H&M tries to get rid of "cheap" labels no longer only when fast-fashion companies

H&M has realized that it should not be just a fast fashion company.

Even if sales in the third quarter of 2012 were not satisfactory - net income rose by only 0.9% - it did not affect the company's enthusiasm. In the spring of 2013, its brand new & Other Story will be fully listed. The new brand offers shoes, bags, accessories, beauty products, underwear and ready-to-wear garments at a higher price than H&M.

“We are ready. The goal of the new brand is for women who are interested in fashion and want to have their own personality style.” At the Q3 quarterly press release, H&M Chief Executive Officer Karl-Johan Persson said.

Cavill, an adviser to retail retail consultancy Planet Retail in London, thinks of this new brand. "In terms of product lines, H&M is bolder than Inditex's (Max. ZARA's parent company)'s highest-end Massimo Dutti brand. They are ready to adopt more exotic designs. ."

This is not the first time the company has tried to get rid of the "cheap" fast fashion label, and it is accelerating the speed of becoming "more expensive".

In September 2012, COS (Collection of Style) opened its first store in the Chinese mainland market at Beijing Qiaofufang Grassland Shopping Center. On November 23, the second store opened in Tianjin. At the same time, Marie Honda, together with designers Karin Gustafsson and Martin Andersson, held the second fashion show in Beijing since the brand was founded. The last time it opened its first store in London in 2007.

The establishment of COS is the beginning of H&M's multi-brand strategy. “There is actually a gap between High Street and High-end – there are a group of customers who want both design and high-quality clothing, but at the same time they want the pricing of these clothes. It's something they can afford,” said Marie Honda, head of the COS brand.

Its goal is to seize those consumers who are more able to spend in the market gap that Marie Honda said - in other words, this is a group of consumers who are pursuing "cost-effectiveness".

Karl-Johan Persson, chief executive of H&M, placed expectations on this group of consumers. “It turns out that we can do similar experiments and we can do it well. This is good for H&M's development and it will bring profits in the years to come. Of course, COS is a brand new concept, but it has very good prospects for development."

In 2007, H&M is growing at a high rate. The rate of expansion of each branch is 10% to 15%. In that year, H&M's turnover increased by 15% from the previous year to 92.323 billion Swedish kronor (about 13.884 billion U.S. dollars).

Although the European market is still frenzied about fast fashion, the market that has been quickly inspired by fast fashion will soon need some more mature and stable brands to take over. H&M believes that it should be the brand that is closest to their needs.

The start of H&M is already late.

ZARA began to expand outward in the 1990s. At the same time, its parent company, Inditex, also started a multi-brand strategy. In 1991, it launched a more youthful Pull&Bear and entered the high-end market through the acquisition of men's suit brand Massimo Dutti.

After the acquisition and integration of Inditex, the company already owns eight brands with different positioning including ZARA, Pull & Bear, Massimo Dutti, Bershka, Stradivarius, Oysho and Uterque.

Similarly, Fast Retailing Group, the parent company of Uniqlo, has also started multi-brand operations from the acquisition of Link International, the owner of Theory and Helmut Lang in 2004.

In November 2012, the group opened a multi-brand integrated store called “Uniqlo Marche” at Ginza Department Store in Tokyo. Uniqlo, Comptoir des Cotonnniers, PLST, and GU brands are all sold in this integrated store.

On November 30, the group announced that it has acquired J Brand Holdings, the parent company of J Brand, a high-end jeans brand, for 25 billion yen (US$304 million).

These fast-starting companies are accelerating the expansion of other brands besides the main brands—the markets they face are still young, but more subdivided.

Marie Honda thought that between High Street and High-end, she did not find a real opponent that could compete with COS. “We started COS because the market was still blank.” Her customers, “not only It's fashion, but it's all they buy, including the lining of the clothes.” Marie Honda's idea is to do COS in a way that resembles a designer's brand – of course, it's cheaper.