Swedish fast-fashion giant H&M faces a drop in customer loyalty as a result of increased competition and a poor online experience, analysts have said.
The retailer this week published second-quarter sales figures showing a 4% decline in like-for-like sales since March. Although last month was flat, H&M Group’s March sales dropped 12% and April only edged up 1%.
It has seen similar monthly declines over the past year, variously blaming both excessively cold and excessively hot weather as well as currency fluctuations, tough comparisons and the economy.
But analysts have warned this could be the beginning of a decline for the retailer, which has until now dominated high streets in the UK and further afield. While H&M has blamed external factors for its decline, experts claim it is intensified competition from the likes of Primark and Asos that is denting sales.
Independent analyst Nick Bubb said: “Just as New Look has been struggling in what is a pretty competitive young fashion market, H&M has been underperforming. Primark is becoming a problem for it, not just in the UK but in Germany and as it goes to other markets like France, and it’s hurting other European operators too.”
Bubb noted that Zara owner Inditex, which published its first-quarter results this week, was “also pretty flat” and that “H&M has been underperforming Inditex for a while now – on product, on segmentation and on store format”.
Asos was also becoming a serious contender in Europe, Bubb noted. “It’s still small beer compared with H&M and Inditex but the bigger it gets the more impact it will have.”
Verdict Retail associate analyst Jessica Fioriti said competition had “caused H&M’s overall customer loyalty to fall”.
While Primark was luring younger customers away, retailers such as Whistles were also undercutting the 35 to 44-year-old customers targeted by H&M’s Cos chain.
Fioriti also identified Asos – which reported a 43% increase in sales for the three months to May 13 – as a threat to the Swedish giant. “[H&M] should further invest in its online experience as it’s not comparable to the likes of Asos and River Island,” she told Drapers.
Ashma Kunde, apparel analyst at market research firm Euromonitor, said: “Primark expanding into western Europe could pose a threat to H&M, especially since it is its core market. H&M has lost its focus, and is trying to be all things to all people – launching sportswear, a red carpet collection, the Conscious Collection – there is a lot going on. Primark is more centred and it knows who it’s talking to.”
H&M declined to comment.