Over the past decade, the “fast fashion” industry has been declining as Americans choose to spend less on clothing and shift hard-earned dollars to enriching experiences and travel. The advent of Amazon means that interest in box stores is also declining. But what does this mean for so-called fast fashion retailers and their brick-and-mortar locations?
The simple answer is that this often means bankruptcy. The list of companies forced to file for bankruptcy is ever-growing, and many other retailers are struggling. In 2019 alone, the Gap, Victoria’s Secret, J.C. Penney and Abercrombie & Fitch have all been forced to close locations (Source: CNBC.com). Many more fashion retailers are facing the same fate, spelling potential disaster for the fashion industry.
Recently, fast fashion icon Forever 21 was forced to file for bankruptcy on Sept. 29. After seeing an estimated 20%-25% drop in sales in 2018, it was becoming apparent the fashion giant needed to do something. After several months, the company is now opting to close 178 stores in the U.S. and may close more stores globally.
Many believe that these changes are being spurred by changes in consumption patterns among younger demographics. Younger shoppers who once would have been potential customers for Forever 21 are now more interested in second-hand clothing and more environmentally friendly options, and that’s when they aren’t using those dollars to dine out or take a trip.
The other pressing issue is the ubiquity of Amazon. The online retailer has had little trouble encroaching on the territory of fast fashion retailers. With Amazon now offering quick delivery and a seven-day grace period to make a decision about a clothing purchase, it’s becoming obvious that retailers need to step up their game to compete. It’s worth noting that many of these businesses plan to maintain an online presence, but are now choosing to no longer maintain physical locations.
Of course, the ripple effect from these losses doesn’t impact just the fashion industry. Landlords and malls that have long thrived from the presence of major retailers are now experiencing uncertain futures. Without income from big box stores, these locations now struggle to stay afloat. It would appear that the future of the American mall rests on shaky grounds. As Netscape founder Marc Andreesen once said: “software eats retail.” When comparing the overhead costs to e-commerce, it’s no wonder that many of these retailers simply cannot compete. Without a creative new approach to utilizing these spaces, many malls have become nothing more than vacant buildings.
With declining sales being an ongoing crisis for major retailers, more of these closures will likely follow. In 2019 alone over 8,000 retail locations have closed so far. This is up from 5,000+ last year. If this trend continues it appears that online shopping may soon become the only option for making clothing purchases.
Fast fashion may have held sway a decade ago, but now it’s an industry in freefall. If national retailers want to stay afloat it may mean making some sweeping changes. Without evolving to meet consumer needs quickly, many of these fashion icons may soon be faced with bankruptcy and store closures.
This article was contributed by Mosley Law Firm PA , an industry leader in bankruptcy law.
