Can a brand built on a perky US teenage personality and ever-changing product lines give the depressed British high street a much-needed shot in the arm?
You may not have heard of American clothing store Forever 21, but its £2.23bn turnover and fast fashion business model may soon have other UK retailers nipping at its heels to keep up.
Its strategy is based on speed. What is in store today may not be seen tomorrow, as Forever 21 has new product lines delivered seven days a week and old stock is not replenished.
Set up by Korean-Americans Do Wong Chang and his wife Jin Sook Chang in 1984, the focus has always been on getting brand new stock in front of its audience of young women and teenagers every day. Linda Chang, head of marketing and daughter of the founders, says Do Wong had an instinct for this quick turnaround model from the start.
“When Mr Chang started the stores and was building them up, he was the original buyer. He would literally go out every day and talk to the customers about what they were looking for,” she explains.
“If the store didn’t have an item, he would go out and get it the very next day and bring it to the store. It was just that kind of mindset – customers want something new and fresh every single day to fulfil a certain need.
“Our business has been built on daily deliveries and now it’s something our customers expect and want.” It also works for the brand’s bottom line – if consumers don’t grab a top or dress when they see it, it could be gone the next day.
When its third UK store at Westfield Stratford City mall in east London opened this month, demand for its here today, gone tomorrow clothes was so great that it had to open 10 minutes earlier than planned to help manage the crowds gathered outside.
The brand is joined in the new Olympic shopping centre by global rivals H&M, New Look and Primark. But Forever 21, with its glittering chandeliers and boutique store concept, hopes its extreme version of fast fashion will set it apart from its neighbours.
The brand’s executive vice-president Larry Meyer says: “We know we are only as good as our next sale, so you have to keep getting better or everyone will pass you by.” When Meyer flew in from Los Angeles for the Stratford City opening, he cut a fairly conspicuous figure as a middle-aged man patrolling an environment that targets a teenage audience.
Meyer may not belong to Forever 21’s target demographic, but he has a good handle on just who the store does appeal to – something which is crucial to his role of expanding the brand into new territories. Its embodiment of the perky American teen identity not only appeals to its domestic market, but to young people all around the world buying into the image of a carefree lifestyle.
As well as moving into the UK with stores in Birmingham and London’s Oxford Street, Forever 21 is expanding into European markets from Belgium to Spain this year. In the past two years, the brand has also opened in India, South Korea and the Philippines, while its revenues in the last 10 years have boomed from $200m (£127.6m) to $3.5bn (£2.23bn).
Meyer admits that it will be hard to translate every aspect of the American teen aesthetic to such diverse countries. “The cultural aspects are a challenge and we know we have to be sharper at integrating the various nuances of each locale,” he says
But understanding new cultures in order to crack the British and European markets may not be too much of a stretch for Forever 21. From its inception, the brand has adapted itself to suit consumer needs, changing from initially offering clothes to middle-aged women to targeting youngsters along the way.
Forever 21 was first set up as a single store in Los Angeles. The rags-to-riches fashion fairytale has been enshrined as somewhat of an urban legend, the story being that Do Wong Chang, known as Don, set his eyes on the retail world while working as a service station attendant and noting that retail businessmen drove the best cars (see Timeline, below).
Having moved from targeting older women to the teenage demographic, the Chang dynasty is now entering a new era. The couple’s daughters Linda, now 29, and Esther, now 23, joined the business three years ago in senior, strategic roles. Esther is in visual merchandising and Linda, who was the driving force behind the company establishing a formal marketing department, heads up the marketing function.
Linda explains: “I had previously done product planning and I came from a more financial background in investment banking at Merrill Lynch. That was the area I was heading towards before coming into the family business.
“Not long after I joined Forever 21 I realised that the company didn’t do a lot of marketing, not in the sense of advertising but being able to connect with the customers. I felt like we were this big company where people loved the clothes but couldn’t really relate to us. We didn’t have an outlet to hold a two-way conversation.”
