Our Thinking

The late September announcement that fashion retailer Forever 21 was declaring bankruptcy and closing its Canadian and U.S. stores has been met with varied reactions. Could it mark the beginning of the end for fast fashion? Are young people doing more of their shopping online? Or might Forever 21 have simply lagged behind competitors in evolving to meet the changing preferences of their target consumer?


There are likely a combination of reasons, but ultimately the answer lies with consumers. Specifically, the retailer’s target market – bargain-hungry, trendy teens and twentysomethings who wanted to remain (the brand assumed) ‘forever 21.’ Thing is, that target demographic has changed.


Like most fast fashion retailers, Forever 21 became big when image-conscious, discount-driven millennials started to come of age around the year 2000. When it came to shopping, cheap cutting-edge clothes hit the mark bang on.


Flash forward 20 years and the buzz today is all about the next cohort just reaching adulthood – Generation Z.


By 2020, Gen Zers will make up one third of the population with 40% of the purchasing power. Already, experts say that Gen Z are turning out to be very different from millennials, with a set of unique experiences and distinct beliefs and behaviours. This generation, they say, wants to shop in a whole new way, and retailers need to adjust their strategies to lure and retain them as customers. One sector already feeling the impact – since its market comprises a lot of young people – is fashion.



Gen Z – Who are they?

Compared with the previous generation, Gen Zers participate more in social activism, and feel they can positively impact the future of the world. When it comes to clothing, concerns about environmental sustainability and social equity compel them to demand authenticity and transparency. They’re techno savvy, social media natives who handily research brand claims and assess supply chains, then share information with peers. Gen Z is also likely to communicate directly with retailers online by giving feedback or reviews. If the experience is positive, 89% will promote the brand.


Financial uncertainty has made this group a generation of careful spenders. As shoppers they want value, but not just in terms of price. They appreciate retailers that offer mending and rental services, and options to bring in an old item (to be upcycled) in exchange for a discount on a replacement. And rather than simply seek out inexpensive clothing, Gen Zers prefer to save money by buying quality, durable items in order to reduce the need to replace them.



How are fashion retailers responding?

Fashion in general produces 8.1% of global carbon emissions and fast fashion, which rapidly produces huge amounts of inexpensive, trendy, low quality synthetic clothing that is then sold by mass-market retailers, contributes to pollution and waste in a big way. Sixty percent of Gen Zers are indicating a preference for clothing companies trying to mitigate their environmental impact.


Though Forever 21 may have been too slow in responding to the demands of Gen Z, many fast fashion retailers are rising to the challenge.


Swedish multinational retailer H&M has committed to a number of initiatives, including ensuring that by 2030 all its products be made from sustainably sourced materials. Already their stores stock ‘Conscious,’ a sustainable fashion line, and the retailer plans to launch a first-of its-kind, innovative collection called ‘Restore’ consisting of formerly unsellable items that have been altered to better suit market tastes, and offered for sale once again.


American Eagle has committed to reducing water usage, using sustainable fabrics, and reusing materials. Customers can bring in any brand of old jeans and receive a discount on a new pair. The used clothing is recycled as insulation. And if the customer needs a bag when they leave the store, it will be a bag made with 75% recycled content.


Zara has set as a target date 2025 to have their distribution centres powered mainly by renewable sources. Within that time, they also plan to divert all product waste from landfill, cut out single-use plastics from all customer sales, and make their products using more sustainable materials such as ecologically grown cotton and recycled fibres.



More change yet to come

Time will tell whether and to what degree these initiatives are successful. But what’s not in dispute is that most retailers will have to develop concrete strategies to adjust their offering to appeal to the values of this new generation. Forever 21 can be seen as the proverbial canary in the coal mine. Gen Z are set to bring revolutionary change to retail that will continue to stir up reactions and force change. Stores that devise strategies to appeal to them will win big. Those that don’t will be ghosted.