H&M Tries on Multiple Personalities to Keep Growing

At the H&M store on Boulevard Haussmann in Paris, teens comb racks packed with velour tank tops as tourists load up on cheap jeans to a soundtrack of bouncy pop music. While the bustle and bargains once appealed to Pierrick Beringer, at age 35 he prefers quality to quantity, so these days he’s more likely to turn the corner to a store called COS, where the pace is far calmer. “I like the shape,” the hairstylist says, pulling a thick-cotton T-shirt from a display. “And it’s less well-known, so you don’t see it everywhere.”

For H&M, that’s not a problem, because both establishments are creations of Hennes & Mauritz AB. Faced with falling profit amid competition from rivals such as Zara and Primark Stores Ltd., as well as online players like Amazon.com Inc., the Swedish retailing juggernaut is beefing up its portfolio of niche brands. H&M is betting outlets such as COS can help expand its appeal beyond budget-conscious young shoppers. The plan is to add 80 stores from the company’s half-dozen smaller brands this year, vs. 350 more H&M outlets. That includes a new concept called Arket, a higher-end shop with clothing, home goods, and a cafe serving Scandinavian-inspired dishes. The first Arket store—the name means “sheet of paper” in Swedish, a reference to starting with a blank slate—is scheduled to open this fall on London’s Regent Street, followed by branches in Brussels, Copenhagen, and Munich. “This isn’t like anything else we have,” says H&M Chief Executive Officer Karl-Johan Persson. “It’s a completely different expression.”