Forever 21 Plans Anchor-Size Units

Forever 21 is pursuing a larger footprint.

Forever 21 is pursuing a larger footprint.

This story first appeared in the June 9, 2008 issue of WWD.  Subscribe Today.

The fast-growing Los Angeles-based apparel retailer plans to build larger stores and within four years expects to be in position to be a mall anchor as it evolves from a teen-focused business into one devoted to a youth-lifestyle retail concept.

Christopher Lee, senior vice president of the firm, shared elements of the company’s strategic plan Thursday during a panel discussion on “Retail’s Moment of Definition,” hosted by Fashion Group International at the Hilton New York.

Forever 21 reported sales of $1.3 billion in 2007 and this year estimated growth to $1.8 billion, spread out among more than 400 stores.

Although 15,000-square-foot stores were once the norm, many are now 40,000 square feet, like the flagship that opened in Pasadena, Calif., in 2006. The company’s Forever XXI stores average 24,000 square feet.

Lee told the group that the company is moving toward a 90,000-square-foot model in select locations, making it a potential anchor. The retailer also is eyeing stores in South Korea, possible acquisitions in the U.K. and going into Russia on its own, rather than with a joint venture partner.

The company operates stores under the Forever 21, Forever XXI, For Love 21 and Gadzooks nameplates.

The session was moderated by Joyce Greenberg, managing director of Financo Inc. Other panelists were Diane Hamilton, president and chief operating officer of Brooks Brothers; Rick Darling, president of LF USA, part of Li & Fung Ltd., and Robin Lewis, vice president and head of Retail Vertical, at consultant Vantage Marketplace LLC.

Hamilton said Brooks Bros. will add new stores, including some bearing subbrands, and enter new categories, such as a men’s and women’s fragrance that is set to launch for holiday.

Although Brooks Bros. already offers made-to-measure for men, it is considering that option for women, as well.

Equally important, she said, is customer service, since the company sees Brooks Bros. as a generational business built by store associates who know how to foster one-on-one relationships with customers.

LF’s Darling said the deflationary apparel trends of the last 15 years are over. Prices are rising in China and throughout the world, as retail expansion opportunities proliferate in European and Asian markets.

However, U.S. retailers are behind the trend curve. Many are focusing instead on using proprietary brands as a means of differentiation to drive customers to their stores, Darling said.

Li & Fung is noticing that only about 18 percent of its sourcing is in China. Much is from Bangladesh, Cambodia and Indonesia. Darling noted that, with tough economic conditions, more of his firm’s work with retail clients is aimed at helping them adjust inventory rather than on discussions of price.

Providing an economic overview, Lewis noted that 55 percent of disposable income is spent on gas, food and necessities, fitting comfortably into Wal-Mart’s “sweet spot.” With income growth decelerating and unemployment rising, other retailers that benefit when consumers look for value-based necessities are Target and Ross Stores, he said.