Neither Zara nor Stradivarius: The Chain That Is Massively Closing Stores in Spain

The fashion industry has experienced times of constant change in recent decades. Brands that once dominated the market now face new challenges due to shifts in consumer preferences. This time, it's H&M that has made a drastic shift in its strategy, and its situation in Spain reflects the difficulties of the textile sector.

The fast fashion sector is witnessing significant transformations. H&M, one of the major competitors of Inditex, has begun to close stores massively in our country, a decision that surprises many. This measure is part of a series of adjustments following a drop in its financial results, marking the beginning of a new era for the brand in Spain.

Came to Dethrone Zara and Is Now Closing Its Stores

H&M had established itself as a rival to Inditex, but the latest financial data from the Swedish firm make it clear that the situation has changed. In the third quarter of 2024, the company reported a significant loss of about 258 million euros, which represented a 30% drop in its profits. This plunge in earnings forced H&M to review its market strategies and close several of its stores.

In Spain, the impact has been considerable, as it accounts for 17% of the brand's global closures, highlighting the magnitude of the crisis. Cities like Elche, Orihuela, and Torrevieja have witnessed the closure of stores that, in many cases, affected dozens of employees. These closures are not new for the brand, as in 2021 it was also forced to close major establishments in Madrid, such as those on Gran Vía and Conde Peñalver.

Factors That Have Led to H&M's Decline

The crisis it faces is due to a combination of factors that have affected the entire industry; the change in consumption habits is one of the main issues. The pandemic accelerated the shift to e-commerce, a transition that many brands, including H&M, did not manage with the same agility as their competitors.

Additionally, the increase in production costs and inflation have severely hit the brand's finances. This has combined with competition from new players like Shein and Temu, which have challenged traditional brands with extremely low prices and online business models.

Although H&M has attempted to improve its offerings through new technologies, such as smart fitting rooms and self-checkout kiosks, the competition in the sector is fierce. E-commerce and second-hand fashion continue to gain ground, forcing major brands to rethink their business model.

The closure of H&M stores is not an isolated case but part of a broader landscape. Since 2020, more than 18,000 fashion stores have closed in Spain, a trend that reflects the shift of consumers toward digital commerce. Although spending on fashion increased by 4.89% in 2023, the rise of online shopping and the increase in sustainable alternatives have made physical stores lose relevance.

Major brands, like Inditex and H&M, are redefining their strategy to adapt to these new times. While Inditex has focused its efforts on large stores and online commerce, H&M is seeking similar solutions. However, in an increasingly competitive market, the question will be whether these brands can survive the new consumption habits.