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Is Third Time the Charm for Forever 21 in China?

Forever 21 is taking another stab at the Chinese market.

The retailer said on Chinese social media platform WeChat that it would open a store this month at Jingjiang Impression City shopping center in Taizhou, a city neighboring Shanghai, according to a Reuters report citing various Chinese online mapping apps showing a Forever 21 store under construction at the shopping center.

This would mark the company’s first store opening in China since it exited the country in 2019.

Forever 21 already reestablished an e-commerce presence in China last year, first selling exclusively on platforms such as online discount retailer Vipshop and Pinduoduo, a platform connecting consumers with farmers and manufacturers. Forever 21 later opened a store on Alibaba’s Tmall marketplace.

On the WeChat account, the company also posted advertisements promoting sales for China’s 618 mid-year shopping festival, with a link leading users directly to their WeChat online store.

An example of a Forever 21 advertisement on WeChat.
An example of a Forever 21 advertisement on WeChat. Forever 21

Authentic Brands Group (ABG), which acquired Forever 21 out of bankruptcy as part of the SPARC joint venture in early 2020, did not immediately respond to Sourcing Journal’s request for comment.

Last year, ABG signed a licensing agreement with Hong Kong-based Lasonic Electric Xusheng Co. Ltd. and its subsidiary, Xusheng Electrical Co. Ltd., to manage Forever 21’s China operations.

The fast fashion brand first entered China in 2008, opening a store in the city of Changshu before closing up shop just a year later.

But Forever 21 was persistent and went ahead with a second go-around in 2011. The company operated 20 brick-and-mortar stores in the country at its peak in 2018, including flagship outlets in Shanghai and Beijing and locations in other major cities like Tianjin and Shenzhen.

This lasted until 2019 when the retailer filed for Chapter 11 bankruptcy in the U.S. Before leaving China, Forever 21 exited Hong Kong in 2017 and Taiwan in 2018.

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The third endeavor into China comes at a time when a global supply chain crisis and a slowing U.S. economy have affected retail operations stateside. But China is still battling Covid-19 outbreaks that led to ongoing lockdowns across major cities and also contributed to outgoing shipping delays.

Retail sales in the market fell 6.7 percent year over year in May, according to China’s National Bureau of Statistics, marking the third-straight month of industrywide revenue declines. While the pace of decline eased from April’s 11.1 percent decline, the data marked the latest indicator of how China appears to have a hard time jumpstarting consumer spending because of the ever-present threat of mass lockdowns.

Forever 21 is far from the only Western fashion brand that did poorly in China, with merchants like Urban Outfitters, Everlane, Asos, New Look and Old Navy struggling before calling it quits in the country altogether.

For one, local competition is fierce, especially since domestic brands throughout China can compete on factors like cost and supply chain. And according to the 2021 WPP BAV Best Countries study, which measures perceptions of countries across the world, 76 percent of Chinese respondents are willing to pay more for something made in China.

Whether the third China venture succeeds or not, it will be one of many other experiments the fashion company is hoping to cash in on under new management.

The modern iteration of Forever 21 is trying new things by linking up with some legacy players. In 2021, the retailer partnered up with one of the oldest major retailers in North America, Hudson’s Bay Co. (HBC), bringing full-line collections to select stores and the company’s online marketplace. Later that year, Forever 21 introduced a range of merchandise across 100 JCPenney stores and online. That connection was brought together by ABG, which is a partner of JCP co-owner Simon Property Group.

And in June, Forever 21 kept the nostalgic theme in launching the Barbie Summer 2022 Collection, which features women’s jean jackets and shorts, swimwear, sleepwear and accessories, as well as beauty products and home décor.

Currently, Forever 21 says it has 572 stores open globally.