H&M’s Big Bet on Fashion’s Elusive Middle

It’s become a truism in fashion that the middle-market brand — somewhere between Shein at the low end and Hermes at the top — is going extinct. H&M Group chief executive Daniel Ervér would beg to differ.

Six months after assuming the top job at the Swedish fast-fashion giant, where he has worked for nearly 20 years, the company is putting the finishing touches on a strategy meant to pull it out of a half-decade funk. At the heart of his plan is a full-court effort to convince shoppers that H&M’s clothing is worth paying for at any price, whether it’s a $15 knit top or a $200 suede skirt.

The retailer has refreshed its design criteria, Ervér said, granting its product team full creative control over its assortment, starting with a fall collection that includes leather pieces, long feminine dresses and a a faux fur long coat — “something for everyone to love,” the brand said.

To better showcase those clothes, the retailer plans to complete renovations on 250 of its 4,000-some stores this year. A series of pop-ups in major cities and a website redesign are also in the works.

The goal, ultimately, is for customers to rediscover H&M as a compelling fashion brand, rather than trying to win the race to the bottom on price (though there will still be plenty of affordable basics).

“There will be pure low-price price plays, there will be pure demand plays and there will be the luxury or innovation play,” Ervér told BoF. “At the end of the day, it comes down to having a really relevant, competitive product.”

Ervér is in a sense tackling the same existential threat H&M had a hand in creating for department stores and other traditional retailers 20-some years ago. Back then, H&M, alongside Zara and Forever 21, was the disruptor, effectively kicking off the hollowing out of fashion’s middle with ultra-affordable styles taken right off the runway.

In recent years, H&M has found itself on the other side of that dynamic as even cheaper and faster competitors such as Shein mutated the fast-fashion model. Around the same time, Zara positioned itself as the premium option in the category, using its elevated image to command higher prices.

H&M was caught between the two. Between 2019 and 2023, sales were virtually flat, at about $23 billion last year. In that same period, Inditex, which owns Zara, saw sales expand by 27 percent, to roughly $40 billion last year.

But under Ervér, H&M is doubling down on its orientation as being smack dab in the middle of the fast fashion landscape. Its fall collection, which hits stores Sept. 12, will feature a wider range of price points.

“There is a tremendous opportunity for growth,” he said. “And for profitability, which will allow us to invest in future transformation.

The decision now to embrace a middle-of-the-market value proposition is a risky one, analysts say. But there are potential upsides.

“From the customer perspective, what does the middle of the middle market mean to people?” said William Woods, an analyst at Bernstein. “It’s neither aspirational nor does it represent good value.”

But if executed well, with products that appeal to a wide swath of customers, a turnaround can take hold fairly quickly, he added.

“You just have to get heat around the brand,” Woods said.

Under Ervér and global creative director Jörgen Andersson, H&M has “re-energised” the design process, the executives said. The product development cycle hasn’t changed radically, but the company has eliminated some layers of management to yield faster decision making.

“The design team is working … with a [new sense] of ambition, passion and energy,” said Andersson. The company is “making sure that everyone gets their proper seat around the table,” he added.

H&M relies on a team of 500 designers to create each collection from the ground up, with the help of some insights from customer data, according to Ervér.

“We are able to let the creative teams make the decisions, but, of course, give them better information before making the decision,” he said.

The design team has also been equipped with supply chain improvements, including more options for product materials such as new trims and other components. The retailer has also increased local manufacturing capabilities to improve its ability to chase trends. Right now, H&M’s lead time can be as short as six weeks for some products — on par with that of Zara. But the bulk of its production is still in Asia, where products are shipped out via sea rather than air freight, said Woods. “The ability for them to be truly responsive [to trends] is still difficult,” he added.

H&M’s fall collection, the first assortment to reflect Ervér’s design directive, will be accompanied by a new brand campaign that celebrates the connection between fashion and music, featuring artists such as electronic act Arca, rapper Sage Elsesser and DJ Sega Bodega. As part of the rollout, H&M will also host events in major cities around the world, beginning in London next month.

A new retail strategy involves major store renovations.

The new store format features updated fitting rooms and sleek fixtures that elevate the shopping experience, creating a boutique-like environment with fewer racks and more open space. Some stores will feature rental services or a selection of pre-owned goods. For its new store in Soho for instance, which opened in February, H&M recruited New Yorker vintage fashion store James Veloria to curate an assortment of secondhand pieces.

H&M will also be implementing RFID, or radio frequency identification, in an increasing number of stores to allow for better inventory visibility and more efficient product replenishment.

“We’re talking about a complete rebuild for 250 stores,” said Ervér. “But we’re touching many more stores than that as part of the programme.”

More immediately, H&M has tapped LA-based design studio Perron-Roettinger on a series of pop-ups and “pop-in,” or activations within existing permanent locations, to showcase the fall collection and the re-energised brand at large.

Pop-ups are confirmed in Paris and Stockholm. Planned pop-ins include new store façades and window displays at certain locations.

With more than 4,000 locations across the world, H&M has a vital advantage over online players like Shein and Temu. Its footprint is 10 times that of Primark. Perhaps an extra sparkle is the ingredient H&M needs to seize that elusive middle ground in the category.

“As a customer, you will feel that H&M has a different confidence, a different level of inspiration and a different level of energy than you might have felt in the past,” said Ervér.