With Nyden, H&M tests a brand designed to attract millennials

Finding innovative ways to appeal to millennials is certainly not a new challenge for retailers, but H&M is setting out to create a brand where appealing to this lucrative demographic is built into its DNA.

The Swedish retailer announced it will launch the first collection of its soon-to-be eighth brand, Nyden, early this year.  The store — which was conceptualized by Oscar Olsson, who formerly led various departments at H&M, including the company’s Innovation Lab — will specialize in collaborations with artists and cultural figures that resonate with millennials. (The name is Swedish: “Ny” means “new,” and “den” means “it” in the Nordic language.)

While H&M has shared little information publicly about what this will look like in practice — in an email, an H&M spokesperson described Nyden simply as “a smaller startup within the H&M Group,” but declined to share further details — it revealed the products will be available online and at select pop-up shops.

Nyden serves as another example of mainstream brands finding new ways to tap into the mindsets of millennials, following in the footsteps of brands like Gucci, which uses a millennial “shadow committee,” and Neiman Marcus, which enlisted a taskforce of young shoppers to help buyers select products. Given its emphasis on bucking traditional retail models by avoiding a physical store presence, it also reflects the continued industrywide trend of experimental retail.

“Big chain apparel retail is very challenged, and shoppers, especially young shoppers, constantly want to try new things,” said Sucharita Mulpuru, retail analyst at Forrester. “This is a way to target that customer. I expect many more of these types of efforts by H&M and others in the years to come.”

Meanwhile, H&M has experienced slumping sales as of late, reporting a 4 percent drop in quarterly sales in December, the first drop in several years. As a result, rather than expand the footprint of stores like its bargain namesake brand, the retailer has scaled back on its existing brands and set its sights on new ventures to test different strategies.

MaryLeigh Bliss, chief content officer at YPulse, said the brand’s success will be largely dependent on price and quality as millennials increasingly veer away from fast fashion. According to a YPulse survey, 61 percent of millennials said they would rather buy fewer, more expensive, higher-quality clothing than cheaper, lower-quality products.

Where Nyden may be able to carve a niche is in helping to redefine the concept of luxury as it continues to move beyond high-end products and brands for millennial consumers, she said.

“Generally, I think a spin-off brand for millennials does have the potential to succeed,” Bliss said. “Affordable luxury is another concept that certainly resonates with this group, which has a very different idea of what luxury is than previous generations. Luxury doesn’t have to be exclusive or expensive, as long as it feels luxurious. To millennials, luxury products are high quality, designed beautifully and elegant, not necessarily high cost.”

The forthcoming debut of Nyden comes on the heels of the launch of Arket in August, an H&M-owned lifestyle brand that sells basics and essentials for men, women and children. In a similar fashion to Arket, Nyden is teasing its opening with a mysterious Instagram presence. The official account currently has just nine posts, eight of them black. In grid view, the black boxes surround a video of flashing images, including a women holding a pineapple above her head and a skateboarder about to complete a trick.

Since the account started on December 15, it has gained more than 7,000 followers. It gives little in the way of intel, except for a clearly curated presence intended for a millennial shopper that enjoys reading lifestyle blogs and double-tapping on the photos of style influencers.

These influencers, which Olsson described to The Cut as “tribe leaders,” will play a critical role in the development of the brand and in driving a target demographic of shoppers he calls “netocrats.” Early collaborators include Swedish actress Noomi Rapace and tattoo artist Doctor Woo.

“The Netocrat is more sensitive than ever to credibility, authenticity and personality,” Olsson told The Cut. “They’re also more sensitive than ever to exploitation of themselves or other people.”

Ultimately, Mulpuru said she anticipates that Nyden won’t act as a significant departure from H&M’s current strategy of offering stylish clothing on the cheap. However, with its emphasis on influencer and social media culture, it remains to be seen how Nyden will ultimately fare within the brand portfolio.

“H&M is already pretty focused on millennials, and it’s exceedingly affordable,” she said. “But maybe this will have higher quality pieces, higher price points, different branding, different selling environments or small batches that enable experimentation.”

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