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Forever 21 to return to Fifth Avenue

By Kristopher Fraser

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Retail

In a surprising, but not so surprising announcement, Forever 21 has announced that it will be returning to Fifth Avenue on Saturday, February 7th, 2015. The store will actually be a new flagship store, which is great news for the retailer’s growth, and will be located between 51st and 52nd Streets in Midtown. The store will be over 36,000 square feet, and will include Forever 21 men, Forever 21+, and of course all the Forever 21 basics from denim, to shoes, and accessories. Forever 21 will join a list of other retailers in that neighborhood, which include competitors like Uniqlo and H&M.

Interestingly enough, the space that Forever 21 will be taking over was formerly an H&M. H&M’s new flagship store is located only three blocks away on 48th Street. It is only a simple wonder that with H&M continuing their expansion, Forever 21 as one of their primary competitors would be as well. H&M’s current strategy is to increase their number of stores by 10 to 15 percent each year, which of course would cause its primary competitor, Forever 21, to double down on their expansion strategy as well.

As of June 2014, Forever 21 has adopted an expansion strategy that will help them double the number of stores they have worldwide. Forever 21 currently operates approximately 690 stores worldwide, with hopes of expanding that number to 1200 between now and 2017. While 690 might seem like an impressive number, it is easily dwarfed by their competitors, such as H&M, who operate over 3200 stores internationally, and Zara, who operate 2000 stores internationally.

The bread and butter of Forever 21’s growth will most likely be their new ultra-bargain priced store, F21 Red. F21 Red is known for their rock bottom prices, including 12.80 dollar dresses and 1.90 dollar camisoles. The first F21 Red store opened in Los Angeles in May 2014, and while there are currently no plans for a F21 red store in New York City, they could quickly be making their way to other major U.S. cities.

It should be noted that this is also not Forever 21’s first go-around at opening shop on Fifth Avenue. In 2010 after Japanese department store Takashiyama closed shop between 54th and 55th Streets Forever 21 took over their retail space, however, they closed abruptly in February 2012. Surprising given Forever 21’s increasingly stellar revenue, the brand raked in 4 billion dollars in 2014, with no signs of slowing down anytime soon. Whatever the reason for their departure, they have returned with a vengeance, and intend to transform their new flagship store into one of the most profitable stores in the entire company.

Fifth Avenue is prime real estate for retailers of any price point, with retailers such as Tiffany and Co. bringing in an average revenue of 18,000 dollars per square foot. The majority of retail flagship stores are located among Fifth Avenue, and being a top tourist destination in New York City year round this new store is sure to help improve Forever 21’s revenue, as well as continue to garner Forever 21 attention as they continue their global expansion. The biggest issue for Forever 21 is the constant battle with the competition.

With H&M intending to open more than one store per day in 2015, and Uniqlo continuing their expanding global presence Forever 21’s biggest challenge will be getting to the markets they are also targeting first. Suzanne Kapner, retail industry reporter at the Wall Street Journal, has criticized Forever 21 for “thinking too big.” In a 2014 Wall Street Journal article, Kapner criticized Forever 21 for moving into stores that were triple the size of their competitors without having the merchandise to fill them.

With new lines such as F21 Red making waves, product is expected to be less of a problem for Forever 21 with their expansion. 2015 will be year that the public will see whether or not Forever 21’s expansion strategy is working, as now they are putting their plan to expand into full force. With their new store opening on 7th of February, it is the first in what Forever 21 hopes will be a string of successful mega stores.

Forever 21