The world of fast fashion may be losing one of its original superstars. Forever 21, mall
favorite and home to a cacophony of graphic T-shirts, brightly colored skirts and dresses, and
denim in varying styles, recently filed for Chapter 11 bankruptcy. What went wrong? Certainly,
Forever 21’s bankruptcy filing reflects growing economic uncertainty and a general slowdown in
consumer spending amid rising fears that the United States could be entering a recessionary
period. However, many people would also point to the changing structure of the retail industry as
a major factor in the company’s demise. Indeed, you might say that Forever 21 was forever
trying to keep up as more agile online retailers like Temu and Schein became the first stop for
many shoppers looking for trendy, inexpensive clothing.
In 2023, the company even joined forces with Schein. Under the agreement, Schein customers
could return unwanted items to Forever 21 locations. However, rather than helping the company
remain relevant in the online space, the move may have hastened its decline. In addition,
company officials also point to a U.S. trade law known as de minimis exemption as being a
factor in to its demise. Under the legislation, foreign companies like Schein and Temu can ship
goods valued under $800 tariff free to the United States. Forever 21 claims that the law is a tax
loophole that puts U.S. firms at a competitive disadvantage because they are subject to import
duties. In the end, the recent filing illustrates the challenges facing even companies that seem
like they could last forever.
Discussion Questions:
- Discuss how the structure of the retail industry over the past decade has made it difficult for
traditional retailers like Forever 21 to survive. What do growing fears of a U.S. recession mean
for retailers? - Forever 21 claims that a loophole in U.S. trade policy gives foreign companies shipping goods
valued under $800 a competitive advantage. Explain. Do you think a more level playing field for
imports would have allowed Forever 21 to outcompete fast fashion companies like Temu and
Schein that sell goods made in China at rock bottom prices? Why or why not?
Sources| Ap News: https://apnews.com/article/forever-21-bankruptcy-shein-amazon-temu-0c5e9bac07bf184988475a2b57842e08, https://apnews.com/article/shein-forever-21-partnership-agreement-7ade59d296bf565534dc6e4fa6470023; CNBC: https://www.cnbc.com/2025/03/17/forever-21-files-for-second-bankruptcy-blames-shein-and-temu.html; NPR: https://www.npr.org/2025/03/17/nx-s1-5330440/forever-21-bankruptcy-chapter-11; Unsplash: Photo by Marcus Urbenz on Unsplash