Be Forever 21 in the New Era of Self Expression

Winnie Park, CEO of Forever 21 joins Oliver Chen, Retail & Luxury Analyst, in this episode of TD Cowen’s Retail Visionaries Podcast Series. They discuss balancing fashion trends, speed, quality, and value to connect with customers as well as driving cultural relevance through collaborations.

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Transcript

Speaker 1:

Welcome to TD Cowen Insights, a space that brings leading thinkers together to share insights and ideas shaping the world around us. Join us as we converse with the top minds who are influencing our global sectors.

Oliver Chen:

Self-expression and being yourself, delivering on-trend for everybody, it’s Forever 21. This is Oliver Chen. I’m TD Cowen’s new platforms retail and luxury analyst. We’re thrilled to be here today with Winnie Park. She’s the CEO of Forever 21. What sets Forever 21 apart? Its history as one of the first retailers to drive speed and efficiency at delivering on-trend merchandise. This is a visionary podcast series about visionary ideas and people. My name is Oliver Chen. I’m TD Cowen’s new platforms retail and luxury analyst.

In this episode of our retail and Luxury Visionary podcast series, we’re excited to spend time with Winnie Park, the CEO of Forever 21. This business stands for innovation and was one of the first to deliver on-trend apparel and accessories with a strong value proposition. More about Winnie Park. She’s a seasoned business executive and an inspirational leader with deep international omni-brand experience and impressive track record at LVMH and Levi’s among others, growing and enhancing business and operations within the retail and fashion industry. She’s an expert in merchandising, branding, marketing, digital retail and e-commerce. All great skills and she’s very stylish and well-dressed as well. Winnie, it’s great to be here with you.

Winnie Park:

It’s so wonderful to see you Oliver. Thank you for having me.

Oliver Chen:

So Winnie, what is the new Forever 21 and what are the brand’s core competencies in your view?

Winnie Park:

So the new Forever 21 is actually a brand. We went from being a great fast fashion retailer to actually being a brand that has a distinct look and feel and that communicates its values to its customers. I will say that underpinning that is we’ve always been an authority on trends and that continues to be something that really keeps us going, makes us actually good at what we do and excited for what we do. But added to that, we’re really leaning into cultural zeitgeist and we continue to make fashion accessible to all, but with really great quality that’s been produced with intention and standards. I would say the other piece of this is delivering 360 experiences to customers from social to digital to in-store. We are really great retailers and finally we are really taking a different approach in terms of marketing. So much of traditional marketing with brands and especially in fashion is about talking at customers and we’re about engaging with them and co-creating with them.

Oliver Chen:

Winnie, what does your footprint look like and can you elaborate on what 360 means, as today’s customer expects everything in a very fast amount of time as well?

Winnie Park:

Absolutely. Our footprint is, we’ve got a really, really great direct experience via e-commerce, and I would say that the first channel really is the app that’s kind of the window to Forever 21, and then we’ve got a network of over 400 stores in the United States and another 150 internationally. I think that for us, this whole notion of 360 is being able to story tell through compelling content and communicate that via every channel. If it’s social connects to front of house and our windows through to what you see on the app, but it’s not just about a bunch of stuff, it is about storytelling. It’s talking about the what’s, the why’s, and giving context for the product and the moments to our customers.

Oliver Chen:

Winnie, how are you balancing executing to great fashion and trend relative to quality? Those are characteristics that consumers want really both if they can have it.

Winnie Park:

Absolutely. And Oliver, I think it’s that much more critical for Gen Z. I think that this notion of getting value for money is huge and this young group of customers especially are, they shop value, which may be carrying a great Louis Vuitton wristlet alongside things that they’ve thrifted, and inclusive of fashion that they find at the mall. But for us, value is really looking at the price value equation for what we bring to market and we’re not cheap. So it’s looking at the fabrications, it’s making sure that the sewing is good, making sure that the product fits in a way that really helps the customer look their best. And so it is a process and it’s a process and it takes a lot of different sources for how to bring that together with an amazing design team based out of Los Angeles, and honestly a lot of really, really great vendors and partners throughout the world.

Oliver Chen:

That brings us to another great question. One of the concepts we always talk about is magic and logic, and the logic of inventory planning and supply chains. So how do you stay up to date with trends? You’ve been famously awesome in terms of being fast. What are your thoughts on inventory planning?

