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Why Forever 21 must go bankrupt and disappear



Forever 21 has been devoured alive today by new monsters in retail stores, digital purchases and giant discount stores finally offering fashionable fashion at always good prices.

The impossibility of internal evolution also hindered Forever 21.

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "One of the previous one-off destinations mod & nbsp;has filed for bankruptcy protection under Chapter 11& nbsp; on Sunday to restructure operations. Forever 21 said bankruptcy would allow him to close some international locations and focus on his core business, according to Reuters, who informed the company & nbsp;will also close 178 stores in the US. "data-reagid =" 17 "> One of the previous places where disposable clothing could be found on Sunday for bankruptcy protection under Chapter 11 to restructure business. Forever 21 said filing for bankruptcy would allow him to close some international locations and focus according to its core business, according to Reuters, which said the company will also close 178 stores in the US.

The company – founded in 1984 – sells cheap products in over 800 stores in the USA, Europe, Asia and Latin America. (Although Reuters reports that it will close most stores in Asia and Europe).

Hearing Forever 21 knocks on the door of death is not shocking. In fact, you have to wonder what has taken so long in the world.

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "For starters, Forever 21 has become increasingly irrelevant in shopping centers shopping nationwide. While rivals in clothing stores compete, for example, Abercrombie & Fitch (ANF) & nbsp;have invested in product quality to encourage buyersForever 21 has remained true to its cheaply made, inexpensive commodity roots. While Zara improved her fashion game (and prices), Forever 21 didn't keep up, according to Yahoo Finance experts, he talked. "Data-reagid =" 20 "> To start with, Forever 21 is becoming increasingly irrelevant in shopping centers While clothing industry rivals such as Abercrombie & Fitch (ANF) have invested in product quality to encourage buyers, Forever 21 remained faithful to its inexpensive, inexpensive roots of goods. Zara improved her fashion game (and its price), Forever 21 did not keep pace, according to experts Yahoo Finance talked.

Source: David Foster / Yahoo FInance

To further offend injuries, national clothing networks focused on closing unproductive stores and reducing the number of others to generate healthier profits.

Forever 21 even does it slowly. As a result, the chain really has no reason – there are too many better options for consumers. Too many other salespeople with a better position from a fundamental perspective.

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "" First, they lost fashion – once they copied higher brands very quickly they have become overly diverse – they have less impact on fashion and quality has fallen, "said longtime retail analyst Janet Kloppenburg from & nbsp;JJK Research Associates. "Also, the store's area has grown steadily and they have huge stores of 20,000 square feet." "Data-reagid =" 43 ">" First, they lost their fashion – they quickly copied the higher level of the brand became too diverse – they had less impact fashion, and quality has dropped, "said longtime retail analyst Janet Kloppenburg of JJK Research Associates." Also, the store area has grown steadily and they have huge stores with an area of ​​20,000 square feet. "

It's all this mess.

Falling retail stores

There are also structural problems in retail that are definitely driving Forever 21 into the ground.

First of all, there are too many retail stores in America in online stores. Non-productive retail chains must – and will – be eliminated because people limit trips to physical stores.

The shock in retail will probably be huge. The UBS investment bank estimated earlier this year that as online retail penetration increases to 25% from 16% today, approximately 75,000 retail stores will close the store by 2026. This is approximately 7% of 1 044 754 retail locations that according to UBS exist.

UBS believes that 21,000 of the 82,000 existing stores will have to be closed.

If you're close to Forever 21 – which hasn't evolved – then a store closure tsunami will probably appear at your fingertips.

Walmart and Target will be created

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Meanwhile, discount stores such as Walmart (WMT) and purpose (TGT) gave buyers what they want in clothing much better. Products are usually fashionable and at attractive prices. Remember that the existence of specialist clothing stores, such as Forever 21, arose because discount stores and department stores could not sell good goods at fair prices. ”Data-reagid =" 61 "> Meanwhile, the fact is that such discount stores are such as Walmart (WMT) and Target (TGT) much better give buyers what they want from clothing. Products are usually fashionable and at attractive prices. Remember that the very existence of specialist clothing stores, such as Forever 21, has come about because discount stores and department stores could not sell good goods at fair prices.

Not any more. In addition, discounters with large supply chains are able to cope with rising employee wages in foreign markets and increased costs from tariffs. The Fast-fashion business model has long been based on low prices due to low costs.

It goes away.

"The strength you see in the retail sector is Target, Walmart, TJ Maxx. Retailers such as Forever 21 and small retailers running shopping centers are really struggling with this because shopping center traffic is still decreasing. Discounters have larger companies and can offset higher costs, "said Nick Giacoumakis, strategist at New England Investment & Retirement Group.

The inscription on the wall in Forever 21 has long been clear. You just had to connect the dots.

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "This story was originally published on August 29, 2019, and updated with information about filing for bankruptcy on September 30."Data-reagid =" 70 ">This story was originally published on August 29, 2019, and updated with information about filing for bankruptcy on September 30.

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Read the latest financial and business news from Yahoo Finance"data-reagid =" 71 ">Read the latest financial and business news from Yahoo Finance

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