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• Mariette Guinto

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Forever 21 Bankruptcy| Case Study Analysis

I.

Statement of the Problem How will Forever 21 reorganize their business?

II. -

III.

Objectives To reorganize and reposition their brand within the year To improve and increase online sales and customers To adapt with the demand of customers

SWOT Analysis STRENGTHS

1. Fast Fashion 2. Inexpensive, trendy clothes and accessories

OPPORTUNITIES 1. Improve online selling 2. Restructure and reposition the company

WEAKNESSES 1. 500-million-dollar debt 2. Continued sluggish sales 3. Bankruptcy

THREATS 1. Online competition 2. Too many stores 3. Demand of higher-quality goods at a low price

Strengths 1. Fast Fashion (Value Chain-Marketing & Sales) - The company started as “Fashion 21 and was known as “fast fashion” since they provide large number of trendy clothes and once it was sold out, they will never manufacture the same designs.

2. Inexpensive, trendy clothes and accessories (Value Chain-Marketing & Sales) - The customers were attracted to their trendy fashion items because it is inexpensive than other brands Weaknesses

1. Continued sluggish sales (Value Chain-Marketing & Sales) - Due to changing trends and demands, it has affected the company which resulted to their decrease number of sales. Especially with the number of their stores closing because of the rise of online marketing.

2. 500-million-dollar debt (Value Chain-Marketing & Sales) 3. Bankruptcy (Value Chain-

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Opportunities 1. Improve online selling (Technological Factor) - This will give the company to improve online marketing. By selling online, they can reach customers and increase their sales rate. 2. Restructure and reposition the company (Economical Factor) - Due to changes in preferences, where shoppers prefer buying online, Forever 21 should take this chance and reposition their company. With the closing of their physical stores, they may used this in gradually paying their debt and funding their online selling. Threats 1. Online competition (Technological Factor) - Online competitors such as ASOS and Amazon. 2. Too many stores (Economical Factor) - Since the customers prefer online shopping, Forever 21 has closed many of its stores in North America and Canada. 3. Demand of higher quality goods at a low price (Socio-Cultural Factor) - Millennial shoppers demand higher quality goods at a low price. Cheap chic is no longer in fashion.

IV.

Framework

Kurt Lewin Change Model

Unfreeze

Change

Refreeze

Forever 21 may use this model to improve their management and marketing.

Unfreeze- With this stage, they will identify their company’s status. Since their management problem is lack of clarity and differentiation, they can focus and analyze the demands and trends of their target market. All that has affected their sales will be reviewed and examined by the management. Change- In this stage, the company will implement their plan. Their plan is to improve online selling and provide items that is based on the customers demand. Refreeze- Lastly, Forever 21 will monitor the changes they made. They should analyze the changes in customer preference and fashion trends. They can also make their own trends but it will take more analysis and review to make sure that they will remain on their track.

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Kurt Lewin’s PDCA Framework

Act

Plan

Check

Do

Plan- In planning, they will analyze the preference of the customers, online competition and fashion trends. Do- In implementing their plan, they may conduct a test. For example, in online selling, they may check how many buyers they will get, and which products gets the greatest number of purchases. Check – In this step, they will review their plan and the results of their test. When the result is positive, they may continuously implement it and identify the things that they’ve learned and use it as their guide Act- Continually monitor the plan and changes, if it did not work, they may start again with planning and use what they have incorporate from the test.

V.

Alternative courses of action Alternative course of action 1- Brand repositioning Alternative course of action 2- Analyze online market, customer preference and fashion trends

VI.

Recommendation Alternative course of action 1- Brand Repositioning -

As Forever 21 was known as “fast fashion” and have provided affordable trendy items, they weren’t able to focus on changes in fashion trends, customer preferences, and online marketing which resulted to lack of clarity and differentiation. With this, it has resulted to their decrease and sales, increased debt and bankruptcy. I highly recommend that they reposition their brand by, analyzing the trends and improve online marketing. With this marketing strategy, they may keep ups with the customers wants and needs, reconnect with them, reach new customers which will get them back on track.

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VII.

Action- 1-year plan

Gantt chart

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