Could it be that fewer people are comfortable buying cheap, disposable clothing made in horrific conditions?
H&M is struggling. The Swedish fast fashion retailer saw sales drop 4 percent in the last quarter of 2017 and 14 percent across the entire fiscal year. As a result, H&M plans to shutter 170 stores and open 390 new ones, meaning it will add a net 220 stores this year -- significantly less than last year's 388 new stores.
The slowdown is attributed in part to fewer customers visiting brick-and-mortar locations. Online shopping is on the rise, and H&M has not been as effective as other fast fashion retailers at capturing online sales.
Retail Touchpoints reported that H&M's "online presence has floundered compared to that of its major competitors," and that its number of website visits grew only 22 percent from March 2014 to March 2017, compared to its rival Zara's increase of 71 percent and Uniqlo's 470 percent. However, it's worth noting that even Zara's sales slowed in late 2017, but regained pace by November.
H&M's CEO Karl-Johan Persson said the results were "clearly below our expectations":
"Our online sales and our newer brands performed well but the weakness was in H&M’s physical stores where the changes in customer behaviour are being felt most strongly and footfall has reduced with more sales online. In addition, some imbalances in certain aspects of the H&M brand’s assortment and composition also contributed to this weaker result."
This could be a reference to H&M's supply chain being less flexible than that of its main rival Zara. As Business Insider explained, Zara manufactures its clothes in-house, which means it has a much shorter lead time than other apparel brands. Meanwhile, Fortune reported that H&M has had inventories pile up over the past two years.
While H&M is scrambling to figure out its next steps and reassure investors, some of us are wondering if this indicates a global shift in people's attitudes toward fashion. Could it be that fewer people want to waste their money on clothing that's made to be essentially disposable? Or perhaps events such as the tragic Rana Plaza factory collapse in Dhaka, Bangladesh, in 2013 alerted shoppers to the atrocious conditions in which most garment workers work and have led them to question their role in supporting the fast fashion industry.
From growing interest in minimalism and frugality, to higher-quality capsule wardrobes and concern over carbon footprints, Persson is absolutely right when he says "the fashion industry is changing fast." It just might not be changing in the direction he'd like to see.