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Delhi News Daily > Blog > Fashion > H&M seeks to lure US shoppers as fast-fashion rivals hike prices due to tariffs – ET Retail – Delhi News Daily
Fashion

H&M seeks to lure US shoppers as fast-fashion rivals hike prices due to tariffs – ET Retail – Delhi News Daily

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Last updated: June 27, 2025 4:09 am
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H&M is trying to win shoppers from rivals in the United States by holding prices steady while Zara and Shein raise theirs, as U.S. tariffs disrupt the fast-fashion industry that relies on imports of low-cost clothes from China, Vietnam, and other Asian countries.

H&M CEO Daniel Erver said on Thursday constantly changing tariffs had created turbulence, with the world’s second-largest listed fashion retailer planning for multiple scenarios.

In an interview, he told Reuters that the challenge in the coming months is “to understand the consumer sentiment, which we see has dropped in the U.S. due to all the turbulence… with the fact that some will be forced to raise prices more, and what (that creates) as an opportunity”.

“Different competitors are acting in different ways, some more aggressively, some more cautiously,” he added.

H&M has around 500 stores across the U.S., its second-largest market after Germany in terms of sales, accounting for 13 per cent in 2024.

As U.S. tariffs add to costs for retailers, relative price positioning is front of mind for executives, and the timing of price increases is key, with companies watching the competition closely to see who will blink first.

For H&M, which is trying to improve its profitability, sticking to current prices for longer carries risks as rising costs eat into margins.

But it also provides an opportunity to take market share from rivals.

“Maybe they are going to raise prices in the U.S… but just to a lesser extent as compared to competitors,” Pareto Securities analyst Alexander Siljestrom said.

H&M can also mitigate the tariff impact by shifting production of U.S.-bound clothes from China, which faces the highest tariff rate, to Bangladesh and elsewhere, he said.

Across categories including dresses, jeans, and shirts, the average U.S. price at H&M’s bigger competitor Zara was up by 28 per cent this month from a year ago, according to data from price tracking firm EDITED, while prices at H&M in the U.S. were on average down 3 per cent year-on-year.

Zara prices were up across the board in June compared to January this year, EDITED found, while H&M has kept prices more or less stable, even though its chief financial officer Adam Karlsson said in March that price hikes were likely to offset tariffs.

Shein, which sends clothes direct to U.S. shoppers from factories in China, has also had to raise prices and suffered weaker customer growth since Trump ended the “de minimis” duty-free treatment of low-value parcels.

SOURCING FROM FEWER, CLOSER SUPPLIERS

As it aims to improve its supply chain and get new styles to stores faster, H&M has spent the last 18 months consolidating its supplier base, Erver said, aiming to order more from a smaller number of big suppliers who also operate factories in multiple countries.

“We look at each individual order to decide what’s the best sourcing market depending on the craftsmanship, the skills, the pricing situation, but also now more than ever the geopolitical situation with trade barriers,” he told Reuters.

“That has led us in certain cases to take the decision to move things to different markets.”

H&M also aims to be below full capacity with all of its suppliers, so it can easily increase production if needed when an item sells well, Erver said.

As part of its “nearshoring” strategy of sourcing products from suppliers closer to main consumer hubs, H&M is looking to increase its supplier base in markets like Turkey, Egypt, Jordan, and Morocco for Europe, Erver said.

H&M will also add suppliers in Brazil, where it is opening its first stores in the second half, he added.

  • Published On Jun 27, 2025 at 08:20 AM IST

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