Chang is not a classically trained marketer, although she argues that her studies at the Ivy League University of Pennsylvania’s Wharton Business School have given her a good grounding in marketing as a function of business. She says that real-life experience and being attuned to customer trends and demands can compensate for the lack of a marketing degree.
“Things change so much these days that you can’t stick to a traditional style of marketing,” she comments. “I think this has been really beneficial for my department and myself. We are always on our feet, learning, seeing what’s happening next and what the customers are demanding.”
Most chief marketers do not work in their family business and Linda Chang admits to never really switching off. Forever 21 and ways to market its teen personality obsess her at all times.
“When we’re at work my dad is Mr Chang and when we are at home he’s my dad,” she reveals. “My parents have very high expectations for me. They are constantly pushing me and sometimes I push them back and talk about things. But it’s never me doing a formal presentation to ’Mr Chang’, it will be something that we have been talking about for a while. The clock never stops for my sister and I; our work spills over into our personal life and that’s how we have been raised.”
Chang’s closeness to the age and mentality of her young audience means she was quick to establish the brand’s presence on social media. Today, the company has more than 5 million Facebook fans and users can sign up for special deals as well as updates from Forever 21’s own The Skinny blog, another initiative by Chang.
She admits that even though the focus on marketing has increased since her arrival, the budget remains low. “We don’t need to do a lot of advertising,” she claims. “Before I even joined, the brand was so popular in the US because our product speaks for itself and our customers have been our marketers.
“Our growth has been very organic and I don’t want to stray too far from that. We don’t have much of a marketing budget because we need to keep our margins down – social media is our most effective marketing tool.”
The brand isn’t just being talked about on Facebook and Twitter. Forever 21’s young customers post “haul videos” on YouTube to show off the products bought during their latest shopping spree.
Chang says these clips are completely user-led, rather than seeded by the company, but the brand does run Facebook competitions around haul video activity to capitalise on the trend.
The business is now using celebrities to promote itself in the UK. But in keeping with the brand’s teen positioning, the company uses a face probably unknown to non-fashion followers over the age of 30. Bip Ling, a blogger, fashionista and London ’it’ girl, has struck a chord with Forever 21’s audience, Chang claims.
“The face of our brand needs to be authentic,” she says. “We love the fact that Bip is a blogger, who is very key to what’s happening right now. She has this great energy and spirit, and she is 21, which works out perfectly. It’s all about a lifestyle and interests – it’s not just about fashion, she’s also a DJ, and we love all those components. She really is a Forever 21 girl.”
But while Ling may be known to the more cutting-edge young adults out there, the brand is hoping to make an impact with mainstream youngsters all over the UK. In an attempt to reach this audience, rival H&M has signed up global names Kylie Minogue and Madonna for collaborations in the past.
Chang notes: “I wouldn’t say we would just stick with one type of ambassador but a big celebrity would not feel authentic to our brand.” She says that if a famous face genuinely loved the brand and wore its clothes, that might be different, but signing up a name more often seen in a designer wardrobe would feel like an unrealistic endorsement.
“We want our customers to know that whoever we choose to represent us actually shops at Forever 21 and loves this idea of fast fashion,” she says.
Despite her assertion that she likes to get close to her customers and understand their needs, Chang is less keen to be a spokesperson or corporate representative for Forever 21. “We never really had a spokesperson for the company before because of my parents’ language barrier, and I don’t really want to see myself as a spokesperson or face of the brand. I don’t want to tie myself into that position,” she says.
While Chang sees fast fashion as a positive endorsement of Forever 21, the last couple of years have seen fashion editors questioning its worth. Against the backdrop of the recession, many glossy magazines have tried to prise the public away from cheap, frequent purchases and more towards ’investment’ pieces.
But Chang dismisses an ugly notion of fast fashion: “I don’t think of fast fashion in terms of throwaway; 80% of my own closet comes from Forever 21. There is that element of value but I consider fast fashion to be the fact that we catch onto trends quickly and we pass these onto the customer.”
