We visited an H&M store and saw everything that's wrong with the brand
We visited H&M's store in Soho at lunchtime on a Thursday. The store is located right next door to its biggest rival, Zara, in one of the city's busiest shopping areas.
On first impression, the store looked empty, which wasn't too surprising considering that we visited on a weekday.
But a visit to the Zara store next door was very telling. This store was buzzing with customers shopping its winter sale.
H&M was once known for its slick supply chain but has been outsmarted by competitors like Zara, Boohoo, and ASOS.
These stores have moved production closer to key markets, enabling them to speed up the design and manufacturing process.
65% of Zara's products are made in Spain, Portugal, Turkey, and North Africa, close to its core markets. On the other hand, the majority of H&M's suppliers (80%) are based in Asia, the Wall Street Journal reported.
This hinders the speed of its supply chain. According to a report done by Fung Global Retail & Technology, it takes online stores ASOS, Boohoo, and Misguided between one and eight weeks to get a product from concept to sale. Zara has a speedy five-week turnaround, while H&M can take up to six months. H&M did not immediately respond to Business Insider's request for comment about its supply chain speed.
This slower turnaround means that H&M isn't able to get new trends out on the shelves or respond to consumer demands as quickly. This was visible in store: the display at the entrance, which should be drawing customers in, looked drab.
In Zara, on the other hand, you're instantly drawn in by its glitzy designs.
In its 2017 third-quarter results, Persson blamed lower profits on aggressive summer sales, but said they had helped to clear inventory and put the store in a good position for the next quarter. This store tells a different story — almost a third of the first-floor space was taken up by a clearance section.
Source: The Financial Times
The prices were very appealing, but the clothing looked unfashionable and tired.
At Zara, it felt more like you're getting a trendy bargain rather than doing the store a favor by getting rid of old, unwanted stock.
Further inside the H&M store, there was another prominent display of womenswear. Although this was well laid-out, the mismatch of styles made it hard to understand what kind of person and situation these clothes were being marketed to.
H&M's workwear was a prime example of how the store can sometimes be off-target ...
... and there was an excessive amount of simple apparel.
H&M has faced increased pricing pressure from online stores. The prices were cheap in the store but sometimes felt a little off. This flimsy black skirt cost $29.99.
This men's faux leather jacket cost $69.99 ...
... while a pair of good quality cotton chinos cost only $29.99.
H&M is growing its digital platform but still falling behind other fast-fashion retailers like ASOS. In 2016, online sales accounted for only 6% of H&M's global sales.
"The fashion retail sector is growing and is in a period of extensive and rapid change as a result of ongoing digitalization. The competitive landscape is being redrawn, new players are coming in, and customers' behavior and expectations are changing, with an ever greater share of sales taking place online," Persson told investors in the company's nine-month earnings report in September 2017.
Overall, H&M seemed muddled. It felt like it was trying to be all things to all people, but this message was ultimately confusing.
The company is now trying to grow its online platform, scale back on stores in oversaturated markets, and focus on adding trendy new brands to its portfolio.
Its eagerly anticipated new venture, Nyden, launches online this year.
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