H&M announced on Thurday 30th March the launch of a new brand rooted in “style beyond trend.” Bernadette Kissane, apparel and footwear analyst at Euromonitor International, comments:
“The announcement of H&M’s new brand Arket comes at an interesting time. While the company has been teasing consumers with the potential launch of a new brand for a while now, the concept of Arket is quite unlike anything we’ve seen from the company before. The company’s results have been falling short of expectations recently, consistently outpaced by key rival Inditex and illustrated in its latest annual report with a drop in pre-tax profits. Rather than adopting a faster sourcing strategy to compete, the company has opted to introduce new brand Arket to effectively cater to shifts in consumer behaviour, while simultaneously making progress towards the company mission to develop a more sustainable business model.
The Arket brand is posed to provide timeless, functional fashion in a setting that is complimented with a Nordic style restaurant offering healthy food, suggesting it has the potential to tap into the minimalistic, health conscious consumer that is increasingly demanding high quality fashion that functions well and supports them throughout their day. Perhaps more interestingly, it’s the company’s decision to host third-party brands in store, aiming to create a convenient shopping experience for time-restrained consumers. On paper this new shopping format sounds promising, taking into consideration the rapid shifts in consumer trends and fashion retailing, and may well provide H&M with the leverage to gain back some lost market share.”
H&M still a step behind Inditex
- H&M’s primary rival is Inditex. Both were pioneers of a catwalk-led fast fashion model that other competitors are aping. Inditex has a more diverse global footprint than H&M, generating 48% of its 2016 sales in its domestic Western Europe market, compared to 59% for H&M.
- Inditex typically appears to be a step ahead of H&M. It was, for example, first into India (2010) and South Africa (2011), markets that H&M entered in 2015. H&M remains the larger player, by virtue of far more aggressive store expansion. However, H&M is once again tracking Inditex’s strategies. In early 2017, it announced that it was slowing store expansion and focusing on a mixture of physical and online sales to set growth targets.
Top 10 apparel and footwear specialist retailers
The global apparel and footwear specialist retailing channel saw limited movement in 2016, reflecting the large scale of its leading players. In many cases, share growth was driven by store expansion, as was the case for H&M. The top 10 players generated 15% of global sales in 2016, up from 13% in 2014, as consumers turned from independent operators to the slicker, more sophisticated offer of the chains.
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