Clothing prices in the US are beginning to rise as the effects of Donald Trump’s tariffs on imported goods take hold, according to the CEO of H&M, one of the largest global fashion retailers. Daniel Ervér highlighted that in the US market, several competitors have started to increase their prices, with some taking a more aggressive approach while others are being more cautious. However, the situation remains fluid due to the changing nature of tariff policies, as the US administration has altered the rules on multiple occasions. This uncertainty makes it difficult to predict how the market will evolve.
Despite these challenges, H&M is striving to maintain its competitive edge by focusing on price, fashion, and sustainability. Ervér emphasized that the company is committed to offering value while also being responsive to the fast-paced changes in the market. H&M’s diverse sourcing strategies provide the company with flexibility, allowing it to mitigate some of the impacts of the tariffs. This flexibility is seen as a potential advantage over competitors who may have fewer options for sourcing products without facing increased costs.
The rising cost of wages, tariffs, and other global factors has put pressure on retailers to keep prices low, especially as consumers are increasingly sensitive to price fluctuations. With inflation affecting household budgets worldwide, shoppers are becoming more cautious in their spending habits, and retailers must adapt to this new reality. In response, H&M is anticipating that it may need to offer more discounts than usual in the coming months, as global uncertainty has already led some competitors to lower their prices to encourage purchases.
In its most recent financial results, H&M reported a modest increase in sales of 1%, amounting to 112 billion Swedish kronor (£8 billion) in the first half of the year. However, the company’s operating profit decreased by nearly 17%, indicating the strain of rising operational costs and intensifying market conditions. To adjust to these challenges, H&M plans to close 200 of its 4,200 stores but will also open 80 new locations, including its first three stores in Brazil and outlets in Venezuela.
In an effort to counter rising labor costs, H&M is increasingly relying on self-checkouts in its stores and utilizing smart RFID (radio frequency identification) technology. This technology allows for faster scanning of items in bulk, streamlining the shopping experience and potentially reducing the need for as many staff in stores. These moves reflect H&M’s broader strategy to adapt to a changing retail landscape while managing cost pressures.
