Forever 21 signals expansion plans

unnamed-3The latest fast fashion retailer to hit Australia, US-based Forever 21, is forging ahead with its local expansion after the opening of a 2800sqm flagship in Sydney’s Pitt St Mall, flagging Melbourne as its next market.

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Opened earlier this week, the flagship is its third, and largest, store in Australia, and is not only considered a flagship for the local marketplace – but a global flagship store.

Spanning three levels at the Sydney Arcade in Investa’s 400 George St building, the 2800sqm store houses the retailer’s entire apparel and accessories collections as well as its Forever 21 Men, Forever 21 Plus, and Forever 21’s active, lingerie, and shoe lines.

‪Following the opening, the company now has its sights on Melbourne and the possibility of a locally run transactional website.

Forever 21 opened its first store Australian store in Brisbane’s CBD in December 2013 and occupies a 1900sqm, two storey tenancy at the newly developed CBD hotel, Next Hotel (formerly Lennons Hotel), fronting Queen St Mall.

Its second store, and the smallest in Australia at around 1200sqm, opened at Macquarie Centre in Sydney’s North Ryde in October last year as part of the mall’s $440 million redevelopment.

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Jatin Malhorta, director of global expansion, Forever 21, told Inside Retail PREMIUM that Forever 21 has “locations highlighted all over the country”, but he declined to comment on a target number of stores. Future stores in Australia are expected to operate on a similar footprint to Macquarie at around 1200sqm, with Melbourne expected to be the next market targeted.

A dedicated Australian e-commerce website is also in the pipeline. Forever 21 currently ships to Australia from the US, with Australia ranking within the retailer’s top three online markets. While Malhorta was unable to put a timeframe on a launch, he said a local online platform is planned for the short to mid term.

Unique to the flagship is the footprint of menswear. Between 279sqm and 371sqm, it is slightly higher than the average size. Forever 21 is also looking to expand its accessories range based on popularity in its Queen St and Macquarie stores.

Distribution is currently outsourced in Australia, but Malhorta says once the retailer reaches around 10 stores locally it will establish its own distribution centre. Pricing is also in-line with its international stores, despite higher rents and wages in Australia, and Forever 21 says its merchandise is uniform across the globe.

Forever 21’s value driven rival, H&M, is slated to join the new generation of tenants in Pitt St Mall later this year in October with a three level, 5000sqm flagship at the Glasshouse retail complex.

‪The two are also neighbours at Macquarie Centre. Sitting alongside H&M and Forever 21 in Pitt St Mall and Macquarie Centre is also Japanese fast fashion retailer, Uniqlo, located at Mid-City Centre, and Zara. The Spanish retailer was one of the first global fashion brands to land in Australia back in 2011, but its sales have failed to keep pace with its global competitors.

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Low budget now big money

Low budget fashion has become big money in Australia. Inside Retail PREMIUM understands H&M generated around $80 million turnover in its first year in Australia, with the bulk of it sales from its 5000sqm flagship at Melbourne’s GPO.

H&M reportedly made more than $11 million in the first four weeks of trading at Melbourne’s GPO in April 2014, and Uniqlo, which also opened at Melbourne’s Emporium, reportedly generated around $13 million in its first six weeks. Zara was understood to have been tracking around $50 million in turnover in its debut year, however, Inside Retail PREMIUM understands that figure has reportedly dropped to around $35 million.

The average pricepoint for Forever 21 is around $30, half the average price tag at H&M, while Zara sits at the higher end of the scale at around $90. Forever 21’s growing footprint is likely to be felt hardest by budget retailers such as Cotton On, Supre (also owned by Cotton On), Valleygirl, and Temt.

Forever 21 was founded by Don Chang, and his wife in Los Angeles in 1984. Since then, it has grown to more than 600 stores globally, with 600 more planned to open in the next three years.

The Australian license is held by Sharaf Retail, a Dubai-based business with interests in retail, real estate (including Dubai shopping centre, Times Square Center), logistics, IT, travel, finance, and industry.

Sharaf is responsible for Forever 21’s presence in the Middle East as well as Australian brand, Cotton on, Sharaf DG, Sanrio (owner of Hello Kitty), Woolworths (South Africa), Adventure HQ, Yellow Hat, YooMoo, and Hello Kitty Spa.

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This story was first published in Inside Retail PREMIUM, issue 2049. To subscribe, click here.

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