New Store Demonstrates H&M Won't Roll Over for J.C. Penney

While J.C. Penney (JCP) may have a plan to dominate fast fashion in the United States, H&M (HMB) hasn't conceded its lead in the sector yet, and it continues to open stores despite something of a rough patch in U.S. sales.

The United States remains a focus of H&M growth plans with the retailer's latest store open Dec. 10 in San Rafael, California's Northgate Mall. The new San Rafael store is H&M's 187th in the U.S. and part of a chain that operates over 1,800 locations in 34 countries. The new store is just shy of 23,000 square feet in size, and it is laid out over two floor with 12 dressing rooms available. It's also the 18th and final U.S. H&M location that's opening for 2009, part of a worldwide 225-store expansion.

J.C. Penney just struck a deal with Barcelona-based Mango, another multi-national fast-fashion chain, that prompted a declaration by J.C. Penney's chairman Mike Ulman. Combined with recently developed store brands focused on inexpensive style, he said the new MNG by Mango label emerging from the parntership between the retailers, "will further establish J.C. Penney as a first choice destination for the best, affordable contemporary fast fashion in the U.S."

Of course, H&M isn't going to readily surrender market territory gained in the U.S., and new stores aren't the only weapon in its arsenal. The chain has reemphasized its fashion position lately. Like J.C. Penney, which has added clothing lines from Charlotte Ronson and other designers, H&M is working with fashion designers willing, in the recession, to partner on projects with mass-market retailers. Early this month, it unveiled a Sonia Rykiel lingerie collection that includes pieces in velvet, silk and satin, and separates designed in her signature multi-stripes and rhinestones. Rykiel, the first guest designer to create a lingerie collection for H&M, also participated in its inaugural designer Christmas collaboration. Among the other items Rykiel developed for H&M were accessories such as brooches, hair bands, pillows and slippers. Yet, the heart of H&M's operation remains seasonal styles. The retailer takes runway fashions as they emerge in places such as Paris, Milan and New York, and it transforms them for popular consumption at popular prices. H&M maintains critical elements such as color and silhouette but often in less dramatic presentations than appear on runways and aways at much lower cost. Styles for fall and winter still prevail at its stores -- as the sweatshirts and scarves prevalent in the kid's clothes displays even in the San Rafael H&M demonstrate -- but a transition is about to begin. For women, as winter gives way to spring in San Rafael, expect H&M to build off the current line up with more modern urban looks including white suits and feminine draped dresses as well slippery silks and loose harem pants in gold lame. Vintage style dresses and artist style tunics will provide preppy and retro 'chic housewife' looks while global influences will become evident in spicy color palettes, embroideries, kaftans and more tunic variations.

For men, a melding of urban and outdoor looks will give some ground to classic menswear fashions updated for the spring season. Displays will feature preppy styles including a new modern check shirt and stripe t-shirt as well as a baseball jacket. Ethnic influences will take the form of paisley prints and rustic tones in modern manifestations. If J.C. Penney is going to dominate fast fashion in the United States, the retailer will have to contend with a dynamic competitor that is focusing on the U.S. market. Sure, H&M hasn't had the best run lately, as customers pounced on its summer clearance sale early, which exacerbated the effects of a generally soft fashion market and hurt its results. Still, H&M's continued store growth, J.C. Penny's interest and success at overstock sellers such as TJX all demonstrate that bargain fashions are proving more attractive to consumers at a time when they are reevaluating their apparel spending. Competition between J.C. Penney and H&M might not turn out to be a zero-sum game, though. By doing more to popularize inexpensive fashion, they may increase its popularity and both enjoy a decent measure of success.