H&M to cut prices and elevate retail as part of new strategy

H&M is cutting its prices. The news brought joy to its shareholers, prompting a surge in its share value. H&M Group's strategy shift under the leadership of its new CEO, Daniel Ervér, focuses on a balance between lowering prices and elevating design to enhance profitability.

The question, of course, is on which products and at which of its portfolio brands can the fast fashion retailer bring costs down? At its flagship brand H&M, tops start at 3.99 pounds, dresses at 9.99 pounds and shoes at 12,99 pounds. Where is the wiggle room to increase its margins, lower prices and ensure the factory workers sewing its products are protected?

As one of the cheapest fashion options on the European high streets, Group chief executive officer Daniel Mr Ervér said more accessible prices, fashion-forward product, and upscaling the brand perception are the order of the day. The company plans to revamp its retail stores, investing in physical locations for enhanced customer interaction.

“This is where we want to make what’s inaccessible for the many accessible for the many, by having that friction between what is premium, but at a very accessible price. We want to build this brand position,” Mr Ervér said in a statement.

Lowering prices, especially in the U.S. where it needs to remain competitive amid challenges from fast-fashion competitors like Shein, is key.

While other brands in the group like COS outperformed its flagship H&M brand, there is a signaling a shift towards more upscale and fashion-forward offerings.

Cost-cutting

H&M will likely streamline its supply chain processes and further reduce overhead costs to lower production expenses, enabling more competitive pricing without compromising quality. This may entail optimizing manufacturing processes, negotiating improved deals with suppliers, and enhancing inventory management to minimize waste. However, as is often the case with ultra-fast fashion retailers, the pursuit of affordability may come at the expense of someone along the supply chain.