Can Forever 21 Recover With Its SHEIN Partnership?

Forever 21, a fast-fashion retailer, is struggling financially with declining sales and fierce competition from digital-first brands.

After filing for bankruptcy in 2019, the company is now requesting up to 50% rent reductions from landlords to alleviate the strain of expensive mall leases. Managed by SPARC Group, Forever 21 faces difficulties integrating multiple brands and managing high operational costs, including late vendor payments. Issues like poor inventory management and an inability to adapt to changing consumer trends, exacerbated by rapid expansion without sufficient supply chain investment, further complicate its situation.

Despite restructuring efforts and store closures, Forever 21’s extensive U.S. store network remains burdensome amid competition from H&M, Zara, SHEIN, and Temu. SPARC Group, also overseeing Aeropostale and Brooks Brothers, navigates similar challenges, focusing on lease renegotiations to avoid further bankruptcy filings. The retailer’s future depends on successfully overcoming these financial and operational hurdles in a highly competitive retail landscape.

One such solution has been partnering with SHEIN. Under an agreement announced in October 2023, SHEIN will design, manufacture, and distribute a line of co-branded Forever 21 apparel and accessories, primarily sold on SHEIN’s website. This partnership has also included hosting SHEIN pop-up stores within Forever 21 locations and accepting SHEIN returns, both of which are intended to drive positive foot traffic to Forever 21’s stores.

In May, SHEIN announced a partnership with Happy Returns, allowing customers to return online orders at over 300 Forever 21 retail locations. This collaboration aims to meet the increasing demand for flexible return options. Happy Returns’ BORIS (buy online, return in-store) solution facilitates “box-free, label-free returns and exchanges across store networks.” The system includes software and logistics components adaptable to various customer needs.

David Sobie, CEO of Happy Returns, highlighted the company’s capability to streamline returns across retailers’ networks. In the announcement, he stated, “We’re leveraging our technology, expertise and scale in reverse logistics to be the first to enable retailers to seamlessly accept returns throughout their full networks.”

For SHEIN customers, returning items at Forever 21 stores will be straightforward: They generate a QR code via SHEIN’s returns portal, which is scanned at Forever 21 for quick verification by store staff. Additionally, customers receive a same-day discount on their next Forever 21 purchase. Happy Returns manages the logistics post-return, optimizing inventory placement or moving it to e-commerce warehouses. The process ensures transparency with tracking at every stage of return handling.

However, one shopper recently went viral for sharing her bad experience returning SHEIN merchandise at a Forever 21 location. Kat, a TikTok user, shared a cautionary tale about her experience returning SHEIN items at a Forever 21 store, highlighting unexpected challenges and poor customer service. Initially optimistic about the convenience of in-store returns, Kat found herself humiliated by employees who openly criticized her during the process.

Despite normally accepting the loss when dissatisfied with purchases, Kat attempted the return due to SHEIN’s partnership with Forever 21. However, she regretted her decision as she faced disrespectful treatment from store staff. According to Kat, employees mocked her and displayed unprofessional behavior throughout the return process, leaving her feeling embarrassed and disrespected.

Commenters on Kat’s TikTok post expressed mixed reactions, with some sharing positive experiences at other Forever 21 stores and suggesting alternatives like UPS for hassle-free returns. Kat’s story serves as a reminder of the importance of respectful customer service in retail interactions, influencing others’ decisions regarding where to handle returns.