Swedish fashion retailer H&M is banking on low prices and a wide range of fashion clothing compared to basics to drive sales to wary shoppers in the key shopping months leading up to the end of the year.
Consumers have started looking for holiday items and H&M recently launched a holiday home collection, said CEO Daniel Erver, adding that the value of money will be critical as households remain under financial pressure.
H&M is the first global retailer to provide insights into its outlook for the upcoming holiday shopping season, which is a key sales driver in the sector.
“We’re seeing higher search interest, actually, for holiday (brands) now,” Erver told Reuters in an interview, referring to online search trends.
He was speaking after the retailer dropped its 10% profit margin this year and reported a weaker-than-expected third quarter, but said it saw September sales – the first month of the fourth quarter – jump 11% year-over-year. ago.
While H&M sells inexpensive evergreen basics like $19.99 jeans and $7.99 T-shirts, Erver said it’s transitioning into more fashion pieces that people will buy regardless of the weather.
“The more we move and the more striking we are, the more we update the assortment to make it more relevant, to make it more fashionable, with improved aesthetics, that’s when we do better and that depends a lot on the weather,” he said. .
Celebrity appeal
Shiny leather dresses with silver studs, knee-high boots, and mohair tops and skirts adorned with rhinestones all featured prominently in H&M’s autumn/winter collection modeled by pop star Charli XCX, who performed at H&M’s London Fashion Week launch two weeks ago. and a supermodel. Kate Moss’ daughter Lila Moss, among other celebrities.
A soft leopard coat worn by Charli XCX in ad campaigns sold out in minutes, Erver told Reuters. He is betting that star power will boost the H&M brand and justify the inflation that is part of his turnaround strategy.
“Focus on fashion, brand hotness, and collaborative launch collections has always been the strongest piece of H&M’s business, and the core has just become more competitive,” said Deutsche Bank research analyst Adam Cochrane.
The increase in marketing costs is “100% the right thing to do to manage the H&M brand,” Cochrane added.
H&M will still need to use discounts to attract cash-strapped shoppers, however, and on H&M’s US website most items in the autumn/winter collection are marked down between 15% and 42%. A burgundy faux leather skirt, marked down to $10.49 from $17.99, was shown as sold.
Overall retail sales growth in the US is expected to be muted during the holiday season as savvy shoppers expect better deals, industry experts predict.
North America is the “most challenging” region for consumer demand, Erver said.
—Helen Reid and Marie Mannes, Reuters
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