In March 2025, Forever 21 filed for Chapter 11 bankruptcy protection for the second time in six years, announcing plans to close all 354 of its U.S. stores by May 1. The company cited intense competition from online fast-fashion retailers Shein and Temu as significant factors in its financial struggles. These Chinese e-commerce platforms have leveraged the “de minimis” exemption, allowing goods valued under $800 to enter the U.S. duty-free, enabling them to offer lower prices and capture a substantial share of the market.
Despite efforts to adapt, including a partnership with Shein in 2023, Forever 21 was unable to overcome these challenges. The company’s merchandising strategies and product assortments failed to resonate with younger consumers, leading to a decline in its customer base.
In addition to Shein and Temu, Forever 21 faced competition from other retailers targeting the younger demographic with affordable fashion trends, such as Aéropostale, American Eagle, Gap, and Abercrombie & Fitch. However, the rapid rise of online platforms offering ultra-fast fashion at lower prices significantly impacted Forever 21’s market position.
The company’s bankruptcy highlights the evolving landscape of the fast-fashion industry, where traditional brick-and-mortar retailers struggle to compete with agile online competitors. As Forever 21 winds down its U.S. operations, it serves as a cautionary tale for other retailers navigating the challenges of a rapidly changing market.
No responses yet