Pulse: H&M & H&M


Philly is an odd retail town. We don’t have a Crate & Barrel, but we have seven Sneaker Villa stores. There seems to be a Starbucks every two blocks in Center City, but no PF Chang’s.

In this grand tradition, Swedish retailer H&M recently expanded its four-year-old Chestnut Street store — at the same time it opened a new store two blocks away on Walnut Street. Why do some chains smother us as others spurn us?

In H&M’s case, it’s strategic: Because the retailer prides itself on its lightning-fast supply chain — a design can go from sketch to hanger in a few weeks — its strategy is to flood the markets close to its distribution center (in Jersey) before venturing farther away.

Also, the two Center City H&Ms have slightly different concepts; the Chestnut Street store sells clothes under the company’s ’80s-centric “Divided” label, while the Walnut Street store specializes in safe-for-work clothes that run a little more expensive. This makes sense geographically: Leases, according to Larry Steinberg of Michael Salove Company, who put together the H&M deal, can be twice as expensive on Walnut as on Chestnut. “Going forward, the only ones that will be able to afford the rents on Walnut are manufacturers,” he explains proudly, meaning retailers who handle their own sourcing (i.e., chains), as opposed to boutiques like Joan Shepp, which don’t generate the same profit margins.

As long as that’s true, we’ll take two H&M stores over one Abercrombie & Fitch any day.