Forever 21 targets Canadian teens
Hollie Shaw, Financial Post
Published: Wednesday, April 25, 2007
Another wildly successful pioneer of "cheap chic" unisex clothing is about to hit Canada.
Forever 21, a Los Angelesbased company that sells "ripped-from-the-runway" fashion aimed at teens and college kids at stores across the United States, will open a flagship Canadian boutique across the street from Toronto's Eaton Centre mall this summer.
It hopes to follow in the steps of retailers such as Zara of Spain, the Gap Inc. unit Old Navy and H&Mof Sweden, which has made a big impact in the category since launching in 2004.
Forever 21 will open its first Canadian store this summer.
Brian Kersey, Getty Images
"We are currently looking at five Canadian markets," said Jeffrey Berkowitz, president of Aurora Realty Consultants of Montreal.
Mr. Berkowitz said an additional Ontario location will open in 2007 and a handful of outlets will follow in 2008. Forever 21, which has 390 stores in the United States and outlets in Dubai and Singapore, opened a pilot store in the West Edmonton Mall in 2001, but has not made a move to expand.
The flagship 13,000-squarefoot Toronto outlet will be in the retailer's latest store format, Mr. Berkowitz said.
The company got its start selling womenswear, but recently expanded into footwear, underwear, accessories and children's clothing. In the United States, the newer outlets are even bigger, at 30,000 to 40,000 square feet.
"They are doing very well in the States and have grown like crazy, and when you have opportunity, you have to go for it," Mr. Berkowitz said of the decision to expand. "We aim to be in all the major markets across Canada."
Like H&M, Forever 21's formula for success hinges on the quick conversion of styles from the fashion runway to the store floor. While it sources some clothing overseas, the bulk of its house-branded fashions are produced in the United States to ensure speedy production of the latest looks.
H&M has 28 stores across Canada and will likely almost double that figure, consultants estimate, by the time it finishes expansion -- Calgary and Edmonton have one store each and the retailer has yet to tackle British Columbia, the Prairies or Canada's East Coast. But Forever 21's buildout will be more modest, Mr. Berkowitz said. "We will probably be smaller than H&M; Forever 21 is going to be a bit more unique."
David Howell, apparel-market researcher and president of the consulting firm Associate Marketing International, said that strategy could serve to fuel the retailer's popularity.
"From a strategic standpoint they would serve themselves well to not [fall prey to the] 7-11 mentality where they are on every street corner," he said, noting retailer Gap Inc. has struggled due to its size and ubiquity. "That can hurt the brand because there is less mystique, less exclusivity. Kids are pretty sophisticated and while they want to wear what their peers are wearing, they do not want to wear what everyone is wearing. If it overpenetrates the market, kids lose interest quickly. It's a fine line you've got to walk."
Forever 21, which has estimated annual sales in excess of US$1-billion, got its start as Fashion 21, a boutique in Los Angeles founded in 1984 by a Korean- American couple who still own the company. Both are devout Christians, and the bottoms of the company's yellow shopping bags bear the inscription 'John 3:16,' referring to a passage in the Bible.
