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H&M’s Afound attempts to steal market share from existing UK players

H&M is entering strong competition in the off-price UK market in an attempt to steal market share from existing players using its new discount retail platform, Afound. Afound which stocks both H&M group’s own and third-party brands is expected to launch online and in stores in Sweden this year in advance of an international launch.

The UK is expected to be next on the drawing board. Drapers is of the view that H&M is looking at having an agreement with several young fashion women’s and men’s wear UK brands. Operating profit for H&M group dropped 13 per cent to SEK20.6bn (£1.85bn) in the year to 30 November, while sales including VAT fell by 4 per cent to SEK232bn (£20.8bn).

Charlotte Pearce, associate analyst at GlobalData Retail, said, “Considering H&M’s recent results, Afound seems like it could be a further distraction to its core business. With H&M’s online platform falling short of the likes of online pureplays Asos and Boohoo, the retailer will need to work hard to bring Afound up to industry standards. TK Maxx has firmly established itself in the UK as an off-price retailer and is synonymous with designer brands, but Afound’s positioning is still unclear.

Rob Feldmann, chief executive at off-price e-tailer BrandAlley, was of the view that Afound’s launch should not pose a threat to bricks-and-mortar outlets. Afound will need strong brands, if they’re working with low selling prices initially, it will be hard to make the economics work. But if they can get a selection of good, more expensive brands to work alongside them, it could work.

 
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