Lessons from Forever 21’s decline

The collapse of once-iconic brands like Forever 21 serve as a stark warning for fast fashion retailers globally. Having filed for bankruptcy for the second time in the US, the news highlighted Forever 21’s failure to adapt to the needs of its customers, take note of its competitors and move with the times. In the UK brands such as Select Fashion and Quiz are facing similar challenges as they struggle to keep up with current favourites Shein and Asos. So, what can be learned from Forever 21’s downfall? Mairi Fairley, partner at OC&C Strategy Consultants, pointed out that Forever 21’s struggles stem from a combination of market and internal challenges. She said: “The market for fast fashion has intensified with strong propositions such as Shein and Primark entering the US market, along with Zara and H&M continuing to succeed. Forever 21 has struggled to keep pace, being slow to move on their product and range.” Charlotte Black, chief strategy officer at Saffron Brand Consultants, reinforced this point. “Forever 21’s bankruptcy shows how fierce the competition is in the fast fashion space. The brand had a significant head start on some of its rivals but in the dog-eat-dog world of fast fashion, this ultimately didn’t count for anything,” she says. “If someone else can do fashion faster and cheaper, then what’s your brand differentiation? Forever 21 had a physical footing, but as younger generations shop in different formats whether it's through TikTok and Snapchat, or resale sites like Vinted, it’s no longer a valuable point of difference unless you invest heavily into experiential like Glossier, Rhode, and many other brands who continue to emerge." The growth of resale propositions and the shift to digital through Covid added further pressure. Forever 21’s failure to adapt quickly to key trends such as athleisure, which resonates with Gen Z, compounded its inability to maintain relevance in a competitive market. “In this more competitive context, Forever 21 has struggled, losing resonance with consumers,” Fairley added. This is a critical lesson for UK brands, as Fairley highlighted that Select Fashion and Quiz need to ensure they stay relevant in this competitive market and avoid falling into the same traps. Her advice is: "Be clear about what the brand stands for, and keep reinforcing these messages.” Digital transformation – or the lack thereof – also played a crucial role in Forever 21’s decline. Fairley explained: “The growth of resale propositions and the shift to digital through Covid added further pressure. Forever 21 did not keep up with investment in digital transformation.” While digital transactions now account for approximately 40% of the market, Forever 21's failure to evolve left it struggling both in terms of online sales and customer engagement. "Forever 21 has fallen behind, and that left the brand irrelevant to Gen-Z and younger consumers," Fairley added. UK retailers must take note: the digital shift is non-negotiable. The importance of investing in e-commerce platforms, digital marketing and customer engagement cannot be overstated. Meanwhile, Vineta Bajaj, ex-CFO at Ocado and current CFO at Rohlik Group, agreed that the retailer’s failure to adapt to changing consumer behaviour and technological advancement contributed to its collapse. She said: “Forever 21’s reliance on vast physical stores, inconsistent brand positioning, and failure to adapt to digital retail left it struggling against more agile competitors.” Bajaj warned UK retailers that success in today’s market requires more than just low prices and chasing trends. "It demands strong brand identity, seamless online integration, and responsiveness to ethical concerns," she added. Resale platforms like Depop, Poshmark, and ThredUp, as well as rental services, are driving a more sustainable shopping trend. The growing demand for sustainable shopping practices means that retailers must adopt transparency in sourcing, eco-friendly collections, and supply chain adjustments. “Sustainability has become a hygiene factor, rather than a differentiator,” noted Fairley. If UK brands fail to integrate sustainability into their models, they may risk losing customers who are increasingly concerned about the ethical implications of their purchases. The importance of sustainability is echoed by Ayesha Mustafa, a social entrepreneur and sustainable fashion expert. Mustafa explained that younger generations are vocal about their environmental concerns, pushing for greater transparency from brands. “Consumers are now more conscious of where and how they buy,” she said. This shift in shopping habits, particularly among Gen-Z, means that brands that fail to adopt sustainable practices will struggle to maintain relevance. According to Mustafa: "Resale platforms like Depop, Poshmark, and ThredUp, as well as rental services, are driving a more sustainable shopping trend." Black added another dimension to this by highlighting the complexity of consumer behaviour: “Not all shoppers are the same. So, while some are undoubtedly more concerned with the problematic elements of fast fashion – labour conditions, waste and sustainability for example – others will only care about the latest looks at prices they can afford. And at the lowest end of fast fashion, most people can afford something. But the plethora of resale sites, charity shops and vintage outlets are offering another route for fashion-conscious teenagers who are adopting more environmentally sustainable shopping habits. The next generation of consumers is one of contradictions and the retailers that are able to adapt and respond quickly are the ones that will thrive." Brands need to have a clear purpose, a point of view, and build emotional connections with their customers. In addition to sustainability concerns, consumers today expect a more personalised, omnichannel shopping experience. Fairley observed that consumers are looking for seamless integration between their online and offline experiences. “Consumers expect seamless and consistent journeys across all engagement and transaction channels,” she said. For UK retailers, this means prioritising both digital platforms and physical stores in a way that enhances the customer experience. Bajaj added that omnichannel retail offers economic benefits. “Stores provide a halo for the brand, and click-and-collect services help manage delivery costs, increasing convenience for customers,” he notes. Brands need to recognise that stores are no longer just retail spaces – they’re marketing assets that can drive online sales, boost customer engagement, and create new revenue streams. But perhaps the most significant lesson for UK retailers is the need for a clear and consistent brand identity. As Fairley pointed out, Forever 21 struggled due to a lack of clarity about what the brand stood for. “There was a lack of consistency in marketing communication,” she said, “and as a consequence, the brand has struggled to gain cut-through and consideration from customers.” UK brands like Select Fashion and Quiz must avoid this mistake. As Bajaj stresses, “Brands need to have a clear purpose, a point of view, and build emotional connections with their customers.” Consumers today want brands that resonate with their values, and those that surprise and delight customers will have the upper hand. Retailers must find ways to cultivate these deeper relationships, particularly as consumer loyalty becomes increasingly driven by factors like brand purpose and sustainability. Bajaj also offered another important piece of advice: “Don’t try and do it all. Focus on what you’re good at and over-deliver on consumer expectations there.” This rings particularly true for UK retailers like Select Fashion and Quiz, who should avoid overextending their resources. Forever 21’s aggressive international expansion often took attention away from its core market and diluted its efforts. “Expanding into other territories in a lighter touch way is crucial,” Fairley suggested. Retailers must test new markets before committing significant resources, and ensure that their core business remains healthy and focused. Lastly, as consumer expectations continue to rise across various dimensions, retailers must evolve their strategies to meet these challenges. Fairley’s advice is clear: “Be agile, test, and learn to keep your range relevant, and focus on your core business.” For UK retailers, this means embracing an agile supply chain, developing partnerships and focusing on customer engagement across multiple touchpoints. Bajaj concluded: “The fast-fashion market isn’t disappearing, but the brands that survive will be the ones that evolve with their customers.”