In the competitive world of fast fashion, H&M is facing tough competition not only from Shein but also from Zara, the rival brand under Inditex. H&M reported a 4% drop in sales, the biggest decline since the third quarter of the previous year. In contrast, Inditex, Zara’s parent company, experienced a 15% growth in sales for the nine months leading up to October.
Despite this, H&M’s performance improved compared to the expected 10% fall in September, which was attributed to warm weather affecting autumn/winter collection sales across the industry. H&M, aiming to secure a higher profit margin, is focusing on showcasing pricier pieces and reducing discounts with the goal of achieving a 10% operating margin by 2024.
Interestingly, H&M’s shares have performed well, surpassing Inditex with a 56% increase this year, reflecting investor optimism about H&M’s potential for recovery. H&M, slower in raising its prices compared to Zara, is adjusting its strategy to attract shoppers who prefer higher-end products.
To compete with the rapidly growing Shein, which holds about 18% market share in fast fashion, H&M is strategically targeting upmarket shoppers. This involves collaborations with designers like Paco Rabanne and the launch of its premium brand, Cos. H&M is also adapting to changing consumer preferences by introducing secondhand clothing sales in its London store.
While Shein focuses on budget-friendly items, H&M is aiming to distinguish itself by enhancing its brand image and fashion appeal. The retailer acknowledges Shein’s ascent as the global leader in fast fashion but maintains its commitment to providing customers with “the best combination of fashion, quality, and sustainability, at the best price.”
