Forever 21

Your thoughts on how such a large chain of stores runs into problems?
The tenants always blame the landlord charging too much but the reason?
Online buying ...?
Wrong fashion ?

Three hundred and fifty stores

Forever 21 files for bankruptcy, will close 350 stores

Just Four landlords own 175 stores!

 

That's a problem, not. One retailer in each of 175 malls around the world. Every shopping centre has vacancies, in a well run centre this would have been flagged a while ago as occupancy costs are increasing, turnover/m2 is faltering as compared across the category, not to mention increased retailer support.

The shock comes to the smaller mall operators who do not have adequate metrics to analyse retailer performance and not aware of the impending failure of their tenants. These malls would have 'signature' retailers who they leverage the category (ie their fashion mix is lifted purely by the presence of a high profile tenant). The loss of their premier tenant can become a larger issue.

 

Slowly... then all at once.
Retail is a tough business to be in, especially fashion where it can change so quick.

 

I understand retail (both bricks and mortar and on-line) is in structural decline. There is less discretionary income in the world today, than say 20 or 30 years ago. More money is being spent on cost of living, such as houses and energy.

Most commentators suggest on-line is taking traditional sales, but some of the banks have on-line retail sales indexes, and they are generally falling faster than bricks and mortar, simply because most online sales are more discretionary than bricks and mortar.

Retailers are suck in the middle. On the income side, sales are falling. On the cost side, rents and energy prices keep going up much faster than inflation.

In Australia, the only way we have been offsetting decline is though population growth. More people, (but spending less) means more sales.

 

I know all the statistics support a declining retail market but has anyone been to their local shopping center or DFO lately?
You spend 15 minutes attempting to get a park.

 

And people continue to drive. Why, when there are generally other options eg reasonable public transport, Uber, share cars etc).

Most people favour convenience hence drive to the shop regardless of whether they want a handful/trolley of items or a bootload. Surely we must be made to think differently not blaming the centres for effective the use of retailers, parking and our personal decisions of comfort.

 

They are probably window shopping. The problem is converting the visit into $$$ spent.

 

There is actually MORE money spent in discretionary spending, but it's disguised as cost of living. Thirty years ago you didn't have a coffee shop on every corner, nor did you have as many people eating out at cafe's on a regular basis. Families were often one car, now two is more common. Things like a refridgerator were a similar price as today, buy you kept it for longer, because it was a major expense to replace. Last time I went to get a part for my fridge, I was told it didn't exist, and they should be replaced every 5-6 fyears anyway.

Retail, whether it's online or stores is much bigger than it used to be. There's more products and more places to get those products from. Bricks & Mortor suffer because there's just so much online now. Any residential building could be an online business & you wouldn't know it.

 

We also need to look at forever 21 as a business model. Compared with Zara the quality is completely different and consumer will walk with their feet

 

Their target market is young women, who are more and more shopping online (The Iconic, ASOS etc) or via instagram so their business model needed a significant change.

 

Who would want to get public transport to a shopping center and try and cart home bags?
Or why would I pay for an Uber when I can drive for 1/10 of the price.

It’s painful trying to get a park but far less painful than those alternatives.

 

It's a case of balancing up the number of times that you get to the shopping centre and how much you buy at each visit.

If it's window shopping and brunch do you really need the car?

We often hop on the light rail to the tram sheds or Market City/Paddy's or the fish market and wouldn't consider driving to either.

 

I reckon it's coz of online buying. Its all about facebook and instagram to run a business.

I was reading about a young lady who started online clothes selling from her garage and in the space of 10 years had a multi million dollar business with 30 employees.

Anything to do with beauty sells. Be it clothes, cosmetics, weight loss, building muscles or raising the titanic.

There's money to be made out there.

 

I think people are purchasing online.

Also where young people used to meet friends and shop and socialize they no longer have to.

Fashion for a lot of people is pretty neutral so you can wear it year after year.

Also I think we all just have so much stuff.

I think businesses over estimate the needs of customers.

Meaning too much variety.

 

Zara and other brands thrive on disposable fashion. Vinnies don't want the stuff, it's not designed or made to last.

The latest fashion may be a subtle difference from previous years or a radical departure.

It's not about needs, it's all about me and my wants. Business just needs to work out how to get me to open my wallet.

 

It’s exactly this.
Why would you want to open a store and deal with all the associated costs when you can start one online and get just as great reach OR likely much further reach for the increased marketing spend you have.

I have a friend doing this very thing. Making cash hand over fist purely from Instagram. She started out by paying influencers and then overtime other influencers didnt want to miss out so start pumping your brand for free. The cycle creates some serious money.

 

See that's great, except you forget that most people, unlike you, don't have the luxury of living in the inner-city. I live in the boondocks. To get to my closest, decent shopping centre takes 13 minutes by car. If I catch a bus, that increases to 30 minutes. And that's if it turns up on time. So not worth it!

 

Not sure if that's a first world problem?

@albanga says it then takes another 15 minutes to find a parking spot. Well that blows your comparitive overall time difference to two whole minutes.

In that time, I could check my email, scratch my nose and pull out my opal card.

 

It never takes 15 minutes to find a spot where I live. I don't think it's ever taken me more than 5 minutes to find a spot.

 

I never mentioned time difference but since you bring it up, I would probably also save 20-30 minutes driving.
So cheaper and faster....and 15 minutes for a park is worst case scenario.
I was just using is to emphasize my point that retail is struggling yet it’s always packed when I go to the shopping center.

Not sure why we are debating driving versus public transport. To work where you need to pay $20 a day for parking plus etag plus petrol plus wear and tear I’ll agree with you.
But any other time, as long as I’m not drinking I’m driving.