H&M fashions upscale accessories chain

PUBLISHED : Tuesday, 09 April, 2013, 12:00am
UPDATED : Tuesday, 09 April, 2013, 4:24am


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Counting on the adage that sales of affordable luxuries like lipstick and scarves climb in tough times, Hennes & Mauritz is rolling out a new chain called & Other Stories that focuses on upscale accessories.

As it seeks to make up ground lost to rival Inditex and win a bigger share of the US$111 billion market for shoes and accessories in western Europe, H&M is opening seven outlets of the chain across the crisis-ravaged region this spring.

Better known for dresses and ballet flats cheap enough to be almost disposable, H&M promises curated style at & Other Stories. The stores feature a selection of more expensive clothing jockeying for space with wardrobe add-ons such as jewellery, lingerie and shoes in four basic styles ranging from "Industrial" to "Glamorous".

"H&M is getting a lot of pressure from low-price retailers on the one hand and from retailers like Inditex, which reacts faster to demand in the fashion world, on the other," said Soeren Loentoft Hansen, an analyst at Sydbank. With & Other Stories, H&M could "build some bridges to a higher price segment".

H&M needs a hit. Europe's second-largest clothing retailer has been lagging behind Inditex, owner of the Zara brand. The Spanish company's sales growth has outpaced H&M's for seven of the past eight quarters.

Inditex has set the industry standard for quickly getting product from design table to shop, defining the style of the moment while H&M shoppers are left waiting. That helped Inditex, which opened its own fashion and accessories chain called Uterque in 2008, overtake H&M by market value.

"& Other Stories is a totally different concept, a totally different brand with its own creative team and creative expression," said Pernilla Wohlfahrt, the head of new business at H&M.

"So it was natural and essential for us to put it in a different store."

H&M might accelerate the expansion of the chain after sales "far exceeded" expectations, chief executive Karl-Johan Persson said last month during the company's earnings conference at its Stockholm headquarters.

Wohlfahrt said H&M might add more stores this autumn.

"We have to evaluate how the openings are going and take it step by step, but we believe the concept can work in all H&M's markets," she said.

With the new chain, H&M is following Inditex's strategy. The Spanish company has expanded with Massimo Dutti, oriented towards urban professionals, and seven other brands.

Zara made up 66 per cent of sales and 29 per cent of stores for Inditex, based in Arteixo, Spain.

H&M's new brand also puts it in the footsteps of luxury titans like Gucci, which gets about two-thirds of revenue from leather goods and shoes.

Gucci's margin last year was more than 31 per cent while H&M's dropped to 18 per cent from 18.5 per cent last year.