Do Won Chang, along with his wife, Jin Sook Chang, came to Los Angeles at 27 years of age with a dream of becoming wealthy. Within three years, in 1984, and observed that the richest around him were from the fashion industry, they launched an apparel store (which later turned into a company) for Korean-American women that attracted a lot of young women and teenagers. 

Cut to 2015, this company, called Forever 21, operated over 600 stores in more than 40 countries, employing over 35,000 people. Its annual revenue was estimated to be around $4.4 billion. The company grew from one store in 1984 to over 600 stores by 2015. 

However, Forever 21 also saw its fall in just four years after that, as it filed for Chapter 11 bankruptcy protection, citing declining sales and mounting debt. They announced plans to close up to 350 stores globally to focus on a more streamlined operation.

With these massive ups and downs, the Korean-American entrepreneur couple Do Won Chang and Jin Sook Chang still have a combined net worth of over $1.6B. But how did they make this happen? 

From working 19-hour days at a coffee shop and gas station and barely surviving in LA to becoming a billionaire and creating one of the largest fast-fashion brands without any college education or background in fashion, we will uncover the story of Do Won Chang and Forever 21. 

Do Won Chang: Early Days in South Korea

Do Won Chang was born in Myoungdong, Seoul, South Korea, in 1954. Growing up in a modest household, he experienced firsthand the challenges of poverty and the value of hard work. His early years were marked by a strong work ethic instilled by his parents, who worked tirelessly to provide for their family. 

Myoungdong, now a bustling shopping district, was much different in Chang's early years. His upbringing in this urban area of Seoul was modest and characterized by economic challenges. His family wasn't wealthy, and from a young age, Chang understood the value of hard work and perseverance.

Do Won Chang did not pursue higher education. Instead, his early life was more focused on working to support his family. The jobs he did were typically labor-intensive and low-paying, reflecting the economic hardships his family faced.

In 1981, the same year he got married, Do Won Chang and his wife, Jin Sook, decided to move to the United States in search of better opportunities. They arrived in Los Angeles with little money and limited English proficiency but with a dream of building a prosperous future.

Los Angeles: The Land of Dreams

When Do Won Chang and his wife, Jin Sook Chang, first arrived in Los Angeles in 1981, they faced significant challenges, including financial difficulties and language barriers. To make ends meet, Do Won Chang worked multiple jobs simultaneously. 

He took on roles as a janitor, a gas station attendant, and a barista, often working up to 19 hours a day. Jin Sook also contributed by working as a hairdresser.

While working at these jobs, Do Won Chang observed that many of the wealthiest customers he encountered were involved in the fashion industry. This observation inspired him to consider the apparel business as a potential path to success.

Finding “Fashion 21”: Forever 21’s Foundation

While they did not know much about fashion and were mostly inspired by the money in the industry, the couple accumulated about $11,000 in savings, from the many jobs they did for about three years and opened their first clothing store, “Fashion 21,” in Highland Park, Los Angeles.

This store was about 900 square feet and catered to the local Korean-American community and quickly became popular due to its trendy and affordable clothing amongst not just Korean-American women but also teenagers and other young American women. 

To their surprise, the store generated $700,000 in sales in its first year, which was a significant amount for a single retail store at that time.

What Made Fashion 21 Successful

Since the Changs did not have any prior experience in the fashion, they played it smart. They went with their Korean apparel sensibilities, which made them standout. Also, they sourced clothes from other parties. 

Moreover, the store was located in Highland Park, a neighborhood with a significant Korean-American population. This strategic location helped them attract their initial customer base.

What worked for them was that they frequently updated their inventory to keep up with the latest fashion trends, ensuring that customers always found new and appealing items in the store.

By keeping their profit margins low but selling in high volume, they were able to attract a large customer base. This model relied on rapid inventory turnover and consistent customer visits.

Initially, Fashion 21 catered primarily to the local Korean-American community in Los Angeles. By understanding their target demographic's preferences, they could tailor their offerings effectively.

They also emphasized a pleasant in-store shopping experience, making their store a destination for fashion-conscious shoppers. Do Won Chang and Jin Sook Chang were deeply involved in the day-to-day operations of the store. They learned about the fashion industry, retail management, and customer preferences through direct interaction and experience.

They were quick to adapt and make changes based on what worked and what didn’t, learning from their mistakes and successes. Since they weren’t “experts” about their products, they were open to feedback and understood their customers deeply. 

