Sweden’s H&M Makes Major Layoffs To Save $2B Ahead Of Looming Recession—Will The US Be Next?

It has been reported that Swedish fashion brand H&M recently became the first big European retailer to lay plan to deploy layoffs staff in response to the rising living costs.

It’s reportedly an attempt to reduce mainly back-office staffing costs as European inflation rates continue to soar. The layoffs are a part of a plan to save 2 billion Swedish crowns per year.

It is “symptomatic of the problems facing the fashion retail sector,” said senior analyst at Hargreaves Lansdown, Susannah Streeter, in a note as reported by Reuters.

“Keeping the lights and heating on in vast stores is becoming increasingly unaffordable with energy prices so volatile,” she added.

Reuters points out that H&M rivaling other fashion retailers with cheaper prices, like British giant Primark, who plans to add 1,800 jobs in Spain and Britain as it continues to expand globally.

“Shoppers are showing signs of trading down and hunting out bargains, so the pressure is on H&M to compete with chains seen as offering greater value, from Primark in high streets to Boohoo and Shein online,” Streeter of Hargreaves Lansdown said to Reuters.

“We are in a big transition and the whole retail industry is facing a lot of challenges. It’s very clear that when consumers have paid for their food … energy, gas, and so on there is less to spend. So what is obvious is that demand for value for money increases”.

The North American H&M stores also faced a bit trouble as well. In January 2022, it was announced the retailer was to open around 120 new stores and close around 240 stores, making a net decrease of around 120 stores. “Most of the openings will be in growth markets, while the closures will mainly be in established markets.”