**Stockholm**: Swedish fast-fashion giant H&M announces a strategic shift towards regional sourcing in response to potential U.S. tariffs and lessons from the COVID-19 pandemic. The company aims to enhance supply chain resilience and better cater to key markets in Europe and the Americas.
Swedish fast-fashion retailer H&M is implementing a strategic shift in its supply chain to enhance regional sourcing capabilities, primarily targeting proximity to key markets in Europe and the United States. This move is being driven by several factors, including the potential for new U.S. import tariffs and the need for increased resilience highlighted by experiences during the COVID-19 pandemic.
Speaking to Reuters, H&M’s finance chief Adam Karlsson noted that the company’s approach aims to establish “a more regionalised supply chain” that supports not only responsiveness but also the overall customer offering. He emphasized the need for adaptability in the face of geopolitical complexities and market fluctuations.
Karlsson acknowledged concerns surrounding potential tariffs impacting imports, stating, “Of course it is a factor, and there are certain countries under higher scrutiny connected to trade barriers, and we’re monitoring that as we move ahead.” The retailer is actively preparing for these scenarios and leveraging its diverse sourcing strategy, which benefits from suppliers located across multiple countries.
H&M is seeking to augment its product sourcing from Central America to cater to markets such as the U.S. and Brazil. In Europe, the retailer is focusing on increasing its supplier base in Turkey, Morocco, and Egypt. This strategic sourcing aims not only to address immediate supply shortages but also to mitigate risks associated with long-distance supply chains that were exacerbated during the pandemic.
The potential impact of U.S. President Donald Trump’s tariff threats on various imports has raised apprehensions among retailers and economists, with many warning that such measures could lead to increased prices. Karlsson reflected on this uncertainty, saying, “If tariffs increase for everyone, there will be a relative position to take (on pricing).” According to him, irrespective of tariff implications, H&M aims to maintain a consistent pricing strategy.
Despite H&M not disclosing country-level sales forecasts for 2024, it remains noteworthy that the U.S. constituted the retailer’s second-largest market in 2023, accounting for 14% of total revenues. The company’s proactive approach in supplier relationship management highlights its effort to not only ensure supply chain robustness but also to navigate the shifting power dynamics between suppliers and customers effectively amidst evolving market conditions.
Source: Noah Wire Services
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