For many years, Forever 21 has been a problematic favorite. While many consumers realized that the store’s inexpensive prices infer both cheap quality and questionable manufacturing methods, the allure of all things trendy and cheap was hard to resist. But recently, the store has found it hard to compete. Although US retail sales hit a record $5.7 trillion in 2017, Forever 21 locations have seen decreased foot traffic and have suffered difficulties when trying to measure up to popular online alternatives. Now, there are rumors circulating that the organization — once wildly successful — may be filing for bankruptcy in the near future. And given the number of legal issues the company still faces, it’s easy to see why.
Although Forever 21 has seen its share of controversies, it wasn’t until recently that those issues seemed to catch up with the retail chain. Created by a husband and wife team, Do Won Chang and Jin Sook, in the 1980s, Forever 21 was referenced as the ultimate American Dream story. But the couple lost their billionaire status, with Forbes citing their accurate net worths are closer to $800 million each. While that’s still certainly a marker of success by most standards, the change indicates that the company has struggled to stay afloat. Hundreds of their 800 stores worldwide have seen dwindling interest from teen consumers and customers in their 20s, while brands like Asos, Fashion Nova, H and M, and Zara have thrived. That’s no surprise, as millennials (who are now in their late 20s and early 30s) make roughly 60% of their purchases online and would rather shop via the internet than going to a physical store. While Forever 21 does have an online presence, it often pales in comparison to other options available.
It doesn’t help, of course, that Forever 21 has been hit with a number of accusations regarding copyright and trademark infringement. From independent artists to international fashion houses, other brands have alleged that they’ve been blatantly ripped off by Forever 21. Although the U.S. Patent Act was first established in 1790, these kinds of protections may not help small business owners if they don’t have the resources to fight back. But now, the fast fashion retailer has made enemies of major movers and shakers — and they’re not backing down without a fight.
Take Ariana Grande, for example. When Grande launched her hit song “Thank U, Next” last year, the retailer initially reached out to her representation in hopes of creating a social media endorsement deal. Ultimately, the deal fell through, explained Grande’s management, because Forever 21 wasn’t willing to pay Grande enough for her name and likeness. While that may sound petty, Grande reportedly became the most-followed woman on Instagram in February 2019, amassing an astounding 160 million followers. Every sponsored social media post Grande puts up “garner fees of several hundred thousand dollars, and her longer-term endorsement arrangements command fees in the millions of dollars,” outlines the singer’s claim in legal documents. Apparently, the retailer wasn’t about to pay that much to use her exact likeness — so they decided to use a lookalike instead.
That’s what Grande’s team says, anyway, and it’s hard to ignore the evidence. The retailer hired a model who looks strikingly similar to the former Disney star and created garments and accessories to emulate her costumes from her “7 Rings” music video. (Ironically, Grande was forced to pay 90% of the royalties from “7 Rings” to Rodgers and Hammerstein, as she used the melody of “My Favorite Things” from The Sound of Music without permission.) Forever 21 even went so far as to run ad campaigns wherein the model sports Grande’s signature high ponytail and the overall aesthetic is clearly inspired by the video. Some of the captions on these posts even featured lyrics from Grande’s songs. And although Forever 21 agreed to take down the posts in February after being contacted by Grande, they reportedly remained up and active until April — meaning that the retailer allegedly continued to capitalize on Grande’s image and success for months.
Now, Grande is suing Forever 21 for at least $10 million in damages for copyright and trademark infringement, false endorsement, and violating publicity rights. Between pending lawsuits and lost revenue, Forever 21 is already $500 million in debt. Unsurprisingly, the retailer is considering filing for bankruptcy, according to sources close to the issue. While 12.8 million consumer bankruptcy petitions were filed in federal courts between 2005 and 2017, it’s certainly become more common for once successful stores to join in. Forever 21 has already started downsizing, with the Wall Street Journal reporting that roughly 700 stores will be closed in the future. But while it seems that Chapter 11 bankruptcy may be imminent, representatives of the brand have dismissed these reports, saying that Forever 21 has no plans to file for bankruptcy.
While no official confirmation of the filing has been made, many experts believe it’s only a matter of time before the retailer is forced to seek financial protection. Whether the brand will survive in any capacity remains to be seen — but unless the company undergoes a massive rebranding and somehow manages to recapture the interest of young shoppers, chances are good that “forever” might not be quite so ever-lasting as the company’s founders initially thought.
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