To summarise, this is what made Fashion 21 successful:

• Strategic Location
• Serving the right demography
• Quick inventory updates 
• Low profit margins and high-volume sales
• Openness to feedback from customers
• Learning from experience and feedback 
• Strong work ethic in store and inventory management 

Transitioning to Forever 21: Expansion & Growth

The Changs reinvested the profits from the first store and started opening new stores every six months. Recognizing the broader market potential, Do Won Chang and Jin Sook Chang decided to rebrand Fashion 21 to appeal to a wider audience beyond the Korean-American community.

In 1987, they chose the name "Forever 21" or “XXI” to convey a sense of perpetual youth and fashion, appealing to a young, trend-conscious demographic. 

Then, what turned out to be, was insane expansion and exponentially rapid growth. In 1989, Forever 21 had expanded to operate 11 stores across California. These stores averaged 5000 square feet in size, marking the chain's steady growth. Additionally, the company ventured into mall-based retailing, opening its first store in a shopping mall.

Throughout the 1990s, Forever 21 expanded rapidly across the United States. They opened new stores in major cities and shopping malls, each offering the same mix of trendy, affordable clothing, establishing itself as a major player in fast fashion retail. 

By 1999, Forever 21's footprint had grown significantly, with 100 stores spanning across the United States. Some of these stores boasted expansive spaces of 9000 square feet or more.

In the early 2000s, Forever 21 began expanding internationally. In 2005, Forever 21 acquired the chain Gadzooks for $33 million. Over the next two years, the company doubled its number of stores to 400, leading to a surge in estimated sales growth from $640 million in 2005 to $1 billion in 2006. 

Unlike its competitors, Forever 21 targeted whole families rather than solely focusing on teenagers. Their stores, typically spanning 25,000 square feet, were significantly larger than those of their rivals.

By 2015, the company operated over 600 stores in more than 40 countries. Forever 21’s annual revenue was estimated to be around $4.4 billion that year, taking Do Won and Jin Sook Chang’s net worth to $5.9B. Employment numbers also grew proportionally with store expansion, reaching over 35,000 employees at the peak.

By 2018, the company boasted 800 stores worldwide and employed nearly 43,000 individuals. Despite its expansive growth, Forever 21 remained a family-centric business, with their daughters, Linda and Esther, contributing to its expansion.

The Rapid Rise & Downfall: Strengths Becoming Weaknesses

From the outset, Forever 21 pursued an aggressive growth strategy characterized by high-volume, low-margin sales, and frequent inventory turnover, combined with strategic locations in high-traffic areas such as shopping malls and urban centers, maximizing visibility and accessibility to consumers, which proved highly successful.

Slowly, Forever 21 also diversified its product offerings to cater to a wide range of demographics, including women, men, and children. However, their key strategy was “fast fashion,” which was the main reason behind their rapid growth and their downfall. 

During their early expansion in 2001, Forever 21 faced legal action from employees at a Los Angeles factory, alleging “sweatshop-like conditions,” including altered timecards, excessive work hours, and substandard wages. 

This sparked a three-year boycott and tarnished the company's reputation, although the case was settled in 2004. 

The company, in order to make trendy clothes, also faced criticism for its designs. In 2011, Forever 21 faced criticism from online users regarding several women's shirts that were perceived as anti-education and sexist. These included shirts with phrases like "Allergic to Algebra," "Skool sucks," and "I heart school" on the front and "not ..." on the back.

Amidst all this, some other unethical practices were exposed. For example, Adobe and Autodesk legally alleged that the company was using pirated copies of its software. Ariana Grande also filed a lawsuit against XXI for copying a wardrobe design from one of her music videos. 

Moreover, Forever 21 also faced lawsuits from its designers over licensing agreements. In April 2010, Rachel Kane, a writer and Forever 21 customer, launched a blog called WTForever21.com. With all these troubles, things weren’t looking nice for Forever 21, as they had to file for bankruptcy in 2019. 

2019: Filing Bankruptcy

In response to increasing competition within the fast fashion industry from brands like Zara and the inability to adapt to the online and e-commerce landscape, Forever 21 initiated store downsizing efforts in 2018 amid what was termed a "retail apocalypse." 

