- Second bankruptcy filing in five years signals systemic retail crisis
- $800 de minimis tax rule lets Shein/Temu undercut prices by 30-40%
- All 380 U.S. stores begin liquidation; international locations unaffected
- Mall anchor vacancies reach 12-year high as foot traffic plummets
- Fast fashion sector projected to shrink 8.7% annually through 2026
The neon lights are dimming on Forever 21's once-thriving mall empire. The fast fashion pioneer's Chapter 11 filing reveals deeper cracks in brick-and-mortar retail, exacerbated by China's Shein and Temu exploiting a 1930s-era tax loophole. Unlike the 2019 bankruptcy that saw mall landlords rescue the chain, this collapse stems from irreversible market shifts.
GlobalData analysts calculate Shein's U.S. market share jumped from 14% to 28% since 2021, using the de minimis provision to avoid $1.2 billion in tariffs last year alone. 'This isn't competition - it's economic warfare,' argues Retail Dive's Lydia Patel. 'Domestic retailers face 16-32% import duties while foreign rivals ship directly to consumers duty-free.'
A Midwest case study illustrates the carnage: The Mall of America's fashion wing now houses 41% vacant storefronts, with Forever 21's 90,000 sq. ft. flagship becoming a liability. 'Tenants demand spaces under 15,000 sq. feet now,' says CBRE's Mark Winters. 'Landlords are partitioning mega-stores into TikTok-popular microbrand boutiques.'
Three critical industry shifts sealed Forever 21's fate:
- Gen Z's 73% secondhand apparel adoption rate (ThredUp 2023 Report)
- Ultra-fast fashion's 9-day design-to-doorstep cycle versus 6-week industry standard
- Mall traffic down 59% from pre-pandemic levels (Placer.ai Data)
As liquidators clear $191 million in remaining inventory, Authentic Brands Group eyes licensing deals with Asian partners. But with Shein launching a U.S. marketplace and Temu spending $3 billion on Meta ads, the fast fashion crown may permanently cross the Pacific.