Defending fast fashion may well fit the demands of financially stretched consumers in the UK, but it is just one of the issues Forever 21 has come up against in the past 10 years. Not only have the working conditions in its factories attracted media attention, but designers Diane Von Furstenburg and Anna Sui have taken Forever 21 to court over copycat allegations. However, Forever 21 hopes to mitigate any damage caused to its brand through publicising new guidelines around its third-party vendors and factory audits.
“This is a continuing battle for us,” says Chang. “We’re not perfect but we are moving forward. With the copyrighting issue, we didn’t used to have an in-house design team and so we were buying from third-party vendors.
“All the things that were pointed out as copyright issues were these third-party issues. We tried to deal with it right away but as it was becoming more of a problem, we have begun investing in an in-house design team, which has been growing. Hopefully we are heading in the right direction.”
But with thoughts of corporate responsibility in mind, Chang is unwilling to accept that the core Forever 21 policy – daily deliveries to stores – should be seen as a negative environmental issue. She says the daily turnover of stock, seen as a unique selling point keeping its fashion really fast, is not negotiable.
The brand looks to offset any environmental impact through other corporate initiatives. “We have been trying to work with more sustainable materials and start more paperless initiatives. We are not the leader in that by any means but we are taking steps in that direction,” she notes.
Despite what critics might say about lorries delivering to Forever 21 stores every day, the very fast fashion concept is helping to persuade shoppers to visit frequently, act on their impulses and buy immediately.
Chang claims that the strategy was a natural evolution of how the stores operate. “It was just that kind of mindset – customers want something new and fresh every single day to fulfil a certain need. It was just how we figured out that was how our customers wanted to be catered to.”
She is also interested in making sure that marketing as a discipline is not siloed within the overall business. And she wants to widen her own general management skills by finding new areas where she can have influence over the future of Forever 21.
“Hopefully I can be doing other things within the company to continue our growth. I don’t think marketing is the only place for me. One of the areas I want to get into is human resources and see what we can do to grow that area, especially with training, education and mentoring,” she says.
The family’s work ethic, along with Forever 21’s attention to marketing, bringing its distinctive perkiness to a wider global audience than ever before, could help it make an impact on the UK high street. In such difficult economic times, being a success in British retail will mean not only growing the market but taking share from established rivals (see Viewpoint, below).
As Meyer and Chang move the brand into new territories over the next year, it will need to balance its concept of the American teen dream with local sensitivities. Meyer admits it is pushing out with physical outlets rather than emphasising the website, as it believes its personality is better communicated in stores than online.
Meyer says stores such as the one at Stratford City will help introduce the brand to new customers and show off the distinctive elements of its personality to new markets effectively. “We are investing heavily in our stores as is evident by what we have developed here. Part of our process of renewal is investing in stores and people,” he notes. “It’s not just shopping, it’s an experience.”
Forever 21 timeline
- 1984: Korean-American Do Won Chang and his wife Jin Sook open their first store, Fashion 21, in Los Angeles, measuring 900 square feet. Sales at the end of the first year total $700,000. The Changs open a new store every six months, changing the chain’s name to Forever 21.
- 1989: Forever 21 opens its first mall-based store in Panorama City, California. Store sizes are now beginning to average 5,000 square feet.
- 2001: Four 24,000 square feet XXI flagship stores open in Texas, Miami, LA, Chicago and Canada. Larry Meyer joins as chief financial officer, becoming executive vice-president in 2006.
- 2006: Forever 21’s new flagship store in Pasadena, California marks the brand’s first use of the ’shop in a shop’ concept, with the store layout made up of mini boutique areas stocked with various sub-brands.
- 2008: Chang daughters Linda and Esther join the fashion empire as chief marketing officer and chief visual officer, respectively.
- 2010: Forever 21 opens its first European store in Birmingham, followed by its second in Dublin.