This strategy involved exiting several international markets: the Netherlands in January 2018, Thailand in June 2018, and Ireland in late 2018. Furthermore, Forever 21 withdrew from Taiwan on March 31, 2019.

Various factors contributed to a temporary collapse in global operations, including intensified competition in the fast fashion sector, reputational damage from labor rights groups and environmentalists, high rental costs for prime locations, and increased competition from online retailers. 

Consequently, in 2019, the company witnessed a significant 32% decline in global sales. Things went so bad that on September 29, 2019, Forever 21 filed for Chapter 11 bankruptcy protection. 

As part of its restructuring efforts, the company announced plans to discontinue operations in 40 countries and close a portion of its 600 stores, particularly those in Asia and Europe. The focus shifted towards strengthening its profitable core operations in the U.S. and Latin America, as well as investing in e-commerce and licensing agreements. 

Over the subsequent year, Forever 21 exited markets such as Hong Kong, Portugal, Japan, and Canada and ceased its online and physical presence in England.

The reasons behind this downfall, as mentioned above, were competition, unethical practices, backlash from the community for its branding, low pay structures, toxic work environment, amongst other reasons. 

However, the main reason behind it all, as Mrs Chang has also admitted, was the expansion was too fast and wasn’t sustainable. 99% of the company till the point was owned by the Changs and the operations got out of hand. 

“7 to 47, in less than six years, is a lot for a retail store,” is what Mrs Chang has quoted. Additionally, consumer behavior was changing, and the market was shifting to online, and Forever 21 simply couldn’t catch up, especially with all the load of that massive expansion. 

Of course, they could not focus on it all, whether it was the new stores, many lawsuits, changing market, etc. 

Selling The Company for $81M

By January 2020, under the leadership of President Alex Ok, Forever 21 had undertaken significant restructuring measures, resulting in the closure of 350 out of its 815 international stores. In an effort to adapt to changing market dynamics, the company relaunched its online store in 30 countries through a partnership with the e-commerce platform Global-e. 

This move aimed to target consumers in regions such as Canada, Asia Pacific, and Latin America.

On February 2, 2020, it was announced that Forever 21 had agreed to sell all of its assets for $81M to a consortium comprising Simon Property Group, Brookfield Properties, and brand management firm Authentic Brands Group (ABG). 

As part of the deal, ABG and Simon each acquired 37.5% of the company's intellectual property and operating businesses, while Brookfield acquired 25%.

Following the sale, SPARC, a joint venture between Simon Property Group and Authentic Brands Group, assumed management of Forever 21. Daniel Kulle was appointed as the new CEO of Forever 21 under SPARC's leadership. However, in 2022, Winnie Park became their new CEO. 

As of May 2022, Forever 21 had a retail presence spanning over 600 stores globally. In July 2022, the company operated 407 stores across 43 states in the United States. The highest concentrations of stores were found in California, Texas, Florida, New York, Georgia, New Jersey, Pennsylvania, and Illinois.

The Changs Today

Do Won Chang and his family received great compensation for their hard work, which they deserved. The $81M sale of Forever 21, almost all of which they owned, was a modest amount for a drowning ship. 

The family is still worth more than a billion dollars. According to the LA Times, Do Won, a devout individual, allocates a significant portion of his leisure time to spiritual endeavors. He oversees the Chang 21 Foundation alongside his wife, a philanthropic organization that channels funds to various religious institutions and faith-based groups. 

Engaging in missionary activities is a personal commitment for Chang, who frequently embarks on journeys to provide assistance to underserved communities in Third World countries. He reveres the Bible as his favorite literary work, finding profound guidance within its pages.

Final Thoughts

Undoubtedly, Do Won and Jin Sook Chang were exceptional entrepreneurs and hard-working folks who not only reversed their financial condition but went from doing labor work to becoming “filthy” rich.

They were always ruthlessly ambitious, which also became a reason for their company’s downfall. However, the market corrected itself and gave the world and the Chang family an important lesson: rapid expansion comes at a cost.

Had they grown the business more sustainably at a consistent but controllable pace, who knows, Forever 21 might still have been the market leader. It’s not easy to run a business like this, with worldwide operations. 

Your strengths may become your weaknesses, so it’s always a good idea to reflect on what’s working and what's not and adapt your business and your mindset to the market accordingly. 

Hope you liked this playbook story and got inspired or learned something. Thank you for reading.

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