H&M Expansion Plans

Many might think H&M would be satisfied with its UK and Republic of Ireland footprint of more than 200 stores – but country manager Carlos Duarte has plans for high street domination.

Over the next four months alone, the Swedish fast-fashion giant is plotting an additional 15 stores to add to its portfolio of 230.

“The UK is still a very interesting market for us, so we are looking [at locations] all over the country,” explains Duarte.

“Medium-sized cities are very interesting to us since we are in almost all big cities quite strongly.”

New locations to open this autumn include Bangor in Northern Ireland and Perth in Scotland, along with Salisbury, Norwich, Cheltenham and Hammersmith, London.

Despite the push to open stores, H&M isn’t forgetting about its existing UK portfolio, and in addition to openings has an investment fund dedicated to refurbishments – although it does not disclose how much has been set aside.

Its Oxford Circus flagship in London bears the fruits of this strategy, having been revamped in March. The exterior now boasts large screens to showcase its Paris Show Collection, which hit stores at the beginning of the month.

Inside, the unit is unrecognisable. The once low-ceilinged, claustrophobic shop floor, which was so crammed it was a wonder anyone ever managed to find anything, has been transformed into a sleek and airy space. The store has grown from three to six floors, with ceilings realigned and floor space doubled to 40,365 sq ft. The Oxford Circus shop also hosts H&M’s first shoe lounge in the UK, which Duarte says could be rolled out into further stores. “We are going to do something similar, maybe not exactly the same, because you should surprise the customer constantly,” he explains.

“We constantly look to upgrade our older stores. It’s a logical process for a fast-growing company like H&M. We have a lot of stores with similar interiors [to Oxford Circus], but here are also some special elements that we only used in this store due to the unique size and shape of the building.”

H&M’s UK arm grew pre-tax profits by 13.1% to £17.7m in its last financial year to November 30, 2012, with turnover rising 8.2% to £777.6m. The UK’s gross sales over this period accounted for 7.4% of the group’s global total, up from 7.2% in 2011.

H&M has made robust progress in the UK, fuelled by store openings and its growing variety of product ranges for both menswear and womenswear. In the past five years the retailer has grown its share of the clothing market from 1.6% in 2008 to 2.2% in 2013, according to market research company Verdict Research.

Jessica Fioriti, associate retail analyst for Verdict Research, says: “It just goes to show that even though H&M went through a bad spell due to tough trading conditions and poor weather in the first quarter of 2013, it is still growing as a brand and continuing to entice its loyal customers.”

She adds that H&M’s autumn collection is a good range, with outerwear a particular highlight: “H&M has really strong
winter pieces, which I think compete strongly with Zara and undercuts its prices, so I think it is in a really strong position.”

This autumn will witness yet another of H&M’s highly successful designer collaborations, this time with Isabel Marant.

The mens and women’s collections from the French designer will launch in stores nationwide in November.

Another launch for autumn 13 is the Mauritz Archive collection for men, which takes inspiration from the Stockholm outdoor clothing store H&M founder Erling Persson bought in 1968, the source of the M in H&M.

“We are constantly updating our collections,” says Duarte. “We are looking every season, every day, every hour actually, at how to surprise the customer.”

H&M has also started to implement new categories, with its High Street Kensington and Oxford Street stores boasting dedicated homeware sections, which Duarte says have been “very well received”.

He adds that despite attracting a young, price-driven customer base, the chain has a very loyal following in the UK with customers coming back time and time again. In Sweden, H&M has a loyalty card scheme and Duarte hints it could launch one in the UK. “We don’t have a loyalty card yet in the UK,” he says. “We work with a loyalty card already in our home country so we are looking into how to implement this in other markets.”

Even H&M’s peers are expecting the business to prosper, with a department head at one of H&M’s high street competitors telling Drapers she predicts a bright future for the fashion chain.

“The recession has changed the mindset of the customer forever and the value market will continue to grow, so I can see a future for H&M,” she says. “They’ve dropped the ball design-wise in the past year but with a bit of focus it will recover. From a product perspective it’s the fashion-forward design in good fabrics that usually sets it apart, making it seem better quality than it is.”

And it seems Duarte is also optimistic about the season ahead. When asked how he is feeling about autumn 13, the lights flicker on in the store, signalling its opening. “Perfect timing – the future looks bright,” he exclaims.

“Autumn started four weeks ago after the Sale and the collections have been well received.

So we are looking very much into the future and into the autumn season,” he adds with confidence.

Although he cannot reveal any details of the chain’s Christmas plans or campaign, he says: “Because I know what’s coming up and what we are planning, I’m very much looking forward to it personally, as I’m a Christmas lover.”

Source: Drapers 19th September 2013