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Why Forever 21 Is Failing With Gen Z & Millennial Shoppers

Forever 21 might file for bankruptcy, and our brand tracker shows how young consumers have been changing their view of the retailer…

Last week, the news that Forever 21 was planning to file for bankruptcy hit the internet—and Gen Z and Millennials responded with memes. Posts about the retailer’s recent USPS and Hot Cheetos collaborations went viral, with social media joking en masse about the brand missing the mark in targeting their demographic.

Forever 21 faces mountains of debt and stalling sales. Their beauty stores, Riley Rose, were supposed to be the fast fashion chain’s potential savior, but they too have struggled. Some have posited that secondhand marketplace apps like Thredup, Poshmark, and Depop have hurt retailers, with the $20 billion resale market outperforming the overall retail market in the past five years according to IBISWorld. H&M and Forever 21 are feeling the loss of that market share. But young consumers’ response to Forever 21’s bankruptcy news indicates that the brand has a larger perception problem contributing to their troubles. So we looked to YPulse’s youth brand tracker to find out what’s been going on with their brand affinity. According to our data, the brand’s shoppers are most likely to be 18-24-year-olds, and 13-30-year-olds make up 75% of their market. We looked at the brand’s overall Yscore (an average of all the dimensions we monitor in our ongoing brand tracker surveys) among this group of young consumers, and their year-over-year Yscore performance. The evidence that their perception among 13-30-year-olds has been on the decline is clear:

The Yscore aggregates performance across all 16 measures we cover in the brand tracker. Some brands’ Yscores may be boosted by the fact that young consumers say they’re popular, while others may be boosted by the perception that they’re innovative, etc. To put it simply: the higher a brands’ Yscore, the more positively young consumers feel about a brand, and the stronger their overall relationship with the brand is. Here, we can see that compared to 2018, Forever 21’s Yscore has been lower nearly across the board this year. To find out more about why, we’ll look at the brand’s diagnostics: the averages of their measures assessing Influence, Momentum, Personality, and Relevance:

Here, we compared the month’s average scores at the start of the brand tracker (in January of 2018) to the most recent month’s average (Sept 2019). Again, we see drops across the board in brand perception among 13-30-year-olds, indicating that overall, the brand has been losing affinity with Gen Z and Millennials for some time. The biggest drops are in the Momentum and Personality metrics, which fell 8.6 and 7.6 points, respectively. Here, we can see exactly where they saw the biggest losses in momentum and personality assessments:

A brand’s momentum score is determined by young consumers’ assessment of whether they have a bright future, are a “hot” brand, whether they’re talked about among their peers, or if they’re a brand that they’ll use, buy, or buy from in the future. This is the dimension that Forever 21 has seen the steepest declines in. Their “talked about” average monthly score dropped 18.1 points from Jan 2018 to Sept 2019, and their score as a “hot” brand fell nearly as far. Personality scores for Forever 21 have also suffered significantly.

Of course, Forever 21 is not alone in failing to survive the retail wasteland. According to Business Insider, 7,000 more stores are closing their doors in 2019. PayLess ShoeSource, Gymboree, Dressbarn, and Charlotte Russe lead the list planned to shutter this year, as retailers learn to scale down size. As Bloomberg reported, fast fashion giants have struggled to adapt to young consumers’ shifting shopping preferences. Filing for bankruptcy would allow Forever 21 to do what many other retailers have done: Downsize their IRL presence by shutting down poor-performing stores. But our brand tracker data shows that it’s not just an oversized footprint or retail alternatives that are causing Forever 21’s woes. They need to turn around young consumers’ perception of the brand as well, focusing on their personality and rebuilding momentum. In other words, the brand might want to listen to those memes.