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FOREVER GROWING

Forever 21 taps into lucrative accessories sector with a new concept

By Maura K. Ammenheuser

Accessories are selling well. They are selling so well, in fact, that Forever 21 has launched a boutique — For Love 21 —dedicated solely to them.

Forever 21, a Los Angeles-based chain of about 200 women’s clothing stores, opened For Love 21 at Glendale (Calif.) Galleria in February. The 1,800-square-foot store is filled with decidedly affordable jewelry, sunglasses, belts, hats, handbags and other items.

Love 21’s neighbors at Glendale include Nordstrom and Godiva, but For Love’s clientele are drawn by the new concept’s affordability.

“It’s a good price, and they have cute, stylish stuff,” said Denise Manning, of Eagle Rock, Calif., who was browsing for bracelets and necklaces with her teen-age daughter, Celine.

The mall is impressed too.

“I love it. I was blown away,” said Janet LaFevre, Glendale Galleria’s senior marketing director. “They’ve done an exceptional job. It’s fun.”

By May, For Love’s sales were exceeding expectations, according to LaFevre, Robert A. Michaels, president and COO of General Growth Properties (which owns and manages the 1.5 million-square-foot Galleria), and Lawrence Meyer, senior vice president of Forever 21. What those expectations were and by how much they have been exceeded no one at the privately held company will say.

But that the concept is doing well should surprise no one. Accessories generally are a hot spot. Women’s accessories sales by nonanchor mall tenants totaled $491 per square foot last year, up 8.1 percent over the year before, according to ICSC research. By February of this year, these sales had already reached $76 per square foot, up 6.3 percent over the first two months of 2004.

Clothing merchants recognize the trend. “I have seen a big increase in accessories in the apparel stores,” said Jennifer Porter, president of Stylesmart.com, an online broker serving accessories designers and retailers. She notes that Banana Republic, Club Monaco, J. Crew, Old Navy and others have expanded their offerings, though so far stopping short of opening boutiques dedicated to accessories.

Meyer says Forever 21 chose to launch the concept at Glendale Galleria because its namesake store there already does well and because executives wanted a Southern California site, one close to headquarters. Further, LaFevre says, Glendale Galleria is a good choice because “we’re known for opening and launching new or first-to-market retail concepts in the U.S.”

Accessories have been selling well at Forever 21, and the chain has already proved its ability to provide affordable fashion, so it made sense to devote a whole concept to the stuff, Meyer says. “I don’t believe it’s unusual to build on what one does well,” he said.

The 9,000-square-foot Forever 21 stores and the 24,000-square-foot flagships, called Forever XXI, carry between 100 square feet and 500 square feet of accessories, says Meyer. (The average is 200 square feet.)

For Love 21 pushes bags and baubles, bangles and belts in a black-and-white, dazzlingly lit space. The look is of a grand French salon, with some whimsical touches. A comically oversize lamp anchors the sunglasses section, for example, ornate chandeliers are cut from plastic, and a glass column at the storefront is stuffed with fake pink roses. Several giant roses occupy the glass front wall. For Love opened using a soundtrack of French jazz and blues, LaFevre recalls, but they have since “funked up the music more,” and the shop “has a vibe to it.” An abundance of jewelry, much of it of inexpensive metal and stone, fills racks, baskets and bowls. There are mirrors everywhere.

On a recent Saturday, several dozen customers crammed the shop, with teens, mothers and gray-haired matrons alike pawing through the goodies.

“Every age is in there,” LaFevre said. “That is phenomenal.”

Most customers are younger than 24, Meyer says, but they range from 14 to 50. “It’s more of a fashion-oriented person than an age statement,” he said.

Certainly, the prices are popular with teens and young women who are unwilling or unable to shell out $30 for a pair of earrings, never mind $300 for a designer purse. A For Love clutch goes for $12.80, a knit hat for $8.80 and a chunky bangle for $3.80. And though nobody claims that For Love’s merchandise will stand up to repeated seasons of wear, most say it does not have to. Frugal fashion is a big reason that local shopper Rebecca Beelner returned to For Love for a second visit. “I tend to lose jewelry a lot,” she said.

