Are H&M’s High-End Marketing Tactics Paying Off?

There’s little doubt that H&M’s glossy marketing initiatives generate significant consumer buzz. But what impact do they have on the bottom line?

H&M Autumn/Winter 2013 at Paris Fashion Week | Source: H&M

PARIS, France — At the beginning of Paris Fashion Week, a horde of prominent fashion editors, critics, and celebrities gathered in the gardens of the Museé Rodin to witness the return of a brand that had not staged a catwalk show in eight years. A winding path, illuminated by candlelight, led to an enormous marquee tent, ornately decorated to resemble the interior of a mansion, laden with vintage-inspired chaise longues, tables and other seating areas. A runway snaked through the chambers.

Was this the scene of a storied fashion label’s return, perhaps Schiaparelli’s re-launch? No. When the models emerged, the trendy, monochrome ensembles they displayed were from Swedish fast fashion retailer H&M.

The pomp and grandiosity of H&M’s recent Paris catwalk show may have been over the top, especially when compared to their last runway show, a Central Park affair featuring musical performances by Kanye West and more celebrities than fashion editors. But it’s certainly not the first time the high street retailer has adopted high-end communications tactics. Indeed, ever since 2004, when Karl Lagerfeld designed a one-off capsule collection for the company, H&M has taken a leaf from the high fashion playbook, churning out glossy campaigns fronted by top models like Daria Werbowy and shot by imagemakers like Inez van Lamsweerde and Vinoodh Matadin.

And that’s not all. Designer gown-spotting has become a spectator sport at Hollywood awards shows, where young starlets make a bid for “Best Dressed” titles in their Chanels, Valentinos and Diors. So imagine the surprise when earlier this year, Oscar-nominated actress Helen Hunt revealed that her midnight blue silk satin strapless number was custom-made by none other than H&M. Actress Michelle Williams also wore a custom H&M cream and black satin crepe gown to the 2012 BAFTAs.

But interestingly, neither Helen Hunt’s nor Michelle Williams’ red carpet dresses were available for purchase. “We wanted to design something unique for Helen Hunt for her special occasion, and it was an exciting way for us to show we can do so many more things than what we have in our stores,” explained Ann-Sofie Johansson, H&M’s head of design, in a statement.

What’s more, the clothing seen on H&M’s Paris runway in February won’t be available in stores until September. “The clothing will be available in stores in September since it was our Autumn collection on the runway,” Margareta van den Bosch, a creative advisor to H&M, confirmed in a statement.

For a retailer that has built its brand around accessibility and immediacy, it’s a curious move and one that stands in stark contrast to the sell-out success of the 2011 Versace for H&M launch, which perfectly synchronised communications and retail, making clothes available for sale immediately after the runway show to debut the line.

Indeed, flashy marketing tactics like catwalk shows and Oscar dressing generate huge amounts of excitement amongst end consumers. But when associated product isn’t available for immediate purchase one of the major problems with the traditional high fashion cycle — it can often dampen this excitement, limiting the commercial value a brand can ultimately capture. After H&M’s recent Paris show, one commenter on lifestyle blog Refinery29 wrote: “The thought of having to wait until September to get my hands on the collection KILLS me,” a sentiment echoed by many who attended the show.

This begs a broader question. There’s no doubt that H&M’s elaborate marketing tactics generate significant consumer buzz and are often extensively covered by the news media. But, at the end of the day, do they pay off?

The H&M communications strategy is in sharp contrast to that of Inditex-owned Zara, the world’s largest clothing retailer (ahead of second largest H&M), which almost never goes in for big campaigns or splashy events. Instead, the company focuses on product, delivering fast fashion copies with incredible speed and responsiveness, and invests heavily in glossy flagship stores. “For Zara, I believe that we have found a model that works very well for us, and this does not include heavy investments in advertising. Advertising is about building up expectations, and telling customers what they can expect and what we can deliver. At Zara, we want expectations to come from the in-store experience,” said Jesus Echevarría, communications director of Inditex, back in 2011.

For publicly traded companies like H&M and Inditex, financial metrics are the ultimate measure of success. Inditex increased net profit by 22.2 percent in 2012 to over €2.3 billion, whereas H&M’s net profit grew by only 6.6 percent over the same period. Indeed, selling expenses, along with investments in new stores and currency translations, eroded H&M’s operating margins to 18.0 percent, down 0.5 percent from the year before, and lagging behind Zara’s 19.5 percent for the same year. What’s more, last month, H&M reported that its operating margins in the first quarter of this year eroded significantly over last year, from 12.7 percent to 11.0 percent. This was attributed to lower than expected sales, markdowns, and “large long-term investments.”

Perhaps the high-end tactics are not having their desired results after all. Still, given H&M’s plans to add 350 more stores in 2013, including a significant push into the US with an online shop and 47 additional stores, the company may yet see longer-term returns from their recent marketing investments.

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  1. With the staging of a catwalk show in February to unveil a collection that will hit the stores in September, H&M underlines the fact that their design studio is not merely churning out interpretations of the latest trends shortly before delivering them to their stores. While fast-fashion retailers are perceived to capitalize on the creativity of other designers, the H&M catwalk show is not just a media coverage opportunity: it also gives H&M the opportunity to improve their brand image by conveying the idea that their design studio can also play according to the same rules applicable to the rest of the fashion industry.

    Victor from Ho Chi Minh City, Hồ Chí Minh, Vietnam
  2. I’m French, in France H&M shops are full every day, even in this time of “Crise”, France had always gived the way of fashion in the world, it’s an intelligent way for H&M to put on the market the collection for september, with the crisis it’s let the time to keep money and wich the good moment to buy the launch they sold, remember H&M isn’t Hight Tailor, it’s casual wear in France, so the firm adapt her sold politic to the customers, and actually, we must have the time to save money and think about before buying…

    Robert from Avignon, Provence-Alpes-Côte d'Azur, France
  3. At the end of the day who makes more turnover?İnditex but H&M differentiates its brand image from the rest of the fast fashion comanies by its marketing efforts.
    They collobarate with the designers and make collections .This simply creates excitement and get the customers to the stores.
    They play the game in a different way to differentiate their brand image from the competition and it works.İt will work more in the long run.

    Karen Cittone from Istanbul, Istanbul, Turkey