After years of widespread expansion of its retail network across the world, Swedish fast fashion giant H&M has slowed its roll, so to speak, as its profitability has begun to slow. All the while, Zara's parent company Inditex has maintained its ability to turn out truly fast fashion - much faster than H&M, that is.
Despite advances in supply chain management that have enabled Zara to prevail in the market place and post consisted sales growth in recent years, H&M has lagged behind. As of now, its supply chain lead times are around double those of Inditex. H&M Chief Executive Karl-Johan Persson conceded that the Swedish retailer's supply chain practices had remained largely unchanged in recent years and as a result, H&M will "definitely" have to reassess.
This is expected to including move some production closer to end-markets - a key point of success for viral Zara - while also "seeking more flexibility with suppliers so it needs lower inventories and boost spending to make the supply chain more flexible," per Reuters. This will include "moving some manufacturing to Europe in order to get faster deliveries to Europe," Persson said.
In an attempt to further regain growing profits, H&M is branching out to reach a broader customer base thanks to a new chain of stores, called ARKET, which will include products that bear slightly higher price tags than the H&M brand. The new chain will also sell brands made by third parties.