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H&M’s New Store Concept is Very Unlike H&M

Acknowledging it turned its attention away from retail stores to focus on higher-end brands and online sales, H&M has launched a new concept store it hopes will help attract shoppers and revitalize its image.

H&M said the pilot store, located in its hometown of Stockholm, was planned with a layout and range appealing to affluent local customers and will test new concepts, including offering a smaller range of selected clothes, less-cluttered displays and color-coordinated sections. The store also will offer espressos and feature invitation-only events.

“We have to raise the entire quality level: to have fewer items in, a nicer presentation of the goods,” CEO Karl-Johan Persson told Reuters.

H&M’s sales have been sluggish for years, and its shares have lost close to two-thirds of their value since 2015, following decades of rapid expansion leading to some 4,800 stores in 69 countries. Founded in 1947 by Persson’s grandfather, H&M is the world’s second-largest fashion retailer behind Spain’s Inditex, owner of Zara.

The plan is to attract shoppers and reinvigorate sales by moving away from its image of cluttered and overcrowded stores lacking discernable customer focus and be more in line with the shifting retail landscape already adopted by H&M’s competitors, which include features such as sleek, open layouts, fitting rooms with phone chargers and adjustable lighting, juice bars and even manicure services, as well as shopping experiences more seamlessly integrated with their online offerings.

The H&M pilot store in Stockholm’s upmarket Karlaplan neighborhood was planned with affluent local customers in mind, but its aim is to adapt stores to cater more for local tastes and means.

According to Reuters, H&M executives admit they neglected the health of the company’s stores as they focused on building online sales and developing eight new, mostly higher-end brands, such as COS and ARKET—despite the H&M brand representing more than 90 percent of total sales.

H&M is shutting underperforming H&M stores faster than usual, and earlier this year said it expected sales in stores open one financial year or more to return to growth in 2019.

Norwegian investment fund Odin Fonder has sold all its H&M shares, per Reuters, saying it believes the company “needs to close at least 1,000 stores, and that just as many need to be refurbished.”