H&M focuses on lower prices, trendy styles to boost holiday sales

H&M is targeting increased holiday sales by offering lower prices and stylish clothing options. The retailer aims to attract budget-conscious shoppers by combining affordability with fashion-forward collections, positioning itself to stand out during the busy shopping season. This strategy highlights H&M's focus on appealing to both cost-sensitive and trend-savvy customers in an effort to boost revenue during the holidays.

Swedish fashion retailer H&M is banking on lower prices and a wider range of trendy clothing compared to basics to drive sales among cautious consumers in the crucial shopping months leading up to the end of the year. H&M is focusing on offering lower prices and more fashionable items over its usual basics to attract budget-conscious shoppers during the key holiday shopping period.

Shoppers are already starting to browse for holiday items and H&M recently launched its homeware collection for the holiday season, CEO Daniel Erver said, adding that value for money will be critical as households are still under financial pressure. CEO Daniel Erver mentioned that customers are already searching for holiday products, and H&M has introduced its homeware collection for the season, emphasizing that affordability will be essential due to ongoing financial strains on households.

H&M is the first global retailer to offer insights into its outlook for the upcoming holiday shopping season, a critical sales driver for the sector. H&M is the first major retailer to provide insights into its expectations for the holiday shopping period, which is a vital time for the retail industry.

"We see a high search interest, actually, in holiday (products) already now," Erver told Reuters in an interview, referring to online search trends. Erver told Reuters that there is already a noticeable increase in online searches for holiday items.

He was speaking after the retailer ditched its hope for a 10% operating margin this year and reported weaker than expected third-quarter profit, but said it sees sales for September - the first month of its fourth quarter - jumping 11% compared to a year ago. This came after H&M dropped its goal of achieving a 10% operating margin this year, reporting lower-than-expected third-quarter earnings, but noted a 11% sales growth for September compared to last year.

While H&M sells many cheap evergreen basics like $19.99 jeans and $7.99 T-shirts, Erver said it is shifting to a bigger share of trendy pieces that people will buy no matter the weather. Though H&M is known for affordable staples like $19.99 jeans and $7.99 T-shirts, Erver said they are focusing more on trendy items that are less dependent on seasonal factors.

"Where we are shifting and doing the biggest leap is updating the assortment to make it more relevant, to make it in current fashion, updated aesthetics, that's where we're performing the best and that's also the least weather-dependent," he said. Erver highlighted that the company is focusing on modernizing its collection to stay fashion-forward, as this is where they see the best performance, particularly since these items aren’t affected by weather changes.

Shiny leather dresses with silver studs, knee-high boots, and mohair tops and skirts embellished with rhinestones all featured prominently in H&M's autumn/winter collection modelled by pop star Charli XCX, who performed at H&M's London Fashion Week launch two weeks ago, and supermodel Kate Moss' daughter Lila Moss, among other celebrities. H&M’s autumn/winter collection, which includes shiny leather dresses, knee-high boots, and rhinestone-adorned outfits, was showcased by celebrities like pop star Charli XCX and Lila Moss during London Fashion Week.

A fluffy leopard print coat worn by Charli XCX in the advertising campaigns sold out in minutes, Erver told Reuters. He is betting that star power will boost H&M's brand and justify the marketing splurge that is part of his turnaround strategy. Erver revealed that a leopard print coat featured in Charli XCX's campaign sold out in minutes, and he is relying on celebrity influence to strengthen H&M’s brand, supporting the increased marketing investment in his turnaround plan.

"The focus on fashionability, brand heat and activating collections with collaborations has always been probably the strongest piece of H&M's business, and basics have just become more and more competitive," said Deutsche Bank Research analyst Adam Cochrane. According to Deutsche Bank analyst Adam Cochrane, H&M’s strength has always been its focus on fashion collaborations and brand appeal, while its basics face growing competition.

Increasing marketing spending is "100% the right thing to do to reignite the H&M brand", Cochrane added. Cochrane agreed that boosting marketing efforts is the right move to revitalize the H&M brand.

H&M will still have to use discounts to lure cash-strapped shoppers, though, and on H&M's U.S. website many of the items in the autumn/winter collection were marked down between 15% and 42%. A burgundy synthetic leather skirt, slashed to $10.49 from $17.99, showed as sold out. However, H&M will still rely on discounts to attract financially constrained customers, with many items on their U.S. website reduced by 15% to 42%, including a burgundy leather skirt that quickly sold out.

Overall U.S. retail sales growth is expected to be muted during the holidays as prudent shoppers hold out for the best bargains, industry experts predict. Industry experts predict that U.S. retail sales will grow modestly during the holidays, as cautious shoppers wait for the best deals.

North America is a "more challenged" region for consumer demand, Erver said. Erver noted that consumer demand in North America is more challenging compared to other regions.

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Source: Reuters ‍