Forever 21: Frequent Replacement Of Regional Operators Overseas Expansion

Following last September's exposure to cash flow problems, Forever 21 suffered a series of problems in Europe and the United States.

By the beginning of this month, Forever 21 announced the replacement of India franchise partners.

This may reflect.

The hidden dangers behind the infinite scenery of giants are not all fast fashion.

Frequent change of regional operators

Like China, India has a large population.

The giant sees it as a great potential.

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Zara's partner in India is Tata Group's retail affiliate, Trent Ltd., and has established a joint venture Inditex Trent in India and operates 16 stores.

H&M also entered the India market in early October 2015, and now has 6 stores, and plans to add 6 new businesses in the current fiscal year. In addition, Gap of the United States opened its first store in India in May 2, 2015.

After entering India, Forever 21 changed three operators.

It is reported that India retailer Aditya Birla Fashion and Retail Retail (hereinafter referred to as "ABFRL") has become a new partner of Forever 21 in India market, replacing the previous India franchise Diana Retail &DLF Brands (hereinafter referred to as "&DLF").

At the cost, ABFRL will pay DLF2600 million dollars, and the two sides have signed the negotiation agreement by the end of May.

DLF has previously operated 12 Forever 21 stores in the India market. After the completion of the paction, ABFRL hopes to expand the India store to 20 in the current fiscal year.

In addition to obtaining Forever 21's right to operate in India, ABFRL will also carry out brand business in India market.

Zhang Dongwen, founder and chief executive of Forever 21, wants India to become the third largest market for Forever 21, and says India's rapid economic growth will help the brand build a $1 billion market in India.

However, at present, the company's operation is far away.

In the last fiscal year, Forever 21's revenue in India increased by 23% to 2 billion 620 million rupees in India, or about 39 million US dollars, while in the 2014 fiscal year, the brand India earned only 1 billion 50 million India rupees.

Another market voice suggests that frequent replacement of regional operating objects is not a good phenomenon for the company.

Overseas expansion is not smooth.

"Forever21 targets the target consumer group in 18-25 year old fashion fast-paced lifestyle enthusiasts. This type of buying group has high sensitivity to fashion and has a certain ability to consume, but it does not have the ability to constantly consume high-end luxury brands. The fast-paced fashion brands often update the fashionable low priced products to meet the needs of this group of people."

Wang Xin, President of Greater China, Sullivan, told reporters.

But this pattern is not very feasible in other countries and regions.

In addition to India's frequent replacement of operators, Forever 21 is also "losing ground" in other overseas markets.

In 2010, when Forever 21 opened its first British store in Bermingham Bullring shopping center, its expansion in Britain once reached 8 stores.

However, the British market continued to lose money, and the British market was the most crowded market with fast fashion and high street brands. It was found that after the difficult competition in the UK market, Forever 21 began to reduce Bermingham's first store area from the 8 of the peak to 4 now from the 2014 fiscal year.

It is worth mentioning that the days of Forever 21 were not so good on the British Isles. In early April of this year, the brand announced its withdrawal from the Scotland market.

In China, as early as June 2008, Forever 21 opened its first store in China.

With competitors ZARA, GAP came in to occupy Shanghai and Beijing and other first tier cities, Forever 21 chose to shop in the four line city Jiangsu Changshu.

A year later, Forever21 closed the store and completely withdrew from the Chinese market, as the location was wrong, the shop area was too small, and the quality and style of the product were added.

In 2012, Forever 21 rolled back to the Chinese market and located in Shanghai.

But compared with other fast fashion brands, this company has a relatively slow opening speed, so far there are only more than ten shops in the country.

In Wang Xin's view, the advantage of Forever 21 is that it has a super large boutique concept store, a competitive price, a variety of clothes and accessories, and a regional fashion product.

The disadvantage is, "for China, only the first tier cities have better brand effect, and the Forever21 with the most large boutique concept stores is more selective, causing consumers' aesthetic fatigue, which is not conducive to promoting consumption.

And the brand sells with a variety of styles and low prices, so that the quality of products can not be improved.

Wang Xin said.

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Rapid development and declining trend

Forever 21, the clothing group founded by Korean Americans, has been developing from a store in Losangeles to more than 700 stores in nearly 50 countries in the past 30 years.

About 70% of the company's revenue comes from the local US market.

However, like its peers, the internationalization of a large apparel group is essential.

But as more and more companies push their brands to the global market, people begin to realize clearly that a brand that can gain the growth of local market is not necessarily able to achieve the same success in foreign markets.

"Fast fashion brands have their advantages in business mode. Once famous brands enter an emerging market, local consumers will be in hot pursuit of their popularity overseas. However, to go deep into a market is a protracted war, which requires testing the adaptability and adaptability of the brand.

If you don't make different strategies for different markets, a long time will make consumers tired. "

Cheng Weixiong, general manager and chief consultant of Shanghai Liang Qi Brand Management Co., Ltd. is an evaluation.

Wang Xin also pointed out that there is a huge difference in clothing culture between consumers in the United States and overseas markets. For example, consumers in the United States have become accustomed to throwing clothes out a few times, but not necessarily in other countries.

"Under the operation system of Forever 21, it is very difficult to maintain low prices and improve the quality of clothing."

Although the price is cheap enough, Forever 21 still feels inadequate.

The company launched the cheap brand F21 Red in 2014 and released the three year expansion plan. The medium-term target was 1200 in 2017, with an annual revenue of 8 billion US dollars.

However, after a year of grandiose medium-term goals, Forever 21 was exposed to cash flow problems.

At the end of April this year, Pearl-Vina Co., a supplier of Forever 21, said the fast fashion company had delayed payment.

In June of this year, C. Elizabeth Jain, the chief financial officer of the company, also announced that she was leaving. The company's chief strategy officer will be temporarily responsible for the financial work until the new CFO is in place.

There is a market view that the number of shops is developing too fast or is one of the reasons for its crisis.