Forever 21 Moving Into Bigger and Bigger Stores

The cheap-chic retailer is aggressively super-sizing its stores as other chains shift to smaller locations. Retail experts aren't sure whether bigger is better, but Forever 21 says the larger stores are attracting new customers.

Los Angeles Times
By Andrea Chang

Forever 21 Inc. built a retail empire by selling the latest fashion trends, but when it comes to running its own business, the Los Angeles company isn't following the crowd.

During the recession, when Mervyns and other chains were going bankrupt and shutting stores, Forever 21 snatched them up.

At a time when competitors, worried about taking risks in a down economy, focused on basics like T-shirts and jeans, Forever 21 continued to churn out fresh and trendy merchandise.

Now as traditional big-box retailers such as Wal-Mart Stores Inc., Target Corp. and Kohl's Corp. are opening smaller retail locations, Forever 21 is aggressively super-sizing its stores.

Its latest megastore opened last week in L.A., when the family-owned company consolidated its three Beverly Center stores into a new 45,000-square-foot space, more than doubling its presence in the mall.

The retailer also took over an 86,000-square-foot former Mervyns at Los Cerritos Center last year and a 91,000-square-foot location in Times Square in New York. Its new Las Vegas flagship is 127,000 square feet, about the size of an average Target, and in September, it will open a store in Mission Viejo in a building previously occupied by Saks. Its biggest store, at 150,000 square feet, opened last month at a shuttered Gottschalks location in Fresno.

With spaces that large, Forever 21 is moving into unknown territory for a cheap-chic retailer: No longer relegated to the cluttered-and-cramped feel of many of its smaller stores, the company is bringing its rapidly changing merchandise into huge spaces typically associated with department stores.

And with a growing lineup of categories — maternity, plus sizes, cosmetics, children's, swimwear and shoes among them — all sold at bargain-basement prices, retail analysts say the retailer is shaking up and redefining the traditional mall anchor concept.

But is bigger better? Retail experts aren't sure.

"Do I normally advise my clients to expand? No. But in times like this, if you have good reason to expand, then I think you take advantage," said Marshal Cohen, chief industry analyst at NPD Group. But "they've got to be careful that they don't get too big."

Forever 21 is "almost taking a mini, hipper department store approach," said Christine Chen, a retail analyst at Needham & Co.

"The question really is, how sustainable is what they're doing?" she said. "They have defied odds and skepticism, but going forward they have all these really large locations. As they go into more and more markets and become more ubiquitous, does the coolness factor at some point in time go away?"

For now, shoppers say they can't get enough of the chain's prices and selection.

More than 300 shoppers turned out at the Beverly Center on Saturday before the store's 10 a.m. grand opening, queuing up in a line that stretched through the food court and out onto the terrace. It was an eclectic crowd made up of young and old shoppers, teenagers, mothers pushing strollers, tourists, children, older customers and luxury shoppers toting Louis Vuitton handbags. The earliest shoppers, a family from Bell, had arrived shortly after midnight.

"In this economy, it's the best bet to be able to go shopping and not break the bank," said Lisa Cullen, 27, a bartender from Hollywood. "You can come every other day and there will be something new."

The opening also attracted some first-timers such as Nick James, 28, a model who said he hadn't known the chain carried men's clothing.

"I always wanted Forever 21 — I was almost jealous of my girlfriend when she had so many options to choose from," he said. "It's like disposable fashion."

The bigger stores have generated a lot of buzz, but they've also translated into increased business, President Alex Ok said. With more room for varied styles, shoppers are spending more time and money in the larger stores; the company is also seeing a wider clientele.

"People used to say we were a two-generation store, now we're a three-generation store," Ok said.

Forever 21 Hosts Holographic Fashion Shows

Marketing Daily
By Tanya Irwin

Fashion retailer Forever 21 is hosting a series of unique fashion shows worldwide that use holographic images instead of live models.

The promotion, conceived and produced with the help of digital agency space150, kicked off last week in Vienna, Austria. A total of eight shows are currently scheduled, with the next two in Brussels and London in June and July, says Los Angeles-based Forever 21 Marketing Manager Kirstin Nagle. A New York show, currently the only U.S. show scheduled, will be in the fall.

The Vienna show, timed to celebrate the opening of the flagship Vienna retail store, gave invited fans and customers the chance to see breaking fashion trends in a runway show comprised entirely of holographic models. It was both a press and consumer event, she says.

"Consumers obtained invites to the event through becoming fans of our Facebook Grand Opening event page," Nagle tells Marketing Daily . "For our upcoming events marketing and outreach will also be done through social media. Depending on each market and size of venue, a certain number of consumer invites will be given."

The show features a runway first: no live models. Holographic models, wearing designs from Forever 21's new line, walk the runway, disappear into starbursts and climb invisible staircases that light up underfoot.

"We know that our customers are tech savvy and stay on top of trends in both fashion and technology," Nagle says. "These shows are a way of connecting with our consumers in both areas."