Winnie Park:

What we’re learning at Forever 21 is how to be best of breed of both. We’re really lucky in that over the course of 35 plus years, Forever 21 has actually come up with a business model that allows us to basically get the best fashion as late as possible. And that is a combination of designed and developed in-House, but doing it on a very, very rapid pace. It is a combination of working directly with vendors throughout the world in terms of what they’re seeing, what they’re bringing to us, what can we move and modify on, and also great partners in the market. And so we’ve got multiple sources for the goodness that we bring to market and I think that that helps us with inventory planning because we can make decisions later.

The other piece of this though is developing a muscle where we’ve developed programs that we know our customers count on. We have a line that was launched in September of ’22 that is called Essentials, and it basically is the pieces in your wardrobe that you want to replenish, you want to go back for. And instead of just doing basics, what we do is we always add that bit of a twist, but we’re designing into fabrications. So really if you can keep the substrate or the fabric running, what new bodies can you cut into it, and how do you continue to deliver those things that he and she and they rely on in their wardrobe?

Oliver Chen:

Winnie, that brings us to another hot topic, the Shein partnerships. You’ve had many cool partnerships. Shein has a really innovative catalog of 600,000 plus products and it’s a global force. What is Shein, for those who don’t know about it, and why did this partnership make sense and what are some of the mechanics behind it?

Winnie Park:

Absolutely. Well, I will tell you Shein is a global marketplace. Their forte is bringing all of these products from various sources together on a traditional marketplace platform, like an Amazon. What is differentiated with them is that they also work directly with manufacturers in that marketplace model and they’re able to produce product very, very quickly. They’re able to scale from 100 units on up based on demand and what they see in their predictive modeling. So it’s a bit of science and art and I think that it’s interesting because there are very good synergies between Forever 21 and Shein in that we have very distinct business models. Shein is a marketplace, Forever 21 is a brand. We are one of their top search and most desirable brands and we’re currently not present there. And so if you can imagine a customer who wants us but doesn’t have us yet, there’s a direct synergy there.

They bring honestly digital domination. We bring the ability to have retail excellence in a network of amazing stores and as I said, over 400 in the US. And there is some magic to our customers wanting things immediately, honestly shopping for the weekend. And so we think bringing the synergies of our footprint and what we do really well as a brand along with what they do really well, there’s an interesting possibility. When we talk about what we’re doing, we are literally laying down the road as we drive on it, which has been terrific. I love the agility of our evolving relationship. I always tell folks we’re a multi-billion dollar startup at Forever 21, as are they. And so kind of co-creating what do we do, when, how and reacting to not only what we think would be great business ventures, but more importantly what the customer wants. And so we are evolving that quickly as we speak.

Oliver Chen:

Yeah, Shein has had some really remarkable physical popups. I also believe strongly in figital, or Bricks Meets Clicks. What’s your vision for how Shein may manifest physically, and this is a 10 part question, but you love experiential retail just as much as I do. What are the coolest stores going to look like now and in the future?

Winnie Park:

Speaking of popups, we just hosted our first Shein popup in Ontario Mills this past weekend in Southern California. And it was pretty amazing to see this combination of Shein as well as Forever 21 customers co-experience this co-branded event, right? You could shop physical Forever 21 as well as the Shein popup, and the synergies between what the customer was gravitating towards was real and we saw just amazing response from customers for that concept. And you will see more of that coming. And just to go to your point around figital, a must have a must have, especially with the youngest customer. There are realities to being the youngest customer in America and one of them is you shop with cash. And so yes, you do some things in terms of direct and e-commerce, but for the youngest two $20 bills and a trip to the mall really does serve a bunch of their needs.

And so figital is important. Also, gen Z really loves to touch and feel product. They get quality, they get fabric, they get make. And so the ability to physically experience is something that they really appreciate. So I think it’s that much more important. We’ve taken figital to the next level, Oliver, in terms of a few things. One is activating where the customer is. So you can throw a store up anywhere and expect them to come, but how about show up at a music festival the way we did with Rolling Loud this past summer. We launched in Los Angeles with Rolling Loud, which is the biggest hip hop festival in the world.

And I think it’s one thing for a brand to name a stage, it’s another thing to activate in collaboration with Rolling Loud. We created a space that festival goers could go and get a makeover via Bunny’s Bay Bar as well as outfit themselves, and have some fun. And so that thought process of how to activate and how to meet them where they are is the next new in terms of figital and where I think the future is headed. You can’t rely on them coming to you, you’ve got to go to them.

Oliver Chen:

Yeah, I think what’s exciting about that is just maintaining cultural relevance and also this evolving sense of music and movies and TV and how this can really interplay with the cultural zeitgeist and being relevant.

