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The Secret Behind Forever 21's Dirt Cheap Clothing

作者: Melanie Hicken
   
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forever 21

Forever21 has taken over malls across the world with its inventory of trendy clothes at rock-bottom prices.

The stores brought in $135 million in profits in 2008, the last time the private company made its financials public. And as many retailers announce store closures, Forever 21 continues to expand. This month alone, the chain has announced plans to open two new locations, in Rochester, Minnesota, and Santa Cruz, California.

Much of the company's success has stemmed from its appeal to budget-conscious women in their teens and 20s.

So how are they able to make and sell their clothing so cheaply?

1. Cheap labor

A recent class-action lawsuit claims that many of the chain's in-store employees are minimum-wage high-school workers, who don't understand their employee rights. The suit alleges that the company "systematically failed to pay them for hours worked," making them work off the clock and denying meal breaks, according to a Huffington Post report.

As for the manufacturers, Forever 21 moved most of its production to Asia following a 2001 lawsuit in which American workers complained of sweatshop conditions.

Today Forever 21's factories attract an unusual number of labor complaints, labor expert Robert Ross of Clark University told Business Insider. Ross said the company is unique in that allegations have stemmed from factories near its corporate headquarters, whereas most retail industry labor allegations stem from subcontractor factories overseas.

"Nobody in the world is making a living if a retailer is selling $10 jeans," Ross said.

This fall, the International Labor Rights Forum called out Forever 21 for not joining retailers like Gap Inc., Levi Strauss, American Eagle Outfitters and other companies in making a commitment not to buy cotton from Uzbekistan factories, where alleged forced child labor takes place.

Up to 30 percent of the store's offerings are still made in Southern California. One LA factory worker told BloombergBusinessWeek she was paid 12-cents a piece to sew vests that sell for $13.80. It would take 67 vests an hour to earn $8 minimum wage.

2. Cheap designs

Forever 21 has faced more than 50 copyright lawsuits for allegedly stealing the work of designers, ranging from Anna Sui to smaller independent designers like Trovata, most of which have been settled out of court, according to a Jezebel report.

The company's vice president for merchandising told The NY Times in 2007 that the chain does not employ designers, "just very savvy designer merchants."

Legal expert Susan Scafidi told Jezebel lawsuits are an expected part of the business model: "I realized that they've been caught so many times, they've been publicly exposed so many times, they've even been sued — although many fewer times, because all they do is settle — and the light bulb went off: this is just part of their business strategy. They go ahead and they take what they want, and when they get caught, they pay up. It's probably cheaper than licensing it in the first place."

Forever 21's product may not hold up as well as premium designer brands, but it looks good enough for young women around the world.

Now check out 13 brands that use sex to sell their products > 

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课本信息
作者: Melanie Hicken
发布者: yibei
 
创建时间: 2012-02-28
更新时间: 2012-02-28
版本:
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发布状态: 已发布
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书集: Business Insider
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