Despite an ongoing trend towards online, H&M continues to invest in physical shops. The concrete interpretation is changing, and additional services are sometimes added. Later this year, the retailer will trial a new, compact store concept in Belgium.
“Antwerp is a key city”
Last month, H&M reopened its 6,500 sqm flagship store on the Meir, Antwerp’s beating heart of shopping. The fashion retailer introduced a host of new services there, including the H&M Rental service, which had thus far only appeared in Stockholm, Berlin, London and Amsterdam. RetailDetail went to the new store to find out where H&M currently stands in Belgium and where it wants to go.
We submitted these questions to Pär Lindbäck, Country Manager for the France, Belgium and Luxembourg cluster. Merging the three is a matter of efficiency, he says: in those countries, consumers have similar expectations. The Swede has been with the company since 2001 and currently holds offices in Paris, after having been posted in Sweden, the United Kingdom, Ireland, Hong Kong and Brussels. “As a group, we have identified a number of ‘global key cities’, and Antwerp is one of them, thanks in part to its strong connection with fashion history. That is why we made that significant investment on the Meir store.”
Location and format
While Lindbäck is not allowed to answer in detail how H&M is currently doing in Belgium, but he does not sound dissatisfied after the bumpy ride all retailers have had, with the Covid crisis and high inflation. “We have a strong position as a brand in Belgium. Customers appreciate our fashion offering and value for money.”
The retailer did close some shops in recent years – including two branches in the centre of Antwerp – but H&M did so not because business was bad there, but rather because its shop portfolio is constantly being optimised. In doing so, the chain does not only focus on larger shops in larger cities.
“The old adage has changed: in the period before digitisation, everthing was just about location, location, location. Now a combination of location and format is key. In smaller towns, we have different shops than in bigger cities, where we want to increase the in-store experience. Moreover: a big shop like the one in Antwerp will also strengthen online activities. On the Meir in Antwerp, we closed two smaller units to focus on the big one. Each catchment area is unique.”
New compact concept
So, is there still room for physical expansion in Belgium? “We still see a strong trend towards online after Covid. In digitally mature markets like countries like Germany, the Netherlands and the UK, online is already very big. In Belgium, we see it developing in the same direction, while customers in southern Europe are less digitally mature.”
Nevertheless, H&M continues to invest in its physical channels. “For example, we are going to add more H&M Home departments as shop-in-shops in a number of Belgian shops. In Antwerp, we have also expanded it. We are also going to trial a new compact store format, which is at the other end of the spectrum compared to Antwerp. It is a concept for smaller cities, where we want to work with a more easy shopping experience for the customer. This is a format that we have developed globally and that we will bring to Belgium this year. However, I can yet not reveal the actual location, as the contract has not yet been signed.”
Renting is more sustainable
In Antwerp, new in-store services are appearing, as the function of the physical shop is changing. Lindbäck: “You have to be able to offer customers a seamless and instant shopping experience. That is what they expect. It is no longer enough to open a shop and hang products on the shelves. You have to be able to predict trends, you have to give customers the option to order an item that is not available in the store or get it elsewhere… Even in the physical shop, customers shop online. What we knew as a recipe for retail has really changed completely in the last five to ten years.”
A real eye-catcher in Antwerp is the service H&M Rental, which had only been launched in five European shops before. What is its ambition? “We want to use it to continue democratising fashion in a more sustainable way. Some of the pieces we work with in the Rental service are rather special outfits, they are garments that you may not want to own because you would only wear them a few times. The service is therefore more for our investment pieces, such as our in-house designed Studio Collections. These are priced higher than our regular collections and they are definitely more extravagant in their design, you are not going to wear them every day. But maybe you go to a fun party and want something special, then you can rent it rather than having to buy it. That is more sustainable, both financially and environmentally.”
Potential in larger cities
Actually, the concept is still in an experimental phase: “We want to see how consumers react. This kind of service is not yet very well established in the market and there are only a few cities where we offer it. In Amsterdam, Rental has been live for several years now, and it is quite successful there.” The retailer sees particular potential for the lending service in specific shops in larger cities. “You won’t find Rental in a suburban shopping centre, but you will find it in a city-centre flagship store, where we want to maximise the shopping experience.”
What did H&M learn from the experiences in Amsterdam and elsewhere? “You have to be able to make this work operationally, first and foremost. We are a big format retailer and every time you try something new, you have to get the logistics right. In this case, the whole process of rental, return, cleaning, back to the shop, re-rental, repair and so on: we have that under control now. In Antwerp, it is now about getting our customers on board. They are not used to it yet. I hope the reactions will be good.”
To say is not to do
Another big trend in the fashion industry is the growth of second-hand. H&M is also pioneering this: “We are working with some global partners to launch an integrated solution, where we want to be able to offer our customers both second-hand products and the ability to sell stuff themselves, peer-to-peer. I can not give you a launch date yet, but we are working on it. We are not planning an implementation of second-hand in physical shops today, but in Barcelona we are testing it.” In Paris and some other cities, H&M is also testing a repair and alteration service called ‘Repair & Remake’: customers can have pieces not only repaired, but also personalised.
Sustainability is a growing concern among customers, observes Pär Lindbäck. “They ask themselves a lot of questions: do I pick it up in the shop, do I have it delivered to my home? Do I buy a carrier bag, do I use my own carrier bag?” Over the last few years, this has become much more top of mind among consumers. At the same time, you see new players entering the market aggressively who may have different business goals. Ultimately, the future still belongs to the players who have a sustainability agenda, is his belief.