At such low prices, consumers can afford to buy more accessories per season, says Meyer.

Forever 21 also sells affordable fashion, mainly to a young crowd. The company is closely held by the Los Angeles-based Chang family, which founded it in 1984. Its stores operate in 28 U.S. states plus Dubai and Singapore. Forever 21 bought 150 Gadzooks stores last year after the latter filed for Chapter 11. Forever 21 is remerchandising those units but preserving their name, says Meyer.

Without commenting in detail on Forever 21’s finances, Meyer says the company is funding For Love and its future expansion internally. (SCT reported in March 2002 that Forever 21 posted sales of $475 per square foot on average, though some units posted upwards of $1,000 per square foot.)

For Love capitalizes on the high margins and popularity of women’s accessories. The hottest of these is the handbag, which Faith Hope Consolo, chairman of Prudential Douglas Elliman’s retail leasing and sales division, calls “the shoe of 2005.” Others share the assessment.

“Handbags have usurped shoes in terms of passion,” said Stylesmart.com’s Porter. Increasingly sophisticated textiles allow designers more creativity, she says. Styles trickle from the catwalk to the mass market, and “Forever 21 can have a similar looking bag [to designers’] on the shelf in a month,” Porter said.

Everyone credits Coach for helping spark the current handbag rage. But the strength of the accessories market goes beyond handbags, and handbags go beyond Coach.

“Coach is the one who made it affordable — made luxury affordable,” said General Growth’s Michaels. Today everyone from Target to UGG Boots sells handbags.

For all that, retailers have had varying success pushing accessories. Gap Inc., for example, created an accessories shop-within-a-shop (coincidentally called Love) at its New York City flagship in November, though the company has not announced plans to open any more. A Gap spokeswoman declined to comment. Howard Davidowitz, chairman of Davidowitz & Associates, a national retail consulting firm, says the lack of buzz leads him to believe Gap’s Love is not doing well.

But women’s retailer New York & Co., credits accessories for helping drive an 8 percent gain in sales last year, according to its annual report. Accessories sales there rose 28.5 percent last year, when the company opened 20 clothing and accessories side-by-side shops.

British specialty chain Accessorize, which has done well in the U.K. and Canada with its 140 small shops, plans a major expansion in Canada. The company says it hopes to realize sales per square foot of at least $1,323 a year there as a result (SCT, May 2005).

Pembroke Pines, Fla.-based Claire’s has peddled earrings, hair clips and the like to girls and teens for decades. The chain runs thousands of stores under its own name and through its Icing chain. It has bought a series of accessories merchants in the past decade, including Afterthoughts and Accessory Place. Last year Claire’s posted $1.1 billion in sales, up 13 percent from the year before, with same-store sales rising 7 percent. Consolo gripes that the store designs have become stale, but Claire’s and Icing remain mall staples. Michaels cites them, Sunglass Hut and department stores as For Love’s rivals.

Clearly, accessories are a moneymaker when done right, and so far For Love seems to be a hit.

“They update their stuff constantly,” said 14-year-old Hollywood, Calif., resident Mareque Johnson, on her third visit to For Love. Showing off a black leather metal-studded shoulder bag she bought last time for $20, she says she has another one in white.

At press time, For Love 21 was a single-store concept with little track record. But the company expects to grow, Meyer says, adding that an additional 30 units are in the works. “Given the success, we’ll be aggressive with the rollout of For Love.” He would not disclose a time frame or any details of pending leases or preferred markets, but he says future shops will range from 1,800 to 3,000 square feet.

“In terms of something new and fresh, I think they’re there,” said Consolo. “It has a lot of very positive energy.”

Few other apparel merchants have launched accessories-only concepts, which Davidowitz says is incredible. “There is such a tremendous chance to do business,” he said. “They are in the right category.”

For Love has made a good start, to be sure, but new concepts have risks, including the idea of the “perceived value” of the merchandise. “If it’s cheap, it is cheap,” Porter cautioned.

For Love has an advantage, though, in being the first all-accessories concept by an established apparel company to go looking for mall leases. “The first one who jumps on this big,” Davidowitz said, “has the potential to win big.”

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