Yishai Ashlag
From its reign as a mall retailer’s favourite store to its spiral into bankruptcy, Forever 21’s story is a stark lesson in inventory management for all apparel retailers. Founded in 1984, it built a retail empire spanning 47 countries by seizing consumer attention with low-cost, trendy apparel. The company’s decline began in 2016 when it expanded aggressively, and ventured into unfamiliar categories like cosmetics and menswear, requiring larger inventory.
The company’s revenue started falling in 2016. It was a time when many retailers were downsizing stores, and moving to an omnichannel approach. Forever 21 did the opposite. The company opened large physical stores across the globe. It suddenly had too much inventory and too little time to sell it.
This removed urgency and freshness — the two tenets that helped Forever 21 capture consumer interest. In 2019, it went bankrupt for the first time. In 2020, Sparc Group, a consortium of mall operators and retailers, acquired the company. Under the new ownership the company invested in digital expansion and licensing. It shut down 350 of its 800 stores but could not avoid the second bankruptcy in 2025.
So why are fast fashion brands going bankrupt?
Three challenges dominate the industry — rising consumer expectations for a broader selection puts pressure on retailers to expand assortments; keeping up with real-time demand requires more inventory; and the demand for freshness leaves brands with less time to sell merchandise before it becomes obsolete.
The impact? Skyrocketing inventory, locked-up capital, shrinking margins and wasted stock. Seasonal forecasting methods are adequate to help decide what to buy, but can’t determine how to distribute stock at the store level. Even when retailers invest more money in analytics-based insights, they often arrive too late to drive timely decisions.
The new reality requires apparel retailers to shift their focus to fast reaction. Rather than buying more than half the collection in advance for the season, they must reduce the supply time from months to weeks, paving the way for flexibility. Short product lifecycles increase the amount of unpopular merchandise in stores. Traditional methods of clearance sales bleed the bottom line. Rather, retailers must react faster and liquidate slow moving items throughout the season.
How? With the right tools that address the right problem — inventory. Retailers today need new solutions for dynamic, daily optimisation, down to the SKU level. This involves shifting from rule-based action plans to demand-driven decisions, moving beyond seasonal forecasts to real-time predictions, and optimising inventory at the SKU-level.
Apparel retailers, who wrap their arms around this change will sell more products, reduce deadstocks, and stay profitable.
The author is founder & CEO, Onebeat