In a move that is in line with the strategies of many other fast-fashion retailers, Forever 21 is plotting a major expansion.
In an interview with WWD, founder and CEO Don Chang said that he plans to double the size of the company in the next three years, expanding its total retail footprint to 1,200 stores globally. (There are currently 600.) A big part of that growth will likely involve F21 Red, a newish store concept that boasts a deeper inventory of the brand's lowest-priced items, like $1.80 camisoles, $3.80 T-shirts and pairs of jeans priced at $7.80.
Under-$2 tank tops aside, the strategy is similar to what competitors like H&M and Uniqlo are doing. H&M plans to open more than one store per day this year. By the end of 2014, Uniqlo will have nearly doubled its retail presence in the U.S. in less than a year.
It's also a move that the company hopes will help stave off competition. “Where there is demand, there is room for more players,” Chang told the trade. “We focus on identifying the room in the marketplace and, when plausible, filling it, as quickly as possible.”
In periods of rapid expansion, something usually has to give. In H&M's case, it was profits, which operating costs put a damper on. And while Forever 21 does not disclose sales figures or financial data, analysts wonder how much of a profit margin the retailer could make on items that costs less than $5. Presumably not much, but perhaps the key is quantity (hence the store openings) and low production costs -- the latter of which is another cause for concern. The company has already faced its fair share of labor complaints for alleged unsafe working conditions in both its stores and its factories, and is one of the retailers who refused to sign any of the Bangladesh worker safety agreements in favor of conducting its own investigations. Expansion will require the company to produce more items for less, which doesn't exactly sound like a recipe for improved compensation and conditions for workers.