U.S. The decisions as to which domestic stores will be closing are ongoing, pending the outcome of continued conversations with landlords.” The company said.
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Forever 21’s bankruptcy filing adds its name to the growing list of retailers that have bitten the dust this year, including Barney’s, Payless Shoes, Gymboree, Sugarfina, Innovative Mattress Solutions and more. In Forever 21’s case, “fast fashion” these days seems to refer to how quickly fickle consumers abandon once popular brands, noted Fortune in a newsletter.
Forever 21 is operational in 57 countries and plans to shut down activities in most of its outlets in Asia and Europe. The company said it would close all 14 stores in Japan at the end of October.
The bankruptcy also affected its businesses in Canada. The company said it is taking down 44 stores in the country. Only Mexico and Latin America stores are allowed to function in the drastic decision.
The incessant dwindling in sales despite some financial backing suggests that the company needs a new approach. Forever 21, received $275 million in financing from its existing lenders with JPMorgan Chase Bank, N,A as agent. And there was another $75 million in new capital from TPG Sixth Street Partners.
More than 20 retailer shops have succumbed to the forces of online shopping giants since 2017, in the US alone. And the remnants are struggling to find their feet doing what they have always done.
Forever 21, believes the tradition is no longer sustainable, for the company to survive the intimidating threat of big e-commerce companies, it must do something differently.
Developing countries that are providing lifelines to retailers because of their conventional shopping pattern have been, recently, implementing cashless policies that will spur the e-commerce culture. Countries like Nigeria are gradually adapting, and retail shops are feeling the boom.
In developed countries where Amazon and Alibaba reign, many believe that the survival of retailers depends on expanding to countries where the e-commerce giants don’t exert much influence. And Africa stands in the center.
The cost of shipping is a deterrent to many would be buyers from Amazon, leaving retail stores as an alternative.
Therefore, the restructure that Forever 21 acknowledged it needs will only be effectual if they are thinking in the direction.