Fast-fashion retailer H&M is a brand to watch for changing tides of fashion and retail for many reasons when it comes to youth culture. First, when they hit hard times, as they have reported in the Q4 finances with a 15.3% drop in profits despite a much-hyped collab with Versace, it means the fashion industry is going through difficulties. No matter what mainstream media touts, especially fashion mags that will try and perpetuate the industry despite risking the reputation for shoddy journalism, the economy is a mess and the fashion industry will continue to take serious hits in 2012 and 13.
H&M is proof.
According to their chief executive Karl-Johan Persson, the reason for the decrease in profits is due to the increase in costs which he admits is “a tough retail environment. The situation in the sourcing markets has also been challenging,” he continued. “Cost inflation has been high resulting in increased purchasing costs for the fashion retail industry.”
These effects are seen more and more globally, especially for brands that manufacture in a faraway countries and distribution is not localized (thus the reason for the rise in Made in America and the slow fashion movement).
Interestingly, H&M opened 266 new stores including expansions in China (the current hot market) and the United States in one of the hardest retail years to date. Also, they’re about to roll out their latest designer masstige collab with Marni due to hit stores March 8, 2012. (See our story on the collection.)
A final note about the latest status of H&M and fashion retail is what’s happening with discounting and the ongoing drama that stores are facing with a new generation that’s waiting for discounts/sales instead of caring about being first to own the latest collection.
As one astute fashion designer at the latest Bread & Butter trade show noted, “Let the Japanese continue to go gaga and be first in line over high-end collaboration store collections.” In the United States, that concept of being the first to have something is fading as fast as, well, fast-fashion’s profits. And having gone through yet another holiday season of discounted goods before the holidays, there’s a new consumer out there and a youth generation that’s now gone through their entire teens in a recession.
As production and distribution costs continue to increase and consumers, coming from a savings culture, continue to be thrifty, brands not only need to wake-up to shifting sourcing problems, but just as importantly, need to create new strategies to capture the attention of very different savvy marketplace.
See our Summer and Fall Youth Culture Studies for more information on shifting patterns in youth culture spending, where things are changing the most, why, and forecasts for 2012.
