H&M Targets Growth in Emerging Markets Amidst Economic Challenges
By Reuters
Published: September 25, 2025
In a strategic pivot aimed at revitalizing its business, H&M, the renowned fashion retailer, is setting its sights on emerging markets, particularly Brazil and India. This move comes as consumer spending in Europe, H&M’s primary market, shows signs of weakening, compounded by the impact of U.S. tariffs on demand in its second-largest market.
Strategic Expansion into New Territories
H&M’s CEO, Daniel Erver, outlined the company’s ambitious plans during a recent statement, emphasizing the need to enhance brand appeal and respond more swiftly to evolving fashion trends. The retailer is not only looking to expand its geographical footprint but also to improve profitability in a competitive landscape dominated by rivals like Inditex’s Zara and the fast-fashion giant Shein.
The company made its debut in Brazil in August with the opening of its first store in an upscale São Paulo mall. Plans are already in place for two additional stores by the end of November, with four more slated for 2026, including a location in Rio de Janeiro. “In some of these markets that we haven’t really penetrated, we see a bigger opportunity for growth,” Erver stated, highlighting Brazil and India as key targets.
Economic Context and Consumer Sentiment
The decision to expand into these emerging markets comes at a time when H&M is grappling with declining consumer confidence in the U.S. and Europe. Erver expressed caution regarding U.S. consumer demand as the fourth quarter approaches, noting that tariffs on imports have led many retailers to increase prices, further straining consumer spending.
This cautious outlook is underscored by the broader economic landscape. The pandemic has forced H&M to rapidly reduce its global footprint, with the number of stores declining by 19% from its peak in late 2019. As of last month, the retailer operated 4,118 stores worldwide, the lowest count since mid-2016. Plans are in place to close an additional 200 stores in 2025, primarily in mature markets.
Competitive Landscape and Market Dynamics
H&M’s expansion strategy is not without its challenges. The fast-fashion sector is highly competitive, with brands like Zara and Shein continually innovating to capture market share. Inditex, the parent company of Zara, has also reduced its store count, reflecting a broader trend in the industry as retailers adapt to changing consumer behaviors and economic pressures.
Danske Bank analyst Daniel Schmidt commented on the uncertainty surrounding H&M’s expansion into Brazil, stating, “It remains unclear how much this could affect sales growth next year. But of course, it’s encouraging that they’ve been well received so far.” This sentiment reflects the cautious optimism that often accompanies new market entries, particularly in regions with distinct cultural and economic landscapes.
Premium Offerings and Targeted Launches
In addition to its expansion in Brazil, H&M is also focusing on its premium brand, Cos, which is set to launch in India with a store in Delhi during the fourth quarter. Erver noted the potential for affordable luxury positioning in emerging markets, describing India as a particularly intriguing opportunity for Cos. “You see in many of the emerging markets that there are great opportunities for affordable luxury positioning,” he remarked, indicating a strategic shift towards catering to a more affluent consumer base.
H&M’s broader Latin American strategy includes plans to launch in Venezuela in the fourth quarter and Paraguay next year, following the recent opening of a store in El Salvador. This aggressive expansion reflects a commitment to tapping into new consumer bases and diversifying revenue streams.
Conclusion
H&M’s foray into Brazil and India represents a significant shift in strategy as the company seeks to navigate the challenges posed by declining consumer spending in its traditional markets. By focusing on emerging markets and premium offerings, H&M aims to bolster its brand appeal and profitability in an increasingly competitive landscape. As the retailer embarks on this ambitious journey, the coming months will be crucial in determining the success of its expansion efforts and its ability to adapt to the evolving dynamics of the global fashion industry.
