**H&M Accelerates Local Sourcing Amid Trade Challenges**
**Meta Description:** H&M is shifting its sourcing strategy to reduce lead times and enhance flexibility in response to US tariffs and geopolitical issues.
**URL Slug:** hm-local-sourcing-strategy
**H1:** H&M Boosts Local Sourcing Efforts to Navigate Trade Turmoil
Swedish fast-fashion giant Hennes & Mauritz AB (H&M) is intensifying its initiatives to source products from manufacturers closer to its primary markets. This strategic shift comes as US tariffs and geopolitical instability complicate international trade dynamics. In a recent interview, CEO Daniel Erver emphasized the importance of reducing lead times and increasing flexibility by establishing manufacturing options primarily in Europe, as well as in Latin America and the USA.
“This strategy is even more relevant now with all the changes we’ve seen, and we need to increase the pace to find even more alternative suppliers,” Erver stated. H&M, which has significant production capacity in Bangladesh and other Asian countries, faces the challenge of potentially higher consumer prices, similar to its competitors like Inditex SA’s Zara. However, Zara has already diversified its sourcing to include countries like Turkey and Morocco, which are closer to Europe.
To maintain competitiveness, H&M has adjusted its pricing strategy, at times raising and at other times lowering prices. “In some cases, we have decided not to place orders because we cannot manufacture them at a competitive price point,” Erver noted. The CEO has observed that tariffs and trade agreements have been in flux almost daily this year. While the company keeps a close watch on how competitors and consumers respond to these changes, Erver believes that now is not the time for major strategic shifts but rather for careful, granular decision-making at the order level.
Following the announcement of a profit that slightly exceeded analysts’ expectations, H&M shares surged by as much as 7.9% in Stockholm trading, marking the largest intraday gain since April. This positive performance was bolstered by strong demand for women’s fashion and sportswear, despite low expectations leading up to the results, particularly after Zara indicated a slow start to the summer season.
Erver, who has been with the company for many years and took over as CEO early last year, is focused on revitalizing H&M after a period of sluggish growth. He anticipates that the gross margin, a critical profitability metric, will improve in the latter half of the year as challenges such as unfavorable currency fluctuations and high freight costs begin to ease.
**FAQ Section**
**Q: Why is H&M shifting its sourcing strategy?**
A: H&M is shifting its sourcing strategy to reduce lead times and enhance flexibility in response to US tariffs and geopolitical challenges affecting international trade.
