The past few months have been trying for H&M. After the Swedish company (aka Hennes & Mauritz AB) released its fourth-quarter results for 2017 in January, which had its biggest profit decline in six years — 14 percent for the full year — it announced that it would be closing 170 stores in 2018 (even as it maintained that it would open 390 more around the world). Add to that a growing inventory of nearly $4 billion that many have criticized as environmentally irresponsible and it’s clear that the company is in need of a shift, CEO Karl-Johan Persson acknowledged. “The fashion industry is changing fast. At the heart of the transformation is digitalization, and it is driving the need to transform and rethink faster and faster,” he said in a January statement.
Some have pointed to H&M’s lagging production cycle compared with that of competitors like Zara, Asos and Boohoo (H&M’s cycle can take up to six months with much of its production in Asia, while others are able to manufacture and deliver product in a matter of weeks). Others have criticized its merchandising for being less than savvy, with too many basic tees and jeans, and not enough trends to compel shoppers.
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But new initiatives this month from H&M and competitor Zara — along with some surprising new stats on consumer behavior — indicate a changing ethos in the fast-fashion landscape and even challenge the very idea of it.
This year, H&M is launching two initiatives that could help it diversify. The first is Afound, a brand that will sell various clothing labels — including H&M — at a discount. And last week, it dropped a prelaunch collection for /Nyden, an affordable luxury brand aimed at millennials.
The latter will focus on what the company calls “cocreation,” culling designs from various personalities (or “tribe leaders,” as the company identifies them) to create capsule collections, even inviting fans to submit photos of themselves via an Instagram hashtag “iamnyden for a chance to win a trip to Los Angeles to design their own collaboration for the brand. /Nyden will also use the “drop” system that even department stores like Barneys New York have enacted outside the traditional four-season system. The brand is a clear nod to the success of Virgil Abloh’s Off-White label, which has risen from cult T-shirt purveyor to a bona fide fashion brand.
/Nyden joins the Swedish giant’s ever-growing roster of brands, which also includes Cos, & Other Stories, Cheap Monday and Arket. Whether H&M’s brand rollouts will prove successful for the company remains to be seen, but the experimentation points to a broader challenge for retail in enticing consumers in a saturated digital market. The newness of a brand could help reignite interest for H&M, transforming deliveries into “drops” may help retain the attention of distracted consumers, and the co-creator initiative is a new way for the company to continue its collaborative reputation.
But H&M is not the only fast-fashion retailer experimenting with how it presents itself to consumers — and what’s on offer. Zara has both steadily increased higher-price-point items within its Studio collection, while recently lowering its entry-level price points by as much as 50 percent in specific markets like India. It is also debuting an augmented-reality presentation to debut in stores this week, on April 12. It will allow shoppers to view specific looks from the spring collection when a mobile phone is held up to a sensor within the store on in shop windows.
Despite H&M’s challenges, the profit gains from Asos — a pretax jump of 145 percent last year — are a sure indication that fast fashion is not exactly slowing down; rather, like luxury markets, midlevel brands and department stores, these companies must diversify the marketing and merchandising and digital/brick-and-mortar balance to retain the attention of a younger, dramatically different customer.