Issue #42: Forever 21 Shutters Stores

Hello everyone! Welcome to all the new subscribers who joined recently. A shorter issue this weekend - focusing mostly on Forever 21’s downfall, an exciting startup, and the news of the week. Hope you enjoy it!

In 1984, in downtown Los Angeles, Do Won Chang and Jin Sook Chang, who both immigrated to the United States from Korea, started a clothing store. Little did they know it would go on to define American fashion and retail. Originally, dubbed “Fashion 21”, it sold clothing found sourced from manufacturer closeouts, aka inventory clothing manufacturers were trying to get rid of. However, along with switching the name to Forever 21, the sourcing method pivoted to fast fashion. The strategy was to hop on trends as quickly as possible, for as cheap as possible. Forever 21 was the first US retailer to embrace fast fashion clothes and one of the first to curate its merchandise based on the latest trends - a real pioneer in the space (here is a great story anecdote about its merchandising strategy as well as how dialed in on merchandising they were).

And the strategy worked. By 2006, Forever 21 had over 400 locations and over $1B in sales. In 2015, the company peaked with almost $4.4B in sales and 600 locations, which proved to be the high point of the company. Around then, retail was starting to struggle and Forever 21’s rapid expansion internationally didn’t help either. In 2018, it started to pull out of some of the international markets, but that wasn’t enough to stem the bleeding. In 2019, Forever 21 filed for Chapter 11 bankruptcy and closed hundreds of stores. In 2020, it got very interesting as it sold to Simon Property Group, Brookfield Properties, and Authentic Brands Group. This move was actually super interesting as you have two of the leading mall real estate partnering with a brand management firm with a strong roster of brands. However, that was not enough as the market headwinds proved too tough to conquer, culminating in another bankruptcy filing in March 2025 and the shuttering of all 300 remaining locations.

So what went wrong? I don’t believe it was just one factor instead a culmination of several issues:

• Increased competition in the fast fashion space from other retailers - Zara, H&M, Old Navy, etc. built strong followings and better products

• Increased competition from eCommerce - Temu and Shein are getting the headlines, even the blame in the bankruptcy filing, but the internet is filled with fast fashion from those two companies, Amazon, Walmart, and more

• Customers want more second-hand - What is cheaper than fast fashion? Second hand. There has been a big spike in second hand, both digitally on apps like Depop and eBay, as well as thrift shopping at places like Goodwill and Savers

• The product selection was not as relevant and the supply chain was not able to keep up with the faster demand/shorter trends from customers

• Malls are struggling more, and are not showing any signs of recovery

I believe for retailers the last point is the most important. What is going to happen to malls? The struggles are happening and what can turn malls around. Unfortunately, not much. I believe there will be a bifurcation for malls: certain top ones will continue to succeed by becoming more and more premium, but for most of the remainder, they will either limp along until closing, or be converted into a different type of mixed-use retail with apartments/town homes, restaurants, and shopping. Out of all the areas of retail, malls are what I am the least bullish on, but I do believe there is a future for retail separately. What do you think will happen to malls?

• Summary: Bleecker Trading is a retailer focused on collectibles (sports cards, comic books, etc) utilizing community building and events to differentiate from the competition. It also has a robust eCommerce offering where people can purchase a similar assortment.

• My Take: When I was younger, I spent a lot of time in trading card shops participating in a wide variety of card games. I may be (slightly) biased from my own personal experiences, but collectibles are on the rise and one of the biggest areas that are growing in sports today. I also really like the focus on physical collectibles rather than digital ones.

• Founder(s): Mark Zablow

• Funding: Unknown

• Number of Locations: 2 in NYC (UWS and West Village)

• Social Media Following: 21k on Insta and 1k on TikTok

Additional Links:

1. Apollo Bagels opens its 4th location, this one in FiDi (read more here)

2. Mr. Beast makes more money from Chocolate Bars than YouTube (read more here)

3. How are same-store sales doing at some of the top QSRs (read more here)

4. Ramp, the corporate expense software platform, did an analysis of corporate spending and has found a decline in Alcohol spending (read more here)

5. Target and Walmart are trying to get faster delivery via investing in supply chain (read more here)

6. Edible Arrangements is launching a marketplace for hemp products (read more here)

7. Darden launches delivery on Uber Eats with a second restaurant under their portfolio, Cheddar’s Scratch Kitchen, after a successful pilot with Olive Garden (read more here)

8. Target is expanding its baby assortment adding 2,000 new SKUs (read more here)

9. Walmart is expanding its premium beauty assortment (read more here)

10. Nike is feeling the pain of right-sizing its assortment as sales are falling while it tries to find the right product mix (read more here)

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