Forever 21's program of digital brand entertainment began in June 2010 with the introduction of an interactive Forever 21 billboard in Times Square, New York. Also conceived in partnership with space150, the board located on the site of the iconic Virgin billboard, features giant onscreen models interacting in real-time with customers on the streets outside the store. Models snap Polaroids of the crowd in real-time or pick people up and drop them into a store shopping bag.

The brand operates 450 stores in the United States with operations internationally in Bahrain, Canada, Indonesia, Japan, Jordan, Korea, Kuwait, Malaysia, Oman, Saudi Arabia, Singapore, Thailand and UAE (Dubai and Abu Dahbi).

Hauling for Dollars: Is Customer-Created Video Good for You?

The Video Conference Consortium
By Rich Fahle

We’ve talked plenty on this site about the importance of creating a smart online video strategy, one that complements and advances your specific brand message and provides a roadmap toward the right style of video for your company.

But what about the video that you can’t affect? In particular, the hundreds of thousand of customer-generated videos now freely posted on YouTube and other sites that dole out brand opinions and product reviews to millions of passionately interested viewers.

How do you go about making that part of your video strategy?

That’s the marketing challenge many retail brands now find themselves navigating with the hugely influential “haul video” phenomenon: Customer-produced videos hosted by chatty, mostly female, teen shoppers providing blow-by-blow coverage of their most recent shopping hauls. It’s a trend that took off last year and has continued to grow and expand as new “haulers” join the fun.

Let’s be clear. This is a challenge most retailers would happily tackle given the astounding viewership of many of these homemade videos. Some, like those on YouTube from Blair Fowler (aka juicystar07) and her sister Elle Fowler (aka allthatglitters21) have more than 150 million views (no, that’s not a typo, folks), with more than 1.5 million subscribers between the two. And there are many, many other haulers out there. A quick search on YouTube shows more than 218,000 results for “haul video.”

The haul video formula works like this: After returning home from a shopping trip or receiving an online shipment from a favorite store like Forever 21, Beverly Lane, or Sephora, teen shoppers videotape themselves removing each fabulous find from the bag, explaining the vital benefits of a new lip gloss, a fun pair of flip flops, a stylish new dress or a sparkly necklace. The videos are uploaded to YouTube, often to user’s own personalized, highly trafficked channel where they are watched, shared and endlessly discussed.

No doubt that some adults may be wary of the notion of the mall teen with broadcast muscle. It’s easy to understand why some might judge some of these girls as materialistic or worse. But for a retailer with a teen target demographic, haul videos can mean magic—the kind of endorsement-driven viral marketing that brands salivate over but can’t buy using normal advertising channels.

Some haulers do receive compensation from the companies whose products they discuss, and they are required to disclose this to their audience. Companies like Bath & Body Works, American Eagle, JC Penney and others are actively courting various haul video stars for paid marketing projects, contests or giveaways as a way to attract new customers. The Fowler sisters, for their part, recently moved to Los Angeles to better expand their online video fashion empire, which now includes makeup, hair products, diet tips and other fashion accessories. But while some of the video kids may be getting paid, most are happily producing their video product reviews for free, all in the name of Internet entertainment and personal expression.

So what are the dangers of user-generated content?

While the haul video trend and other similarly intentioned customer-created videos have huge potential for growth, brands are advised to proceed cautiously. The upside of personal endorsements from key influencers in a particular niche may very well be too great to ignore, but there are some concerns when you turn your marketing over to the Wild West world of homemade video.

For one, haulers and other organically grown brand evangelists can accidentally spread wrong or incorrect information about the quality or prices of your products. From a larger brand strategy perspective, it’s possible that the varied, but unvetted group of content creators could present an inconsistent brand message, slowly eroding your hard-earned brand equity. Plus, the home-made, often uncensored, quality that is the key to the haul video’s believability factor can also be a turnoff; you can’t edit out something you don’t like in a video that isn’t yours.

Given the potential drawbacks, it makes sense to consider how to incorporate user-generated video into your larger marketing strategy. To that end, for many major retailers, user-generated video has become a key marketing component of a larger strategy.

Retailers capitalizing on the trend

JC Penney is one of the retail brands jumping on the haul video trend. This past fall, for its back to school campaign, JC Penney worked with a group of six budding haul video influencers. Penney’s provided gift cards ranging from $250 to $1,000 in exchange for a series of videos that were uploaded to the retailer’s YouTube channel, Facebook page, and on the retailer’s teen-focused website www.jcp.com/teen. As required, the young videographers each disclosed that they had received gift cards, but were allowed to buy whatever they wanted and were encouraged to be honest about their purchases. By all accounts, JC Penney views the campaign as a huge success. As another example, American Eagle, regularly points their Facebook and Twitter followers to selected haul videos online, weaving the video endorsements into their everyday marketing mix.

