Forever 21 plans shift to ecommerce following second bankruptcy filing

The news: Forever 21 could soon become an online-only retailer if it fails to find a buyer willing to purchase its inventory and manage its 354 stores, per Bloomberg. Should that come to pass, the company will ship goods directly from its factories to customers and other retail outlets—a model it has successfully tested outside the US.

A last-ditch effort: Forever 21’s proposed solution for emerging out of bankruptcy relies on emulating Shein and Temu, the very companies that helped push it into insolvency for the second time in six years.

In some ways, that makes sense: The two marketplaces have been eating Forever 21’s lunch thanks to the de minimis provision—which allowed them to sell products at vastly lower prices—and a more nimble on-demand model that let them quickly capitalize on emerging fashion trends.

• Adopting a factory-to-consumer model would allow Forever 21 to take advantage of de minimis.
• But the clock is ticking: The exemption will be revoked as soon as Commerce Secretary Howard Lutnick informs the president that “adequate systems are in place to fully and expediently process and collect tariff revenue.”

A long shot: Chances of success are slim. Despite considerable ecommerce investments, Forever 21 was known first and foremost as a mall brand—and consumer interest will likely fade as soon as its last stores are closed.

• Just 11% of the retailer’s US sales in 2024 came from ecommerce, the company said in its bankruptcy filing.
• Forever 21 has also failed to keep pace with shifting consumer tastes and connect with would-be shoppers on social media, causing it to lose relevance even as other mall brands like Abercrombie & Fitch find new life.

Go further: For more on Forever 21 and malls, listen to Reimagining Retail: Malls—Why People Visit (or Skip), IKEA & Walmart's Big Moves, and What the Modern Mall Will Look Like.