UNIDENTIFIED PERSON #1: NPR.
(SOUNDBITE OF DROP ELECTRIC SONG, "WAKING UP TO THE FIRE")
STACEY VANEK SMITH, HOST:
Hello, old friend. This is me standing outside of the Forever 21 store in Times Square. I haven't been inside of one of these in a long time.
CARDIFF GARCIA, HOST:
You refer to the Forever 21 store as your old friend?
VANEK SMITH: Well, when I was just starting out in radio and I was making, like, very little money and was living in LA, where there was all of this pressure to be super stylish, you know, Forever 21 and H&M were like a miracle. It was called fast fashion. I mean, before that, you kind of had to choose. You could get cheap clothes that were really unstylish and unflattering, or you could pay some real money for clothes that were cute and super trendy.
But the fast fashion companies let you have both - super cheap clothes in all the latest styles. It was amazing. You could get a lot of cute clothes for no money. And you know, the clothes would dissolve in the wash after about a month. But still, you know, the stores were giant, and they were always packed. And there were swarms of people with these armfuls of clothes, giant lines.
So when I read last week that Forever 21 had filed for bankruptcy, that it was closing a bunch of its stores and going to try to turn things around, I couldn't believe it. I wanted to check it out for myself.
GARCIA: Yeah, it makes a certain amount of sense. It sounds like the store played an important role in your life at exactly the time when you needed it...
VANEK SMITH: It did.
GARCIA: ...Just like an old friend.
VANEK SMITH: Like an old friend. Exactly.
This is THE INDICATOR FROM PLANET MONEY. I'm Stacey Vanek Smith.
GARCIA: And I'm Cardiff Garcia. Today on the show, the business of fast fashion. Fast fashion dominated retail about a decade ago, and now, a bunch of the big stalwarts - Stacey's old buddies - are struggling.
VANEK SMITH: It's true.
GARCIA: What happened? Also, Stacey goes back to check out what's going on at Forever 21.
VANEK SMITH: Oh, Cardiff, I did not just go back. I gave myself a Forever 21 challenge. I went to the store in Times Square - Times Square, where a coffee costs, like, $5 - and I wanted to see if I still had the Forever 21 touch. I wanted to see how much I could get for $21.
GARCIA: In Times Square...
VANEK SMITH: Yeah.
GARCIA: ...Probably, like, a sock - not even a pair of socks. Like, you get one sock, and then the other one you put on layaway.
VANEK SMITH: Hold on to your very underpriced hat.
All right. Here we go.
(SOUNDBITE OF DROP ELECTRIC SONG, "WAKING UP TO THE FIRE")
GARCIA: Today's indicator is 21 - as in, Forever 21. Now, Stacey, you were surprised to hear that the store had been struggling of late.
VANEK SMITH: Yes.
GARCIA: But Chana Baram was not surprised. She's a retail analyst with Mintel.
VANEK SMITH: I was like, oh, my God, I thought that place was bulletproof.
CHANA BARAM: Yeah. I think that maybe was part of the problem - is that, you know, they were very comfortable in thinking that, you know, they had this market cornered.
GARCIA: Yeah, and for a long time, they kind of did have the market cornered. I mean, their growth was explosive. And during the financial crisis, while other retailers were closing their doors, Forever 21 was still thriving.
VANEK SMITH: So what happened? Chana points out that a lot of the fast fashion old guard has been having troubles. H&M has been really struggling. And Delia's, The Limited, Payless ShoeSource, Aeropostale and Wet Seal all filed for bankruptcy this year. So did Claire's.
Claire's - that makes me really sad. That's, like, an old...
BARAM: Yeah, I know - same (laughter).
VANEK SMITH: I spent so much time in the mall at Claire's Boutique...
BARAM: So much time.
VANEK SMITH: ...Buying bad earrings.
BARAM: All the earrings.
VANEK SMITH: Little cowboy hats - I had a pair of dice.
GARCIA: Well, Chana says a few things are going on. First, consumers are not spending like they used to, and that has made things more competitive. And in this more competitive environment, Forever 21 has been losing ground to the new crop of online retailers - companies like Boohoo, ASOS, Revolve and Lulus.
VANEK SMITH: Is it price? What is it that, like, Boohoo can offer that Forever 21 and possibly H&M can't?
BARAM: You know, really fast trends, really respond to what people are wanting.
VANEK SMITH: How often do trends change? Is it like - there are the, like, half-day fashions and stuff?
BARAM: It's interesting 'cause it's not even necessarily, you know, spring, summer, autumn, winter. It's, you know, responding to a specific event. That's really important. People are seeing stuff on social media. They want it. They're very influenced, for example, by what they see on - reality TV stars wearing. I don't know in the U.S., but we have a TV show called "Love Island."
(SOUNDBITE OF TV SHOW, "LOVE ISLAND")
UNIDENTIFIED PERSON #2: If people get on the wrong side of me, you'll know about it.
UNIDENTIFIED PERSON #3: I can't wait to get in the villa and get in amongst it with all those fit girls.