- 2011: London flagship stores are unveiled on Oxford Street and Westfield Stratford City, spanning 35,000 and 68,000 square feet respectively. Future UK openings are planned for Lakeside in Essex, Bluewater in Kent, Liverpool One, Glasgow and in the MetroCentre in Gateshead. European store openings this year include Brussels, Antwerp, Barcelona, Vienna and Paris. The store footprint spans around 480 outlets, with sub-brands such as Forever 21+, For Love21 and 21Men. Forbes magazine estimates the Chang family to be worth $2.2bn.
Honor Westnedge, retail analyst, Verdict
The 16- to 24-year-old British customer is quite excited about Forever 21. Its frequent new lines encourage people to visit regularly. But the brand’s success will depend on how the existing UK competition reacts. At the moment, New Look is finding it quite tough so this might be to Forever 21’s advantage as it appeals to a similar audience.
Rather than grow the value market, we’re expecting Forever 21 to steal share from existing competitors.
Forever 21 has come into the UK at a tough time but as a new brand it has built up a lot of excitement and it is probably a nice relief for customers to spend their money on a new brand at an affordable price point. The price point is comparable with Primark but it offers a better store experience and is more trend-led.
It will take time to build Forever 21’s reputation here, but once its store presence grows, it should fare reasonably well. It doesn’t need a big marketing budget because of social media and its connection with its core audience. It can make itself well-known without spending a lot of money.
Head of marketing Linda Chang and executive vice-president Larry Meyer
Marketing Week (MW): How do you see Forever 21 making an impact on the UK fashion retail landscape?
Larry Meyer (LM): We would like to be in the UK what we are in the US – the first choice for customers who are seeking great fashion.
MW: How do you position yourselves against rivals in the British value fashion sector such as Primark and H&M?
Linda Chang (LC): We offer things on a daily basis. We don’t offer things in a huge amount of depth. Our customers know that if they don’t get something now, they might never get it again. We also cover all the different trends and a wide variation of them.
MW: Forever 21 has not traditionally been a marketing-led organisation. How has the brand grown so successfully without it?
LM: In the US, retailers grow by taking up space in malls. We built a brand through choosing the right locations and having customers talk about us to their friends. This viral campaigning has made us what we are.
MW: Since the marketing department was established three years ago, how have budgets and attitudes towards the discipline changed?
LC: There definitely has been more budget since I joined and marketing is becoming much more important. But it’s probably very small compared with other companies our size. We do the best with what we have and we would never limit ourselves. If our customers demanded it, we would provide it.
LM: Marketing is one thing but coming to the stores and seeing the products, store environment, quality of service, ability to buy and the price – all of those variables are what make a person’s decision to shop with us. It’s the 4Ps of marketing (product, price, place and promotion). Our social media strategy and store environment is what gets people in.
MW: The store layout and rollout investment seems to take precedence over developing the ecommerce and even mobile platforms. What is the rationale behind this?
LC: The web isn’t a channel we can disregard but we haven’t been able to capture the same excitement on the web as we have in the store environment. However, technology is taking us closer to being able to mimic our store environment online, so it is something we are definitely investing in.
MW: Much has been made of printing the Bible passage John 3:16 on shopping bags. How much is faith is connected to the brand?
LM: The vision you see in stores is totally that of Mr and Mrs Chang. They believe in faith and it is part of who they are. But the shopping and clothes are independent of that.
Marketer 2 marketer
Julie Lavington, publishing director at Look Magazine, asks: How many stores do you expect to have in the UK in the next two years?
Larry Meyer: Forever 21 is tentatively planning to open five stores in the UK and a further two stores in Europe before 2013.
Donna Howitt, marketing director at Liverpool One shopping centre, asks: You are making a significant investment in the UK; why do you feel confident in this market?
Linda Chang: We have always known that the UK is an important market, with fast fashion basically having been born here. So for us to be a competitive retailer, we have to have a presence here. It has always been on our mind and the timing is because of the real estate opportunities that have come up.