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The Drapers Interview: Carlos Duarte, UK and Ireland country manager for H&M

Store openings and a beauty launch are keeping UK and Ireland country manager Carlos Duarte busy.

Carlos Duarte H and M

H&M UK and Ireland country manager Carlos Duarte

With 12 H&M store openings planned between now and the end of November, a Shoreditch pop-up currently attracting headlines, a beauty concept launching this month and another must-have designer collaboration scheduled to drop this autumn, it’s safe to say now is a busy time for UK and Ireland country manager Carlos Duarte.

Not that you’d know it. Calm, collected and impeccably dressed, he’s eager to talk about the Swedish chain’s UK performance and plans as we sit in the surrounds of its showroom – typically Scandi in style with clothes neatly folded or hanging on rails and a muted grey and white interior – on London’s Argyll Street.

“We are very happy with the performance of the UK and Ireland. This is H&M’s third biggest market [Germany is number one, followed by the US, with France at number four] and we will
open 12 stores this autumn in the UK and one in Ireland,” he says.

Global sales were up 21% to SEK 45.9bn (£3.5bn) in the second quarter, while gross profit increased by 18% to SEK 27.2bn (£2.1bn). UK-specific financials are not available.

New stores have been opened in Yeovil in Somerset and Coventry, while further stores are planned in Rotherham, Durham, Beverley in Yorkshire, Biggleswade in Bedfordshire, Welwyn Garden in Hertfordshire, Bradford, Newport, Cardiff, Kingston in London, Edinburgh Ocean Terminal Shopping centre and Dundalk in Ireland between now and the end of November – the end of H&M’s financial year.

At present, H&M has 234 stores in the UK and 16 in Ireland. However, Duarte says H&M hasn’t reached saturation point in either country yet.

“We haven’t covered Ireland completely yet. There are towns where we are not yet, such as Waterford, for example. But due to its [larger] size, there is a lot of potential in the UK. We will open in cities and towns where we don’t currently have stores, but also where we are going to open second or third stores. We are quite convinced about the UK.”

In addition to these store openings, H&M is continuing its programme of refurbishments.Its refurbished Reading store was reopened on April 1, with floor space expanded from 19,000 sq ft to 28,500 sq ft via the addition of a mezzanine level to house its menswear and its third homewares department, its first outside of Edinburgh and London.

Duarte cannot reveal the sum H&M has allocated to this refit programme but says that, given it will celebrate 40 years in the UK market next year and 11 in Ireland, refurbishments of older stores are regularly needed and will be continuous.

H&M is also relocating its Kingston branch to a larger store. The new megastore will be across three floors and is large for H&M, at 27,362 sq ft. It will sell the women’s, men’s and young fashion Divided collection. Like Reading, it will have a home and shoe lounge: “We launched homeware in the UK in 2010 and see a big opportunity to grow it here.”

However, the most imminent change in H&M stores will come in the form of a full beauty line of 700 products priced from 99p to £14.99 (the average will be £4.99, for liquid eyeliner or lipstick liner), sold via cosmetics counters, replacing its much more limited existing offer. “Beauty is part of fashion for women. It’s a completely new range and concept, which we will launch in 14 stores in the UK and one in Ireland between now and autumn,” Duarte says. Stores set to receive the beauty package will include Oxford Circus, Nottingham and Southampton in the UK and Liffey Valley in Ireland.

This all comes hot on the heels of H&M’s current Shoreditch pop-up for its Divided collection, which opened at the Old Truman Brewery on July 23 for six weeks. The 1,100 sq ft unit features neon and linear lighting, an indoor wall mural, raw concrete features and scaffold elements. H&M ensured maximum press coverage by drafting in singer and Grammy Award winner Foxes, the face of its Divided collection for spring 15, for the press launch event on July 30.

Foxes for H and M Divided

Pop star Foxes models in the H&M Divided campaign

“This is only our third pop-up in the UK [in 2012 there were two Sports pop-ups, the first in Covent Garden in July and a second soon after in Westfield Stratford] and the first since I have been in this role. We don’t have a store in east London, so it is very exciting to launch the Divided campaign there. Foxes is exactly what we were looking for for the Divided campaign. East London is a target [market] for the range and we are, of course, looking into Shoreditch as an area for H&M as a brand. Then we will take our evaluations afterwards.”

Affordable on-trend fashion for men, women and kids, priced from £3.99 for a babygrow to £199.99 for a pair of women’s leather trousers, has kept customers coming back time and time again.

H&M’s high-level designer and celebrity collaborations have won it fashion plaudits. Its partnership with ex-footballer and fashion icon David Beckham, who Duarte describes as a “great guy”, continues to go from strength to strength, and this November H&M will no doubt see the fashion pack lapping up its new collaboration with French luxury fashion house Balmain.

“We want to show that fashion such as Balmain is accessible to everyone,” says Duarte. He can’t reveal too much for now but does say: “The collection is mainly going to be a snapshot of the last five years from Balmain and it’s an amazing collection, really wow, wow, wow.”

Duarte had an early appreciation for fashion. Growing up in Aveiro in Portugal during a period of political transition towards democracy, he says: “I always wanted to work in fashion, since I was a kid actually. I think I was one of the most fashionable kids in school. I don’t know where it came from, but I was always attracted to beauty.”

He decided to leave Portugal to study in Germany. A testament to the career path a large international business can offer, Duarte has been an H&M success story since he landed his first
job there, aged 28, in 1993. Since then, he has held a long list of positions from store manager at German stores from Frankfurt to Dortmund, to working in human resources in Belgium, to leading the chain’s Spanish launch in 1999, then heading up logistics and eventually becoming country manager for Switzerland.

His next move was to Warsaw to take up an expanded role as country manager for five countries including Poland, the Czech Republic, Slovakia, Hungary and Romania, the latter of which was another new market for H&M that he led the launch of. Then, three years ago, he was asked to run the UK market.

Figures from market research firm Verdict forecast H&M to have a 2.5% share of the total fashion market this year, ranking it seventh, with New Look just above at 2.8%, Matalan just behind at 2.3% and Marks & Spencer the leader with 9%. However, in the value sector, H&M has a larger 8% market share and is again ranked seventh, below New Look but above Sainsbury’s, with Primark’s 21.3% leading this segment.

Verdict retail analyst Nivindya Sharma says H&M has been one of the fastest gainers in terms of market share in the value sector over the past five years, adding: “It has really understood its core young customer. It has a regular turnover of product, which ensures people come back, and its designer collaborations portray H&M as a leader in fashion.”

The director of one young fashion firm agrees that these attributes have helped establish H&M as a fashion destination but asks why the chain launched ecommerce so late, having only done so in 2010.

Sharma says that this allowed competitors, such as Asos.com and Missguided, to steal a march during the recession. H&M faces an uphill battle to gain that footprint online.

Duarte is confident the chain can do it and says it is happy with online sales, with a dedicated ecommerce team in the UK working behind the scenes, looking at different ways to improve its offer. “For different markets, we have to look into different needs. Click-and-collect, for example, is something that is very used in the UK and we are not offering it.” When asked if a launch is imminent he says he can’t confirm anything but adds “you might get a surprise soon”.

With that little hint, our time is up and Duarte is off to his next meeting, so we’ll just have to watch this space. But if H&M can match its focus on clicks to its bricks-and-mortar strategy, then the future is very bright indeed.

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