[WORLD] Forever 21, one of the most recognizable names in the fast fashion industry, has filed for bankruptcy for the second time in just six years. This news has sent shockwaves through the retail and fashion worlds, signaling deeper challenges within the fast fashion sector. As the company enters Chapter 11 bankruptcy proceedings, it raises questions about the future of the fast fashion business model, consumer behavior, and the broader retail landscape.
The Rise and Fall of Forever 21
Forever 21 was once a darling of the fast fashion industry. Founded in 1984 by Do Won Chang and Jin Sook Chang, the Los Angeles-based retailer quickly became a go-to destination for trendy, affordable clothing aimed at young adults. With its commitment to providing the latest fashion trends at rock-bottom prices, Forever 21 was a pioneer in the fast fashion space. It grew rapidly over the years, boasting hundreds of stores worldwide and becoming a household name.
However, the rise of e-commerce, shifting consumer preferences, and increasing pressure to adopt more sustainable business practices have severely impacted the company. Despite attempts to modernize, including focusing on digital transformation and closing underperforming stores, Forever 21’s financial difficulties have continued to mount.
In 2019, the company filed for bankruptcy for the first time, closing many stores and restructuring its operations. At the time, Forever 21 faced mounting competition from online retailers like Amazon and fast-fashion rivals such as H&M and Zara, which were better able to adapt to the rapidly changing retail environment. The bankruptcy filing led to the company reducing its physical presence, focusing more on its e-commerce platform.
The Second Bankruptcy Filing
Fast forward to 2025, and Forever 21 has once again filed for bankruptcy protection under Chapter 11. This move comes as the company faces a combination of financial instability, market saturation, and changing consumer habits that no longer align with its previous business model. While the company has been attempting to reinvent itself in the post-pandemic era, it has struggled to regain the market share it once enjoyed.
The second bankruptcy filing, while not entirely surprising, signals a deeper reckoning for Forever 21, which is now in its fourth decade of operation. As it works to restructure and secure a future in an increasingly competitive retail market, the company will need to confront several key challenges if it hopes to survive.
Key Challenges Faced by Forever 21
The Decline of Physical Retail
Forever 21’s reliance on physical stores has been a major factor contributing to its ongoing financial struggles. Even before the pandemic accelerated the shift to online shopping, consumers were moving away from brick-and-mortar stores in favor of digital experiences. Fast fashion retailers like Zara and H&M adapted quickly to this shift, investing heavily in e-commerce platforms to capture a larger share of the online retail market.
Forever 21, on the other hand, lagged behind, failing to build a robust online presence that could compete with the likes of ASOS, Boohoo, and other digital-first fast fashion brands. The company has made strides in the digital space but still has a long way to go to become competitive with industry leaders in e-commerce.
Changing Consumer Preferences
As the fashion industry becomes increasingly aware of the environmental and social impacts of fast fashion, consumers are shifting toward more sustainable and ethical purchasing choices. Brands like Patagonia, Everlane, and Reformation have capitalized on this trend, promoting eco-friendly materials and responsible manufacturing processes. In contrast, Forever 21 has faced criticism for its unsustainable practices, including the mass production of cheap clothing and its reliance on overseas factories with questionable labor conditions.
Younger generations, particularly Millennials and Gen Z, are more conscious of these issues than ever before, and many are choosing to support brands that align with their values. As consumers move away from the disposable nature of fast fashion, Forever 21’s business model, which once thrived on producing low-cost, low-quality garments, is increasingly seen as outdated and incompatible with current fashion trends.
Competition from Digital-First Brands
Forever 21’s traditional business model of stocking products in physical stores was challenged by a new generation of digitally native brands. Companies like Shein, PrettyLittleThing, and Boohoo have built their businesses entirely online, using advanced data analytics and social media marketing to target young shoppers. These companies have also mastered the art of producing and delivering trendy clothing at incredibly fast speeds, often with lower prices than Forever 21 can offer.
The rise of these digital-first competitors has made it difficult for traditional brick-and-mortar retailers to keep up. Forever 21’s physical stores, which once served as a major point of entry for customers, have become a liability, contributing to the company’s financial woes.
The Impact of COVID-19
Like many retailers, Forever 21 was hit hard by the COVID-19 pandemic, which disrupted global supply chains, forced store closures, and altered consumer behavior. While many companies quickly pivoted to enhance their e-commerce offerings, Forever 21 struggled to adapt quickly enough. This disruption, combined with the company’s ongoing issues, led to its first bankruptcy filing in 2019 and now, in 2025, its second.
What’s Next for Forever 21?
The second bankruptcy filing marks a crucial juncture in the brand’s history. While the company has not disclosed its full restructuring plan, it is clear that Forever 21 will need to make significant changes to stay afloat. Key steps in the restructuring process could include:
Streamlining its physical store footprint: Forever 21 will likely continue to close underperforming stores, focusing its efforts on its most profitable locations while investing more heavily in its digital presence.
Adopting more sustainable practices: To regain consumer trust, Forever 21 must adopt more sustainable manufacturing practices and reduce its environmental impact. This could include offering more eco-friendly clothing options, embracing recycled materials, and working with ethical factories.
Embracing technology: Forever 21 must make technological advancements, especially in its e-commerce platform. Investing in artificial intelligence and data analytics to predict fashion trends and enhance the online shopping experience will be key to competing with digital-first brands.
Forever 21’s second bankruptcy filing underscores the intense challenges faced by the fast fashion industry today. The company’s struggle to adapt to shifting consumer preferences, the rise of online competitors, and the broader move toward sustainability has left it vulnerable to financial instability. While Forever 21 remains a well-known brand with a loyal customer base, its ability to reinvent itself in a rapidly changing retail landscape remains to be seen. If it hopes to survive and thrive in the coming years, the company will need to transform its business model, prioritize sustainability, and focus on meeting the evolving needs of today’s fashion-conscious consumer.
In this new era of retail, the question is not whether Forever 21 can survive, but how it can transform itself to be relevant once again. The journey ahead will be a critical test for the fast fashion giant as it navigates the complex and unpredictable world of retail.
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