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Larry Meyer

As US fast-fashion giant Forever 21 prepares for its UK debut, its executive vice-president explains how it can rival New Look and H&M.

W e’re lucky we’re a private company,” laughs Forever 21’s Larry Meyer, as he bats away questions on the potential of the UK market for the US fast-fashion retailer, which makes its UK debut at Birmingham’s Bullring next month. Its entry into the UK market is the biggest since US chain Abercrombie & Fitch hit these shores in 2007.

Reluctant at first to go into specifics - as the executive vice-president of a private company, he says he “doesn’t have to” - Meyer eventually succumbs. After some quick mental arithmetic, he reveals he’d like to see more than 100 Forever 21 stores in the UK and that “size is important. We’re a location-driven retailer. We don’t have to rush but, if we find the right location, we’ll jump on it,” he explains.

Quality proposition

The Birmingham store certainly fits the criteria for this $2.3bn (£1.45bn) business, which has about 500 stores, mainly in the US, with a handful of shops and franchises in southeast Asia. Set over two floors, with an additional mezzanine level, the Bullring shop will cover 60,000 sq ft. Meyer says Forever 21 chose the Bullring for its UK launch because it offers “a quality proposition and footfall”. Stores in the Westfield Stratford shopping centre in east London and in Dublin’s Jervis Centre will follow next year and openings in cities such as Liverpool, Manchester, Belfast, Edinburgh and in “multiple” London locations are in the pipeline.

Maureen Hinton, lead analyst at Verdict Research, agrees with the Birmingham choice and with Meyer’s go-slow approach. “It would be a big mistake to have an aggressive roll-out,” she says. “Birmingham might be a good catchment area for its target market and a good store for a soft launch. London stores can distort [a business’s] performance because it’s a bigger footfall driver and attracts tourists. In Birmingham, they could get better feedback.”

But she stresses that the key to Forever 21’s success in the UK lies in its pricing strategy. A retail giant at home, Forever 21 is the US counterpart to New Look and H&M, but in the UK it will have its work cut out in what is arguably the world’s most competitive high street. “US retailers really need to know the UK market and a lot of them don’t take account of price perception. Forever 21 cannot be more expensive than New Look,” says Hinton. “Also, US retailers generally have lower costs, so can have lower sales per sq ft. Costs will be higher here, but they still have to drive through volume.”

Meyer is all too aware of the importance of price, listing it as one of Forever 21’s three determining factors in satisfying its customer (product and service are the others). “We believe that the first price is the right price, so we don’t start high and then mark down. It’s everyday low prices,” he explains, adding that price will be adapted to the UK market and the dollar sign won’t simply be replaced with the pound sign. For autumn 10, cardigans at $10.50 will translate to £9.50, jackets at $22.80 become £19.80 and jeans at $9.50 are £8.50, while more basic styles like leggings do simply swap the signs - $3.50 becomes £3.50.

Meyer is also adamant that product - or “assortment” as he calls it - is what will allow Forever 21 to stand out from competitors. And he’s right. Price alone isn’t enough to succeed in the UK; high street retailers put trend-led product onto the shopfloor at lightning speed and the UK’s creative industry is frequently cited as second to none.

“We are about our assortment and we provide the customer with a large collection, comprising multi-thousands of SKUs. We have daily new deliveries and in the US our customers visit us three times a month,” he says. “We offer a wide assortment so that not everyone looks the same when they buy from us.”

Global stage

Product will not be designed specifically for the UK market because fashion occupies a “global stage”, says Meyer. “The world is getting smaller and, because of the internet, the customer knows what’s available in Japan, in the US, everywhere.”

A sneak preview of the autumn 10 product going into the Bullring store reveals there is plenty in there to make the US retailer stand out from New Look and H&M, particularly from its womens­wear offer. A super-short layered skirt with a lace trim and vintage-style brooch is likely to appeal to the younger end of the target customer bracket, while an oversized 100% silk wrap-around top with a popper button is spot-on for the older, fashion-conscious consumer. Menswear, which is a small part of the business, is less impressive. Checked shirts and layered hoodies create a preppy look for autumn 10, but it lacks a genuine point of difference from the offers of other UK retailers.

Forever 21’s own brands include mainline Forever 21, women’s lifestyle brand I Love H81, 21Men menswear, plus-size label Forever 21+, contemporary womens­wear label Love21, kidswear brand Forever 21 Kids and “couture-like” Twelve by Twelve. All but the last two will be available at the Bullring.

Meyer is convinced that Forever 21’s US customer demographic - some 20% are under 18, about 45% are between 18 and 24, and around 35% are over 24 - will translate to the UK. But if, as is widely held to be the case, the UK’s public spending cuts announced last week will largely affect those on lower incomes, Forever 21, with its value proposition and young customer base, could be affected by cautious consumer spending.

But Meyer isn’t worried: “I don’t believe our customer is poor. People are much more value-driven. They will shop for value. I believe we can succeed in the UK like we’ve succeeded elsewhere.”

Asked to quantify that success in terms of sales, Meyer retreats to his “private company” mantra. “The results will be what the results are. It’s just guessing,” he says. UK retailers will be watching closely.

CV

2006 Executive vice-president, Forever 21

2001 Chief financial officer, Forever 21

1997 Chief financial officer, Gymboree

1991 Chief financial officer, Toys R Us International

1989 Chief financial officer, AC Nielsen

1978 Financial analyst, rising to assistant treasurer for international, Pepsi Co

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