Forever 21, the fast-fashion revolutionizer, first gained the attention of every teenage girl for one big reason: product-market fit. 

The fashion giant understood two big things; young people have the need to constantly keep up with the latest fashion trends, and lack the income to support their ever-changing wardrobe. There was a gaping hole within the fashion industry, and this is exactly where Forever 21 built its empire. 

It has now been 35 years since the retailer first opened its doors to the mob of wide-eyed teenage girls, and things have… changed. 

On September 29, 2019, Forever 21 announced its decision to file for bankruptcy, and people were quick to react. Twitter was instantly flooded with a wave of mixed responses to the news, with many shoppers pointing out the obvious shift in aesthetics, visible in the retailer’s recent collaborations. 

business plan components forever 21 fatally missed

While the fashion world was licking its wounds from yet another iconic retailers downfall, I started asking one big question:

How could a company that began with such a targeted approach, end up so far from its initial goals?

In order to find out, I sought out the knowledge and expertise from two leaders at Palo Alto Software (makers of Bplans), Noah Parsons, COO, and John Procopio, director of marketing.

My attention was immediately drawn towards discrepancies with Forever 21’s original business model. What really struck me was that, from the outside, it seems like the company didn’t have a solid strategy or a nimble business plan—a lean plan—that could adapt to changes in customer desires and changes in how younger generations shop. 

In the end, Forever 21’s downfall comes with three entrepreneurial lessons. Don’t abandon your niche, keep listening and responding to customer needs, and don’t neglect your customers’ experience.

Forever 21 Lost Touch With Their Niche

Finding and defining your niche is essential to building a company, and maintaining your focus is the key to growth. Forever 21 built its empire by producing a unique line of products for an underserved niche. 

This hyper-focus led to quick success and rapid growth, which eventually came to a halt because of the company’s failure to maintain its core connection. Instead of creating unique products for trendy teenage girls, they added a men’s line, plus + curve line, beauty line, and girls line. They spread themselves too thin and tried to serve too many different niches—so much so that their brand started to seem disjointed and confusing. 

Expand Your Niche

When creating your own company’s growth strategy, think about ways to expand the products you currently offer to your existing customer base. It can be tempting to view a broader product focus as appealing to a wider range of customers, but if it’s not done well, the real outcome is a brand that no one truly identifies with. 

The largely successful company, Nike (which started off as a simple shoe store), is a classic example of a company that was able to foster rapid growth while maintaining its original niche. Instead of creating dress shoes or high heels in order to appeal to a broader audience, they launched clothing and accessory lines that channeled the athleticism which underpins the essence of their brand and makes them appealing to their target market
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They Stopped Listening to Their Customers

“Know your customer’s pain points, don’t look for solutions.” – Noah 

The problem with creating solutions for customers is that most of the time, they have no idea what they really want. 

Noah pointed out that if Henry Ford had asked his customers what the solution to all their transportation problems was, they would have asked for a faster horse.

The fact is—people are much more in tune with their dissatisfactions than they are with their actual needs. As a business owner, it is your job to listen to your customers’ pain points and develop a life-changing product, instead of giving them another horse. 

When Forever 21 became disconnected from their original niche, you could argue that they stopped listening to their core customers—they lost valuable insight, and it was harmful to their brand. 

For example, the idea of sustainable living, and sourcing clothing from greener alternatives is rapidly rising in popularity among Generation Z. With Forever 21 being an infamous example of fast fashion and cheap clothing, consumers began slowly disengaging with the brand. 

Forever 21 not only failed to address this emerging pain point, but they failed to change, while their largest competitors (such as Zara) were creating ambitious sustainability goals, and reinventing their business model. 

As you look into the problems your customers face, keep in mind that you are selling a customer experience —not just a product. Addressing pain points is a continuous process, that is based on much more than the physical aspects of your company. 

They neglected the customer experience

As social beings, we are constantly relying on our emotions and experiences to shape our opinions. We don’t just want a great product placed in our hands, we want to feel the satisfaction from personal interactions, the desire from watching commercials, the calmness of an effortless online order, and finally, the pure bliss of owning the product. 

Looking back to Forever 21’s customer experience, the main things I remember experiencing were frustration, overwhelm, and exhaustion. 

The physical stores were understaffed and in a constant state of clutter, and the website was a chaotic muddle of sales and styles that failed to lead to a clear choice. I enjoyed many products sold by the store, but the process of receiving them was structured so poorly that I ultimately stopped returning. 

key business components that forever 21 fatally missed

When thinking about how to create a customer experience that doesn’t make your customers feel like they are being slowly tortured, John says that the one big question to ask yourself is: “what is the win for your customers?”

In other words, why would a person benefit from engaging in your customer experience, rather than your competitors’? You should be asking this question at every touchpoint you establish; online stores, customer service, physical stores, and everything in between. 

A Cautionary Tale

Unfortunately, as we saw through Forever 21, not every business will follow the picture-perfect storyline that ends with a happily ever after. To ensure the longevity of your business, it is your job to periodically revisit the origins of your company—and your roadmap. 

Your business plan is more than just a starting point, it is a living document that needs to be revisited, and regularly updated, especially when you learn more about how your target market—your customers—are changing. Incorporating this revision process into your routine will re-establish the core values that align with your niche, and drive a positive customer experience within your company. 

AvatarNina Bamberger

Nina Bamberger is a business development associate at Palo Alto Software. Her recent work has included strategic writing, social media campaign management, and collaboration on creative content for advertising. She is currently studying business administration at the University of Oregon, and will be graduating in 2020.