Winnie Park:

I do think that with Gen Z they are more than anything cultural omnivores and it goes to food, media, film, sports, you name it. And so we are trying to figure out ways where we can engage on all of those. And so our next collaboration, we did collaborate with Barbie and in fact the trifecta this summer of Barbie, Taylor Swift and Beyonce was just a tidal wave of business for Forever 21, which we loved. But also looking at further collaborations in terms of how to be part of the language of media and film. So those are some of the things that we’re thinking about for the future.

Oliver Chen:

On the customer side, how would you contrast the Shein customer relative to Forever 21? Shein, in my opinion, is also about expressing yourself and enabling a customer to express themselves, but what’s your hypothesis for the nature of those customers?

Winnie Park:

I think the Shein customer, I think you’re right. I think there’s a lot of overlap. I also think that customers who shop on price get a lot of bang for buck on Shein. I think that they have a very broad customer base, probably one of the biggest in the world, if not the biggest. And that is with the freedom of being a marketplace and being fully digital. I think that with Forever 21, what is special about our customer, and really we go across the socioeconomic spectrum and across the spectrum of ethnicity, as well as however you identify yourself, he/she/them, however, and that has been terrific for us. I would say that what demarcates our customer in terms of cohorts are really millennials, gen Z and now Gen Alpha. And so we really look at generationally and at life stage. And what’s interesting is that the millennials, in terms of customer, they typically have more spending power and they’re at a very different life stage.

They’re starting families, they have different needs, but they have this nostalgia for Forever 21. It’s the place when you were a kid, you went to the mall and you got your looks for prom or for Friday night or Saturday nights out and for Gen Z they often shopped with their parents, Gen X, and they grew up with Forever 21 as well. But it has a very different meaning for them and they’re at a very different stage in their lives. For us, the funnest thing for me to do is now stare at Gen Alpha and what are they doing? And I think what differentiates them, well, we’ve got social natives with Gen Z, we have Web3 natives with Gen Alpha and they spend a lot of time in the metaverse and their virtual reality is as real as their real reality.

And so doing things for us, being part of Roblox in Shop City was not a way to market per se. It’s to do exactly what I like to say is be where they are and let’s be present and let’s start building a relationship with them and being engaged with them and co-create with them, even if it doesn’t necessarily get the immediate return on investment that you typically see in performance marketing.

Oliver Chen:

Yeah, Winnie, I’m very excited about decentralization, peer-to-peer as well as gamification. What do you think about gamification and how it may manifest and what have been your key learnings on the metaverse? There are many issues with the metaverse in that there are many different metaverses and technology is not quite there with augmented reality, but it may get there. What do you think?

Winnie Park:

I am no expert, so I’m going to speak from what I’ve been trying to observe and learn, but also just our own experiences with Forever 21. Gamification is really interesting because I think that the traditional retailer version of gamification is what you would see honestly even like on a Temu and in this whole notion of rewards, et cetera. But gamification for me when it comes to Web3 and this notion of co-creation is what’s been really powerful. It has been exciting to do things like bring Barbie into the metaverse via our Barbie collection this past year, where your avatar could twin with you and your physical looks could go on your avatar. But it’s also been neat, like co-creators in the Metaverse and in Shop City have created a forever beanie and it refers to Forever 21, but all it says is forever and it’s sold a million units in the Metaverse.

Well, we stepped back and we’re like, “Wow, if that’s so popular in the Metaverse, why don’t we make one in real life?” And so the Metaverse is actually reflecting back and the twinning goes backwards. I think things like that are just interesting and it spells out possibilities of what the next new could look like in terms of design, in terms of innovation, in terms of looking at customer demand. But again, most importantly it’s just being present where they are and giving them freedom to play with the brand and self-Express, which may be uncomfortable at times. They may create a version of Forever 21 that you don’t love, but it’s very telling. You can learn something from it.

Oliver Chen:

Yeah, the whole world of non fungible tokens and also tokenization because these physical objects can exist on the blockchain and interplay with digital. Also, I think that these emotional cultural moments can be quite fun. And the objective of retail is to also surprise and delight. I agree. So I need to go twinning with you. Let’s talk about promos. We can get back to that hot fun topic. What are you seeing in terms of the promotional environment and what’s your promotional strategy? We’re normalizing and customers like deals, but retail can often just have too much stuff and needs to mark down more than you want. What do you think about promos right now?

