Can a new store concept jumpstart a turnaround for H&M?
Photo: H&M
In less than a decade, H&M has gone from the top of the burgeoning fast fashion world to a flagging retailer in need of a turnaround. The retailer is hoping that a new store concept, which it is piloting in its home town of Stockholm, Sweden, will get it back on-trend.
The concept features a smaller clothing selection and a cleaner, more organized layout, with some products grouped together by color, according to Reuters. The store also features a product mix tailored to the more upscale tastes of the local residents of the particular neighborhood in Stockholm where it resides. There's an in-store espresso machine, spacious changing rooms, wooden floors and a café corner, leading one visitor to describe the pilot store as "like a luxury brand."
Though H&M has been losing steam for a while as it has been outmaneuvered by new fast fashion competitors, things took a decided turn for the worse in 2017 when the chain reported its biggest quarterly sales drop in two decades, according to The New York Times. Early this year, H&M reported a $4.3 billion glut of unsold inventory, raising questions as to whether it still had the product mix customers were looking for.
Around the time of the announcement of its problem with unsold inventory, H&M launched Afound, a deep discount concept dedicated to clearing out excess stock from the retailer and its sub-brands.
The revamped pilot on display in Stockholm, however, is taking the opposite tack from the Afound concept. Rather than doubling down on the chain's image as a cluttered discounter, H&M is focusing on tailoring its main line of stores to the more upscale audience it has already begun courting with other chains it has launched, like COS and Arket (some of which have no U.S. presence).
The company is planning on taking the localized product mix strategy to H&M stores beyond the Stockholm pilot, according to Reuters. It is not clear, however, how many of the chain's more than 4,000 main brand stores this will impact or to what degree the product lines will vary in different markets.