Forever 21 lying on its deathbed underscores that in retail, nothing is forever.
/It's sad to see Forever 21 finally lying on its deathbed, an ironic ending that underscores that in retail, nothing is forever.
As vacancies are still low at A-plus mall properties, Forever 21 closures will be a good thing for those landlords, which will quickly replace those vacancies with more productive retailers at higher rents. However, in bankruptcy cases, the court tries to sell those leases, and that would be bad for any landlord. RCS Real Estate Advisors has already began to market about 360 store leases in the U.S.
Fast fashion is a segment where strong players such as Zara are doing well but others like Forever 21 can’t seem to turn out a profit.
Some international online competitors like SHEIN and Temu have been detrimental to Forever 21 and other fast fashion retailers because they sell fast fashion directly to American consumers bypassing tariffs through the "de minimis" tariff loophole that allows these online sellers to import single items without tariffs while Forever 21 and other retailers that import the merchandise in bulk from China have to pay tariffs.
Another problem that is inherent with Forever 21 is the very large footprint of most of its leased premises, which ranges from 4,000 to 150,000 sq. ft. The average Forever 21 store is 21,000 sq. ft. Because of its size, the chain hasn’t managed to perform adequately on a sales-per-square-foot basis to pay for its occupancy costs. Today, retailers are shrinking their footprints to achieve greater sales and minimize occupancy costs, all on a per-square-foot basis.