Winnie Park:

Right. I think it’s going to be a hot and heavy promo season. The macroeconomic headwind is reel and I think customers are looking for the best deals out there. I also see in Forever 21 a countertrend, which is, we’ve always been, I always tell the teams we’re in the business of desire. She and he need to see it, want it and buy it. And what we see is with our best fashion, especially what is front and forward and now trending when we’re saying, “This is it, you’ve got to have it.” There’s not a lot of price resistance. We don’t see a lot of price resistance when it comes to amazing collaborations. We just dropped our Disney collection and we had on our app an early kind of access event and it is insane how much product is flying out. So I think if it’s compelling and there’s the desire there, price is really not that big of a barrier.

We’re always thinking about value. So we’ve got key price points. I mean the value you can get for a Barney’s cashmere like coat at 99 bucks at Forever 21, in our collaboration is beyond. And so value and having those pieces that you’ve just got to have. And the other countertrend we’ve seen at Forever 21 is they value everyday sweetheart pricing and hitting certain price points more than a promotion. And I think it’s specific to us and our business, but I do think promotions are going to be hot and heavy for Q4. I also think online, it is the price of entry and there is an expectation. It’s like free shipping and something off is the expectation for customer shopping online.

Oliver Chen:

Winnie, part of the secret sauce in retail is just getting the right stuff at the right place at the right time. Broadly, how are you thinking about breadth versus depth in your portfolio? And also planning and allocation can also be extremely important. We would love your reflection upon that because Forever 21’s had a really broad assortment in the past as well.

Winnie Park:

One, that breadth is important to us, but the breadth can’t just be a bunch of stuff and it can’t be duplicative. That breadth has to be compelling and that breadth has to be strategic in terms of getting the breadth out there, testing and then saying, “This is a hit. Let’s order up, let’s go after this.” It also is, it’s part of the magic of desire, right? It’s going to be there for nanosecond, you’ve better buy it or it’s gone. So that is part of our business model and we want to stay true to that.

I think where we are finding greater balance is the piece that is the essentials of your wardrobe that you go back to Forever 21 for, and it’s not a basic tee. It is a great contour body suit. You’re going to get it at a fraction of the price of what you would get at other brands and being able to offer that consistently because she does replenish her black and white, but maybe it is a square neckline instead of a round neckline, maybe it’s a cap sleeve. And evolving what that means to her and to him and them is important. So our balance is that is where really great planning and allocation and being mindful as a design and merchandising team of cutting into fabrics that work as opposed to recreating the wheel. That’s the part of the business that is new to Forever 21 since I joined. And we are going to amplify that piece.

Oliver Chen:

Winnie, we have to also talk about Barney’s. Barney’s New York is such an iconic brand that you and I grew up with. How is that fitting into your strategy? You’ve been a really busy CEO, many creative partnerships.

Winnie Park:

So Barney’s, the Barney’s collaboration we launched at Fashion Week and it was such a wonderful moment, Oliver, because of the nostalgia that it does bring in terms of being an incredible fashion icon. And what we did was demonstrate, I think, to the world that we can deliver upon the quality, the fashion, but twist for the new generation what Barney’s can mean. And so let me give you an example. The entire collection was designed to be unisex. So we fit every piece both on men and women. We looked at very different body types and we went the full range in terms of size inclusivity, in terms of gender inclusivity. And we really were thoughtful around that full length cashmere coat, how good does it look on a six-foot four guy and a five-foot three and change, myself, woman? And anyone in between and on the curve.

And so that exercise was so much fun for us. And again, bringing a bit of that nostalgia and what that represented to us in being able to bring Barney’s was we really are a fashion authority, and just as much as Barney’s has a long and really solid history as an authority in fashion, Forever 21, while newer, can blend our DNA with Barney’s and bring and bring something that is special. So that was really fun. And it’s one of 20 collaborations that we delivered in the past couple of years. And some of them are cultural zeitgeists, guys like Barbie, some of them are design-driven and some of them are honestly around fandom, like Hello Kitty. And so for us, that is leaning into what is relevant for customers today. And it’s not just one language, it’s lots of cultural languages.

Oliver Chen:

The other part, congratulations on all the collaborations, amazing to have that throughput and also that diversity. ABG, Authentic Brands Group. So you’re part of this platform which has a suite of amazing capabilities. What are some of the benefits and how has Forever 21 really evolved on this platform over time?

