Week 7 EOC: Retail PEST

"No brand exists in a vacuum, and a PEST analysis helps a company determine the political, economic, social and technological environment the brand will live in."

Political:

Environmental Policy- “Forever 21 is committed to reducing its environmental footprint throughout its global operations. Environmental sustainability is a key responsibility and we can play an integral role in ensuring that our impact is minimal in the countries where we source materials and products through to the markets where products are sold.” Forever 21 plans on doing this by transporting its products by sea so that they can help reduce carbon emission, they now use energy efficient lights in their stores so that they can cut down on energy usage, and they have committed to recycling all shipment boxes.

Taxation- To import Forever 21 clothes into a country the tax rates can range from 0%- 27% and that doesn’t include some of the additional taxes that are charged from other country fees.

Competition- “Analysts Lorraine Hutchinson, Paul Alexander, and Jessica A. Lebo at Bank of America warned that competitors need to start paying attention to the privately-held retailer right now.” As Forever 21 keeps growing and doing what they do best, giving its customers the latest trends at low prices, it will run over its competition. Forever 21 has expanded worldwide, broaden its customers to not just teens but to the entire family, and they are no longer just in malls they now take on bigger and better locations. They have put a dent in big teen retailers such as Abercrombie & Fitch, American Eagle, and the Gap, due to its extremely low cost on clothing. Forever 21 sells jeans that can cost around $15 whereas other retailers average pair of jeans cost $30.

Consumer Protection- Forever 21 protects its customers by setting a privacy and security policy which are “…intended to protect your privacy and provide you with a safe and secure experience in fashion, style and shopping.”

Economic:

In a time of hardship and struggle Forever 21 is having tons of success with expanding their business and product range, while other retailers are struggling to stay afloat. Instead of moving to smaller locations they have expanded its square footage into the 100,000s. They now have over 480 stores in 8 countries and project revenue of more than $3 billion a year. Each time a customer visits a Forever 21 store they spend an average of $21-$40.

Social Demographics:

Forever 21’s target demographic is from the age of 12 to 34, but they primarily target women from the age of 16- 24. They mainly target women, but they also carry men’s and kids clothing as well. The income that their customers typically have is $20,000, with a college education. “The primary target consists of highly fashionable women on a lower budget. They are motivated by the trendy, fashionable and frequently changing clothing styles on the market. These women want runway looks for a reasonable price. They also like the idea of “disposable” clothing that makes it possible for a woman to outfit herself for a party one week, and then come back the following week to find something completely new and hip to wear and still have enough cash left over to treat herself to lunch or the latest CD”

Technological:

Forever 21 typically conducts its research in the form of online surveys they will send out Facebook messages out to its customers and ask them to take a survey, such as the survey they gave out to better understand why college students preferred Forever 21 over other stores. This form of research has appeared to be very effective for them as they have a response rate of 92.9%.

Citations: 

Davis, M., and Baldwin, J. (2006). More Than a Name: An Introduction to Branding. AVA Publishing. Page 192

Forever 21 and Corporate Social Responsibility. Retrieved on August 24, 2013 from http://www.forever21.com/Htmls/CustomerService/en-US/socialresponsibility.html?8/26/2013

Import duty & taxes for Forever 21 women’s clothes. Retrieved on August 24, 2013 from http://www.dutycalculator.com/dc/127733-import-duty-rate-for-forever-21-womens-clothes-is-27/

The Competition Should Be Terrified of Forever 21. Retrieved on August 24, 2013 from http://www.businessinsider.com/forever-21-dominating-teen-retail-market-2013-3

Privacy & Security. Retrieved on August 24, 2013 from http://www.forever21.com/Htmls/CustomerService/en-US/privacy.html

Forever 21 bursts retail boundaries with huge stores, aggressive growth. Retrieved on August 24, 2013 from http://www.timesdispatch.com/business/forever-bursts-retail-boundaries-with-huge-stores-aggressive-growth/article_ece0f546-d103-5f8f-bcb0-b599ce6bb05d.html

Forever 21 Inc-Account Planning Briefing. Retrieved on August 24, 2013 from http://kaylathorn.files.wordpress.com/2011/06/account-planning-briefing.pdf

Forever 21 Research of College Students. Retrieved on August 24, 2013 from http://ethnographyprojectpur3500.files.wordpress.com/2009/07/write-up.pdf