H&M Shuts Down First and Largest Flagship in China

·2 min read

SHANGHAI — Swedish fashion label H&M has closed its first flagship store in mainland China, located in downtown Shanghai’s busy commercial district Huaihai Road.

The store officially closed on Friday. When visited on a Saturday morning, the three-story building had all its walls covered in white, and two H&M sign had been removed  while workers were busy packing racks of garments inside.

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The location was the world’s second-largest fast-fashion retailer’s first and largest store in the mainland China market since it opened 15 years ago. It was open briefly after the city eased lockdown measures, but consumer demand failed to bounce back, and the prolonged backlash after the Xinjiang cotton controversy sank the brand’s sales in the market. According to government reports, Shanghai’s retail sales fell 6.7 percent in May after an 11 percent drop in April.

The company declined to comment, citing a quiet period before the group’s six-month earnings report next Wednesday.

After refusing to use Xinjiang cotton because of forced labor allegations in the region last March, H&M and companies such as Nike and Adidas faced an intense boycott. H&M was scrubbed off China’s leading e-commerce platforms, including Tmall, JD.com, and Pinduoduo, and its store listings were delisted from online maps and Dianping, the Chinese version of Yelp.

According to its company website, the Swedish retailer currently operates 381 stores in China, with 26 in Shanghai. The brand closed 31 stores in the market in the fourth quarter of last year.

Before the Huaihai store closure, the retailer shut down its other flagship store on West Nanjing Road in Shanghai last May. Chinese down jacket brand Bosideng has since taken over the space.

Consumer backlash wasn’t the only issue that plagued the company. Recently, its Sanya affiliate company was fined for selling faulty products by local law enforcement. According to the company profile app Qichacha, H&M faced 34 administrative penalties over the last few years, mostly caused by alleged quality control issues.

H&M’s parent company H&M Hennes & Mauritz AB, shut down its Monki brand in mainland China this April. The group still operates sister brands COS, &Other Stories, and Arket in the Chinese market, which accounts for around 6 percent of group sales, according to analysts.

Related:

China’s Retail Sales Contract, but Demand for Luxury Is Back

H&M Removed From All Major Chinese Platforms Over Xinjiang Cotton Ban

H&M Emphasizes ‘Long Term Commitment’ to China

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