Winnie Park:

Absolutely. Well, Oliver, I will tell you that what ABG brings us is the ability to partner with some amazing brands, GC Couture for instance. And the ability to, again, the same thought process, collaborations. Take a concept and reinvent it in a way that you bring the DNA of two great brands. And ABG’s superpower is they are brand builders. And the best thing that’s happened for Forever 21 in terms of being part of that platform is reinvigorating the brand. Brands mean a lot, having worked for some of the world’s best brands, Levi’s, Louis Vuitton, Moet Hennessy Group, and their pantheon of brands. And in my days heading up fashion for DFS, I’ve also worked with all the Caring Group brands, Richemont, et cetera. And I guess what’s so powerful about brands is that there is an emotional power that they have, and I think ABG really knows how to bring that power out and to go back to the disciplines of what a brand truly means. And it is a motive. It’s not just transactional. And they’ve empowered me to build a brand, not just drive a great retail experience.

Oliver Chen:

Winnie, on that topic of brands, what’s most exciting to you about the future brands? What do you see changing about new generations and different kinds of generations and how brands should evolve to remain relevant and what do you see Forever 21 being most famous for as well as we look forward?

Winnie Park:

I think the future of brands is that in the world we live in, it’s so exciting to have so many micro brands pop up and the level … The barriers to launch brands are so much lower today than they were in the past. And so the ability for creators to have a moment and to manifest in physical product or frankly in virtual product, their creative energy and have communities buy into it, that ability is faster, cheaper, and better today than it ever was in the past. And I think that’s super exciting. I think the difference between being a micro brand and and launching and sustaining is the brands that win, listen, they have the greatest humility when it comes to their real bosses, which is their customer. And being able to evolve to customer needs and listening and understanding the cultural zeitgeist and understanding what it takes to be relevant is critical.

And it’s not just buzzwords like you have to be on social. How are you on social? How do you engage on social? How do you show up? What does it mean to you? And so I think all of that makes it much more complex and harder to be relevant. But if you listen and have the humility to listen and not just demand or not just push what you think it should be and have a rich dialogue with the customer, the world is your oyster. I think finally having a product that is amazing and that there is a need for, and that need might be an emotional need as it is for Forever 21. We’re not food, water, shelter, so Maslow’s hierarchy of needs, we’re not at food, water, shelter. You have to desire it. And I would say the future of Forever 21 is to continue to be relevant by acknowledging the customer and their need for self-expression through fashion and to continue to really deliver amazing trends, not just fashion trends and to be part of the cultural language that’s around us.

Oliver Chen:

Yeah, creating desire as part of the innovation of clothing. Last question, Winnie, you’re a visionary executive in retail. Which parts of your past have really helped inform what you’re doing now? Which parts of this job are the most fun and any closing remarks you may have?

Winnie Park:

That’s a hard question, Oliver. So I would say that I’ve had a long and winding road to this role. I’ve not had a direct path. And so I have learned from beginning in my first career out of college working for Ralph Nader in the nonprofit sector all the way through to being a first time CEO with paper source and everything in between. And what you learn along the way is a few things. One, know your audience and your customer. Let that be your North Star. Two, really understand the art of influence and how to get people to say yes more than they say no. And part of that is listening. Part of it is being a really great partner. I had a boss who once told me, there are people you have to work with and there are people you want to work with. Try to be the latter because things will go a lot easier.

And I truly believe that I have learned along the way in my career that strategy without execution is nothing but strategy is important. And having a team who lives and breathes both the strategy and the execution and who are so much better than you is the only way to be successful. And finally, I have learned that don’t manage, lead. Be a conscious leader, develop in your teams and your people around you that conscious leadership, of being intentional about what you do, about being above the line and about being respectful. And I am excited to continue just to be a student of life and a student. I’m a very unfinished product as a leader. And I think my journey with Forever 21, we’re still not done. We’re literally laying down the road as we drive on it, and it’s super fun and exciting, and that entrepreneurialism is the thing that I thrive on the most. If it was easy, it probably wouldn’t be that much fun. I think the most important advice I would have is be open and actually make change and being a change agent your MO as a leader.

Oliver Chen:

Yeah. What we really see happening across these topics, Winnie, is this new generation where gender fluidity, personal style, they’re all important, and also diversity and inclusion across the executive spectrum. So it was great to hear about what customer centricity means to you, how to be conscious and collaboration means as well. And there is these big aspects of community and co-collaboration. Congrats on Shein and thanks for sharing many details of the new Forever 21. Thanks a lot, Winnie.

Winnie Park:

Thank you so much, Oliver. Always wonderful to see you. You’re an inspiration.

Speaker 1:

Thanks for joining us. Stay tuned for the next episode of TD Cowen Insights.

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