H&M’s newest brand collection will be on sale from the start. After the Swedish company’s plunge in profits for six years, the company announced that it will soon offer a new off-price marketplace called Afound.
H&M describes the new outlet as a “style- and deal-hunting paradise” that will begin selling discounted clothes and lifestyle items from H&M group’s own labels, which also include offshoots such as COS and Cheap Monday, as well as outside labels. The first Afound store will open up in Stockholm, Sweden in 2018, along with a new website.
H&M is entering a profitable category. According to Euromonitor, the global off-price market grew more than 30% between the years 2012 and 2017, going up to $62 billion. The U.S. owns the biggest share with 80% of the total.
Considering that big retailers such as Nordstrom have had much success in the discount business, H&M’s move is different from the mega brand because it is a fashion brand selling clothes from other brands. H&M has yet to state what other brands will be sold alongside theirs or if they are planning on buying overstock and out-out-season items directly from the brands.
The company surely needs a boost of some kind to pick up its declining growth. H&M took too long to build its e-commerce and has realized it has way too many brick and mortar stores. It has also been outmatched in speed by digital competitors such as ASOS, BooHoo and longtime rival company Zara, thus leaving H&M stores filled with unwanted clothes.
Off-price retail, meanwhile, has shown an increasing attractiveness over the years. “Coincidentally enough, it looks very similar to the same reasons that people shop online too,” Tim Barrett, a retail analyst at market research provider Euromonitor, wrote.