It’s too early to tell whether customer-created haul videos will remain a long-term factor for retail brands like Forever 21 or fade into passing fad status. But for the time being at least, haul videos seem to be sticking around. The videos are effective because they’re generally honest and believable. As more companies try to capitalize on the trend with marketing and ad budget support, savvy teens may begin to smell a marketing campaign instead of something cool and fun. If that’s the case, expect the videos to move on to other subjects.

Still, it’s clear that the lower barriers for entry to online video are empowering factors for both company and customer—and it’s hard to envision ever putting that genie back in the bottle. That means for brands and brand video managers, the key will be, as always, finding new ways to keep it real.

Click here to see a sample haul video from juicystar07.

Teen Retail CEOs On the Move

by Alexandra Steigrad
From WWD Issue 03/23/2011

Fickle teens are leading to insecurity in the executive ranks of youth retailers, who’ve seen a series of management shake-ups as the sector attempts to get back into growth mode after a weak, highly promotional 2010.

Since the start of the year Hot Topic Inc. and The Wet Seal Inc. have appointed new chief executive officers and American Eagle Outfitters Inc. has revealed plans to do so, while Mindy Meads stepped down as co-ceo of Aéropostale Inc. in December, leaving the role of sole ceo to Thomas Johnson.

All are in the process of turning around their respective brands and trying to get a handle on shifting teen fashion preferences and tightening spending tendencies. And all have struggled with top-line challenges. PacSun, Hot Topic and American Eagle had respective comparable-store sales declines of 8 percent, 5.3 percent and 1 percent in fiscal 2010. Aéropostale, an industry overachiever with a 10 percent comp gain in 2009, saw its increase dwindle to 1 percent last year. Wet Seal reports results for the fourth quarter and year on Thursday.

“As business shows some indication of getting better, companies seem to be more ready to make the executive changes that they expect will generate their share of the increase in business in this environment,” said John Jonas, president and ceo of executive search firm The Jonas Group. “The need for someone to ‘get’ how to approach online and international business is also key now. As always, having great leadership is necessary for success in the super competitive retail sector.”

But there’s something specific about the teen sector that has sparked the ceo mass exodus, according to analysts.

“Ceo movement is a direct correlation to performance,” said Susquehanna specialty retail analyst Thomas Filandro. “Clearly, there’s a lack of differentiation within the sector…. There’s not a dominant enough trend in the teen sector, and as a result, it’s more of a dog-eat-dog world.”

Gone are the days of relying on basics and “heavily logoed” T-shirts and hoodies. “Kids are somewhat de-logoizing,” he said. “It’s more difficult to differentiate without logos.”

With their low-priced, trendy apparel, competitors like H&M, Zara and Forever 21 have left many staple teen retailers flat-footed, he said, pointing to American Eagle, which this month announced the retirement of ceo James O’Donnell. The ceo, who’d been with the firm for 11 years, was set to resign in 2013 and will remain until his successor is in place.

“The Eagle lost sight of who its target market and customer are,” he said. “They have been extraordinarily disappointing…the merchandise on the floor, the messaging and their marketing are inconsistent with their brand DNA.”

In order to turn around the brand, American Eagle should look for a ceo with a “merchandising or design background, as product seems to be what they are struggling with,” noted Wedbush Securities analyst Betty Chen.

Chen suggested former Aéropostale co-ceo Meads or current Charlotte Russe head honcho Jenny Ming.

What many of these companies have in common is the need for a “fresh perspective” to expedite a turnaround, she said, pointing to Hot Topic, which Monday appointed director and former Gymboree ceo Lisa Harper to succeed Betsy McLaughlin as ceo. McLaughlin resigned after 11 years in HT’s top spot.

It’s now been 20 months since Gary Schoenfeld joined PacSun as president and ceo, snagging a spot that had been occupied for three years by Sally Frame Kasaks, the former Ann Taylor and Abercrombie & Fitch executive. Kasaks, a PacSun director, was initially appointed interim ceo, but the interim was removed after she’d been on the job a year.

Under Schoenfeld, PacSun’s struggles have continued. Last week, it reported a smaller fourth-quarter loss but fell short of analysts’ sales and earnings estimates.

Sitting out the ceo dramas of recent months — although not exempt from occasional rumors of a possible takeover — is Abercrombie & Fitch, led by chairman and ceo Michael Jeffries and coming off a year in which it posted a 7 percent comp gain after a 23 percent decline in 2009. Abercrombie generally is viewed as having held the line on fashion leadership while becoming far more competitive in its pricing.

Prior to hiring its new ceo Susan McGalla in January, Wet Seal has battled to balance price and compelling fashions.

This balancing act, however, is symptomatic of the times, as retailers who have fared best have opted to buy shallow and test different merchandise.

“If you are offering commoditized product, you will get beat,” Susquehanna’s Filandro said, pointing to chains like Victoria’s Secret, Express, Buckle Inc. and Zumiez Inc. “These companies are creating innovation and newness. They are reading and reacting to what consumers are looking for and they are winning.”