Forever 21 is losing its grasp on fast fashion

October 12, 2015

Author: Dottie Maguire

Forever 21, the beacon of lowbrow fast fashion, appears to be in a tight spot.

Fast fashion continues to inundate the apparel market, but Forever 21 remains on the lower end of the spectrum.

After Forever 21, you have the slightly higher-quality H&M, followed by Zara - which has schooled everyone in how to replicate runway styles at a lightning-quick speed.

Other players, like Topshop, which falls on the more expensive end of the spectrum, and Primark, which recently entered the United States market with its limbo-worthy low prices, prove that fast fashion runs the gamut. There's something for nearly every consumer.

But Forever 21 has been subject to lots of criticism lately, and with so many other places to shop, the brand is in a tough position.

The retailer, which is private, does not disclose financials.

But a recent Wall Street Journal report indicated the brand was in talks to secure a $150 million loan to pay for the leases on its massive stores.

"Forever 21, which discloses little about its finances, has predicted that sales would rise 10% this year to $4.7 billion," the Wall Street Journal writes. "But people familiar with the company say its sales and profit have tapered off after years of strong growth."

Recently, H&M sued Forever 21 for copywright infringement. According to The Fashion Law, Forever 21 ripped off H&M's cheeky "Beach Please" tote bag.

It's no secret that the essence of fast fashion is to borrow from runway styles to provide comparables look for cash-strapped consumers, but this issue shed light on how Forever 21 has a sordid history of settling copywright infringement lawsuits, as Jezebel detailed in a 2011 post.

Copying another fast fashion company begs the question: How low is Forever 21 willing to go to snag easy designs? (And, as Liz Dunn, CEO of consulting firm Talmage Advisors, pointed out, "That's not where the fashion originated.")

In other words, Forever 21's habit of copying other companies' designs could eventually hurt its reputation.

Forever 21, like its fast fashion competitors, offers bargain-bin worthy prices. But with that, there are invisible expenses.

The Asian Pacific American Legal Center sued Forever 21 for allegedly making employees work up to twelve hours each day for less than minimum wage in filthy conditions with rodents, The New Yorker reported.

In 2008, a documentary called "Made In LA" detailed the struggle of three immigrants who struggled for labor rights while they worked for Forever 21. The documentary won an Emmy.

And just a few years ago, Forever 21 faced a class action lawsuit for allegedly denying employees breaks for meals and forcing them to work unpaid hours, The Huffington Post reported.

Of course, it's no secret that there's a real, human cost of fast fashion - so much so that a documentary called "The True Cost" made waves this summer. While Forever 21 is likely not the only company guilty of subpar working conditions, these ethical gaffes have the possibility to turn away more conscientious consumers.

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Additionally, a new consumer trend is emerging wherein consumers are slowly but surely moving towards quality, rather than quantity.

"A generation of consumers has grown up wearing what is often referred to as 'fast fashion' - trendy, inexpensive versions of runway looks that shoppers wear for one season, or one occasion, and often toss," Elizabeth Holmes wrote in The Wall Street Journal last year. "Now, many of these shoppers are graduating to a philosophy of quality not quantity."

But, some millennials who remember the recession all to well have been trained to zero in on value.

"I think that there's just very big shifts in terms of [what] consumers value, particularly with the millennial generation. They tend to be more value-based in terms of their purchasing behavior," Dunn said to Business Insider.

"There are two ways to approach having a limited budget - you can either buy really cheap stuff and a lot of it or buy higher quality things and fewer of them," she added, noting that although this consumer trend is present, it is still in its nascency.

But for consumers who fall somewhere in between the ends of the spectrum, there are plenty of other fast fashion chains with marginally higher-quality clothing - like Top Shop and Zara, for example. Dunn also says that H&M is likely where Forever 21 shoppers graduate to when they've moved on from Forever 21's selection.

Forever 21 has nothing on Zara's speed, which, "[tends] to be a little faster on the fast fashion in terms of interpreting trends that are on the runway or from much higher end designers," Dunn said. "Zara is very rapid at interpreting those trends and incorporating them."

"So there's both the quality...and the interpretation of fashion," she said.

But despite these issues that could potentially pull away an older, more discerning consumer, Forever 21 doesn't have anything to worry about just yet.

Forever 21 has captured a target customer - a younger women who is "aspirationally 21," as Dunn put it. Dunn pointed out that these customers are generally younger than 21. (The idea of being eternally 21 is probably not appealing to an older customer.)

These consumers don't care that Forever 21 rips off other brands. "You're attempting to get the looks for less, right? The consumer is aware that the brand is derivative - that's probably why they're buying it."

This cheap, fleeting fashion is what its target demographic is all about, anyway.

It's "part of this whole generation that's kind of obsessed with taking selfies, showing the world what they're doing at every single moment," Dunn said to Business Insider, citing how teens are spending more money on technology and experiences than on tangible items.

Ultimately, she said that this allows young consumers to say, "'I have a really fabulous life because of all the places I've been and the things I've eaten and the people I've been with - that's almost worth more than what my outfit is.'"