UNIDENTIFIED PERSON #4: I'm coming to "Love Island" in hopes of finding love and finding, you know, the love of my life - fingers crossed.
BARAM: And people are watching that. You know, they want to wear what the people on that show are wearing.
VANEK SMITH: What did someone wear on "Love Island" that - I mean, people don't really wear that much stuff on "Love Island," right? Isn't that the point of "Love Island"?
BARAM: You know, it's really the swimwear and summer kind of outfits. And we've had, you know, retailers collaborating with "Love Island." And people - customers have really responded, you know, as they're watching it, where did this person get that bikini or where did this person get that swimsuit?
VANEK SMITH: And then it's just like, you go online, and there it is...
BARAM: Yes, exactly.
VANEK SMITH: ...On Boohoo or - so it's fast - it's quickness, actually. The old fast fashion isn't fast enough.
BARAM: Yes, in a way.
GARCIA: So that's the first reason that Forever 21 is struggling. It's just not fast enough. It is not responding to social media and reality TV the way that these other retailers are. And part of the reason Forever 21 is less fast, Chana says, is that it's dealing with so many physical stores - about 800 of them. And those stores are big. Forever 21, H&M - these were a volume business - giant, sprawling stores stuffed with inexpensive items.
VANEK SMITH: There was also that kind of barnlike thing that these fast fashion stores have, right? Like, part of it's that they just pack in all the super cheap clothing, right?
BARAM: Exactly - stack them high, sell them cheap.
GARCIA: The problem with this, Chana says, is twofold. First, all those physical locations make Forever 21 less nimble. They can't swap out displays as fast as an online store like ASOS can change the image on its home page. But also, those stores are expensive - long leases in expensive neighborhoods like Times Square and also paying all those employees who work there. The costs add up. So paying to keep all those stores clean and the lights on and the air conditioning going - it's all really expensive.
VANEK SMITH: And it's not paying off like it used to. Chana says people don't want to spend their time browsing in giant stores anymore. They want to be, you know, watching "Keeping Up With The Kardashians," see Kim's cute blouse and Khloe's cute sneakers and look them up on their phone and order a cheap version of them and have them show up at their house, like, right away, try them on. And if they don't like it, they want to be able to return it, you know, no fuss, super fast.
BARAM: You get your stuff the next day, and then you return it so quickly as well. So the - everyone is making it super easy. Some retailers collect the returns from your house within, like, an hour.
VANEK SMITH: Really? They just show up?
VANEK SMITH: Oh, that is hard to beat.
BARAM: It's so easy.
VANEK SMITH: It's so easy.
GARCIA: Online retailers like ASOS and Boohoo can stock small amounts of a lot of different things and respond to demand. They can ramp up production if Kim's cute blouse, for example, takes off.
VANEK SMITH: Which you know it will.
GARCIA: It probably will.
VANEK SMITH: Meanwhile, Forever 21 is stuck with thousands of, you know, neon green shirt dresses that nobody wants and a bunch of giant, expensive stores that nobody wants to shop in. And their online game isn't great, and their shipping is too slow. And it's kind of complicated to return things, and they don't even have the tiny green striped bikini from "Love Island." So customers get impatient and move on.
VANEK SMITH: I mean, you know.
GARCIA: The one exception, Chana says, is Zara, which has super streamlined its supply chain and has a really good online store. It has this superfast shipping and returns policy that helps it compete with the younger stores. Earlier this year, Zara had a dress go so viral that it had its own Instagram account.
VANEK SMITH: It did - the spotty dress, apparently. Everybody knows this.
GARCIA: I did not know that.
VANEK SMITH: I did not know this, either. And Chana says Zara proves that the fast fashion model can still work, but it needs to get faster about responding to trends, faster with shipping and returns and also, it needs to get a lot of the big, expensive stores off its books. Forever 21 does seem to be moving in that direction. It currently has more than 800 locations, and it's looking to close almost half of them.
GARCIA: But obviously not the one that you were in this morning.
VANEK SMITH: No.
GARCIA: All right. So the Forever 21 challenge - how did it go?
VANEK SMITH: OK. So I went into Forever 21, just like I did all the time back in, like, 2009. And in Forever 21, it is still 2009. Remember that Kesha song "TiK ToK"? That was playing when I walked into the revolving doors.
(SOUNDBITE OF SONG, "TIK TOK")
KESHA: (Singing) Don't stop. Make it pop...
VANEK SMITH: So I wanted to see if I could buy a whole outfit for $21. In fact, the outfit that I'm wearing right now - I purchased it this morning at the Times Square Forever - everything I'm wearing is Forever 21.
GARCIA: It looks good, too.
VANEK SMITH: Thank you.
GARCIA: It looks nice. Yeah.
VANEK SMITH: Thank you very much. I was - Forever 21 has more than just clothes.
VANEK SMITH: It's a lifestyle.
GARCIA: This episode of THE INDICATOR was produced by Darius Rafieyan, edited by Paddy Hirsch and fact-checked by Nadia Lewis. THE INDICATOR is a production of NPR.
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