The fast fashion, low-priced retailer, Forever 21 is aggressively expanding into the international market with its first store opening in Brazil, and anticipating to open seven more in the near future. The grand opening drew thousands of customers to its store in one day. The low price is the most attractive feature for these price-sensitive shoppers. Forever 21’s pricing is far below competitors in Brazil, where high operating costs make it difficult to keep prices low.
One way Forever 21 is looking to lower its operating cost is to source locally because fashion retailers pay 35 percent in taxes for their products and an additional 35 percent for imported apparel. Brazil’s apparel market is expected to grow to 21 percent over the next five years. So the retailer’s entrance to Brazil may be a way for it to win market share with its low prices.
1. Will Forever 21 be successful in Brazil? Why or why not?
2. What is Forever 21’s pricing strategy in Brazil? Is it sustainable?