With the takeover of online shopping, few high street stores remain that are synonymous with the British high street. Yet H&M has withstood the test of time to become a staple of fast fashion in this country. While the company itself is based in Sweden, its affordable fashion range and high-quality clothing allowed the retailer to go international during the 60s and 70s. Since then, the British public has frequented H&M stores with a loyalty little seen by other high street retailers. So, why is this beloved Swedish clothing company currently experiencing a life-threatening decline in sales?
A major indication of H&M’s downfall came at the beginning of this year, with the announcement of the closure of 240 stores worldwide. While the company also announced the opening of 95 new stores, the closure of a net 145 stores in “established markets” is a worrying symptom of the company’s fall from grace. Indisputably, these store closures can be attributed to the ongoing war in Ukraine, given that Russia’s invasion of the country prompted the closure of 185 shops in Russia. As H&M’s sixth biggest market, the loss of valuable custom in Russia is a difficult blow for the retailer.
Nonetheless, the company’s problems arguably began before Russia’s invasion of Ukraine. The pandemic was a testing time for the fashion retailer, and it has proved challenging for H&M to recover from the loss of sales seen during the Covid-19 pandemic. As a result of global lockdown measures, 80% of H&M’s high street stores were forced to close during the pandemic. While the store mitigated the consequent loss of sales through focusing on its online store, the retailer is struggling to make a full recovery. Markedly, despite a 23% increase in growth in the three months up to February of this year, sales are still 11% down from two years before the pandemic hit.
Just as H&M began to recuperate from Covid-19, the retailer is now facing another seemingly insurmountable challenge: the cost-of-living crisis. In September of this year, the fashion retailer announced that quarterly sales were far lower than expected. With fewer customers spending money in store due to the surge in energy and living costs, the company is struggling to keep up with its high street counterparts, including its lifelong competitor Zara. Despite plans to raise the prices of certain products to combat inflation, the store is currently underperforming its rivals, given that Zara saw a 16% growth in sales between May and July of this year.
Despite H&M’s best efforts to guarantee its place on our high streets, as shown in efforts to promote its sustainable fashion range Conscious Collection, the retailer is evidently straining to compete with rivals. As the company endeavours to maintain its charm as an affordable clothing company, one can only wonder if this is the beginning of the end for this esteemed Swedish retailer, and perhaps low-cost high street fashion more broadly. Only time will tell whether H&M succumbs to the same fate as other victims of the rise of online shopping, such as TOPSHOP, to become an exclusively online store.