The exterior of the Forever 21 at Arrowhead Towne Center. Retail experts attribute the success of the California clothing chain to its quick turnaround of runway-inspired fashion, the relatively low cost of its apparel and a generally broad appeal.
Forever 21, the fast-growing retailer of trendy, moderately priced clothing and accessories, opens its first double-decker stores in in Tucson and Glendale at the end of March.
The Los Angeles-based chain is one of a few apparel retailers to expand in a bear market – a move fueled by shoppers’ hunger for cheap fashion and the acquisition of commercial real estate left open by defunct department store Mervyns.
Large-format stores will debut inside former Mervyns spaces at Glendale’s Arrowhead Towne Center and the Tucson Mall.
Forever 21 shoppers can expect to find a new line of plus-size clothes, expanded lingerie and shoe collections, and relatively new to Arizona: men’s wear.
Retail analysts attribute the company’s growth to a quick turnaround of runway-inspired styles, but also warn that the chain could face obstacles while adopting a department-store format.
Stop by any of the five Forever 21 stores at Valley shopping malls and you’re likely to see lines congregating at the dressing rooms or disheveled hangers with picked over sparkly items.
“It’s just astounding, they are right on top of every trend,” said Ilse Metchek, president of the California Fashion Association.
The chain is known for spotting new styles and moving them from the design room to the sales floor inside of six weeks. That compares with department stores, which can take four to six months to do the same, said Mark Cohen, a professor at Columbia University’s Graduate School of Business and the former chairman and CEO of Sears Canada.
Department stores are also known to restock styles, whereas Forever 21 will carry a finite supply.
“The customer knows that if they see it, they better buy it, because it may not be back and there won’t be hundreds of them,” Metchek said.
And not every store carries the same styles.
Metchek said regional networks of contracted designers allow Forever 21 to carry out its operation model at a low cost. Much of the store’s merchandise is priced at or below $40.
That appeals to teenagers with limited disposable income, such as 19-year old Estrella Mountain Community College student Vanessa Alonzo, who said she gives herself a $50 budget each month to shop for clothes.
But the chain also appeals to women in their late 20s and 30s, allowing it to effectively tap two huge markets, said Britt Beemer, a retail analyst and founder of America’s Research Group.
Forever 21 isn’t the only company to build success on such a business model.
Swedish retailer H&M and Spanish retailer Zara use similar techniques. Forever 21, however, is in more markets across the U.S, Cohen said. It currently operates more than 400 stores nationally and reported sales of $1.3 billion in 2007, according to Hoovers business database. The chain’s presence will increase as it opens 12 new stores at former Mervyns sites across the western United States. The company purchased the real estate from Macerich, the parent company of mall developer Westcor.
Still, while Forever 21 has found ways to lure customers from traditional department stores, it could face challenges that plague its competitors, said Mary Teagarden, a professor at the Thunderbird School of Global Management who has done case studies on discount retailers.
Department-store display space fronting mall passersby is often limited, driving down impulse visits. And customer traffic thins out on the top floors of multi-story spaces, she said.
With more space to fill, the chain’s quick fashion turnaround could also be strained, Cohen said.
———
Forever 21
• Operates more than 400 stores across the country under the names Forever 21, XXI Forever, Heritage 1981, TwelvebyTwelve and ForLove 21.
• Based in Los Angeles.
• 2007 sales totaled $1.3 billion, according to Hoovers.
• Operates five Forever 21 locations in the Valley and one ForLove 21, an accessories store.
• The chain’s original Arizona stores are around 25,000 square feet. It will soon debut two large-format stores inside spaces formerly occupied by defunct department store Mervyns. The new stores would be around 80,000 square feet.
• The larger stores are expected to open at Glendale’s Arrowhead Towne Center and the Tucson Mall on March 28.