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Forever 21 commits to opening three stores in China

The stores in Beijing, Shanghai and Hong Kong are part of Forever 21's plan to reenter the world's largest emerging consumer market. It had briefly operated one in Changshu but closed it two years ago.

December 07, 2011|By David Pierson and Andrea Chang, Los Angeles Times
  • Forever 21 plans to open a 24,000-square-foot store next year in Wangfujing, Beijing's central shopping district. Above, the Forever 21 store at the Beverly Center in Los Angeles.
Forever 21 plans to open a 24,000-square-foot store next year in Wangfujing,… (Genaro Molina, Los Angeles…)

Reporting from Beijing and Los Angeles — Cheap-chic retailer Forever 21 Inc. is opening a flagship store in Beijing, part of the company's plan to reenter the world's largest emerging consumer market.

In a ceremony Tuesday in Beijing, the Los Angeles clothing maker committed to opening a 24,000-square-foot space next year in a multistory mall in Wangfujing, the Chinese capital's central shopping district. Two additional stores, in Shanghai and Hong Kong, are also expected to open in the first half of 2012.

The expansion marks Forever 21's second attempt to crack the China market. The company briefly operated a store in Changshu, a city 70 miles from downtown Shanghai. But company officials closed it two years ago after concluding that the location was too remote and the store too small.

Attending the Beijing event were Los Angeles Mayor Antonio Villaraigosa, who was visiting as part of an Asian trade mission, and Sung Won Sohn, Forever 21's vice chairman.

"The action and money is here," said Sohn, who is also an economist at Cal State Channel Islands in Camarillo. "China is the only locomotive left in the world."

China's retail sales grew 17.2% in October from a year earlier, to $262.6 billion.

Famous for churning out new styles quickly, Forever 21 joins other foreign fashion brands pursuing Chinese consumers, including H&M, Zara, Uniqlo and the Gap.

Sohn acknowledged that the company's investment comes at a time when China could see an economic slowdown. Exports are declining, and the property market has been stung by government restrictions.

"There's growing potential for a real estate bust," said Sohn, whose dark suit and white shirt contrasted with the brand's lively casual wear, known for wild prints and revealing cuts. (The attendee who appeared to be making the most effort to look fashionable was Villaraigosa's girlfriend, Lu Parker, who paired black knee-high boots with faux snakeskin pants and a black blazer.)

But Sohn remained bullish on Chinese consumers, explaining that affordable brands such as Forever 21 tend to do well during downturns.

The company already has strong manufacturing links to China, where about 60% of the brand's clothing is made.

Its retail strategy will differ slightly, however. For its stores in mainland China, Forever 21 will scrap its tradition of printing Bible verses on the bottoms of its bright yellow shopping bags, company officials said. The government tightly regulates religious activity in China.

In the U.S., Forever 21 has been one of the few retailers to move forward with aggressive expansion plans since the recession, opening new locations and supersizing existing ones. Worldwide, the company is planning about 60 new locations and store remodels next year.

At a time when big-box retailers such as Wal-Mart Stores Inc. and Target Corp. are focusing on smaller retail spaces, Forever 21 has transformed its stores from small and cluttered to enormous and sleek. It has moved into closed Mervyns and Gottschalks department store locations after those companies filed for bankruptcy protection as well as former Saks Inc. stores, shaking up and redefining the traditional mall anchor concept.

The larger stores have enabled Forever 21 to add a growing lineup of categories — maternity, plus sizes, cosmetics, children's, swimwear and shoes among them — all sold at bargain-basement prices. Although the fast-fashion chain has become a favorite for a wide swath of shoppers, the retailer has been dogged by criticism that its clothes are poorly made or cheap knockoffs.

Forever 21 was founded by Do Won Chang and his wife, Jin Sook Chang, South Korean immigrants who opened their first store in L.A.'s Highland Park neighborhood in 1984.

Today the privately held company, which is headquartered just south of downtown L.A., has about 525 stores worldwide and more than 35,000 employees. In 2010, Forever 21 reported revenue of more than $2.5 billion. This year, the company projected revenue of more than $3 billion.

Despite its rapid growth, Forever 21 has largely remained a family enterprise, with Do Won Chang running the business as chief executive and his wife in charge of merchandising. A couple of years ago, their daughters joined the business. Linda, 29, runs the marketing department, and Esther, 25, spearheads visuals such as store displays and window design.

Speaking onstage in Beijing, Villaraigosa said the company's immigrant roots embodied the story of L.A.

"Forever 21 is an L.A. fashion company we are very proud of," he said.

The mayor is on an 11-day Asian trade mission that is also scheduled to take him to Japan and South Korea.

On Monday, he met with the head of China's sovereign wealth fund, Lou Jiwei, who expressed interest in investing in L.A.'s public infrastructure, possibly through the Metropolitan Transportation Authority, Villaraigosa said.

The mayor didn't have time to elaborate. He was in a hurry to remove specks of glittery confetti that had rained on attendees at the end of the ceremony –- lest he look too festive in his meetings that afternoon with Chinese Vice Premier Wang Qishan and Vice President Xi Jinping, a man pegged to become the next president of China.

david.pierson@latimes.com

andrea.chang@latimes.com

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