Cheap-chic H&M picks Raleigh mall

It will aim for penny-pinching shoppers in a down market

Staff WriterOctober 15, 2009 

Triangle fashionistas can cross another shop off their retail wish list: H&M.

The Swedish retailer known for its cheap-chic offerings is about to complete a deal to open a store in Raleigh's Crabtree Valley Mall. It will be the first H&M in the Carolinas, and it's expected to draw shoppers from across the state.

The deal for a 21,000-square-foot store is about a week from being finished, mall spokeswoman Sandra Geist said. If all goes as planned, the store will open in the spring.

When the deal is finalized, it will be one of the biggest retail announcements in the market this year. And while exciting to H&M fans, the news may be less welcome to some competitors in a time when the retail industry is suffering.

H&M has always had loyal followers, but the chain has become more popular lately, said retail analyst Britt Beemer, founder of America's Research Group in Charleston, S.C.

"They'd be popular anyway, because they have such a good fashion sense with the low pricing," he said. "But with the economy today being difficult, they're even more popular. More people demand them to open because they can't afford to shop at Abercrombie" & Fitch.

The store mostly appeals to girls in their teen years and their 20s, Beemer said, and competes head-on with stores such as Abercrombie and especially Forever 21, another cheap-chic fashion chain that opened in Crabtree mall in late 2007.

H&M is certain to draw shoppers from those stores, Beemer said. This year, his firm did a survey in which 40 percent of consumers who said they have shopped at Abercrombie & Fitch said they had stopped shopping there because it was too expensive.

"They'll decimate them," Beemer said. "Half the people who are now shopping at H&M used to be going to Abercrombie, Hollister, American Eagle."

Last week, Abercrombie reported dismal financial results for September, with sales at stores open more than a year dropping 18 percent. Overall in September, sales of clothing rose 0.5 percent from August, the U.S. Department of Commerce reported Wednesday.

And now may be a good time for H&M to try to snap up teen customers.

Teens plan to spend 2 percent more on clothes, shoes and accessories than they did a year ago, and 6 percent more than they were thinking about just six months ago, a nationwide survey of 11,000 students released last week by Minneapolis investment banking firm Piper Jaffray found. It's the first time since the spring of 2006 that Piper's twice-a-year survey has found teens in the mood to spend.

Where it's going?

The Crabtree H&M will go on the mall's lower level near center court, below the Belk Men's Store. Try Sports, which is the only retailer on that stretch of hallway now, will move across the hall to make room.

Geist declined to comment further on the store until the deal is done.

Owners of the area's smaller clothing boutiques say the H&M opening will not affect them much, because they serve a different clientele.

"[H&M] will be great for the teenagers and the preteens that just want the latest thing and they don't care if it lasts more than a couple weeks," said Susan Burney, co-owner of the Galatea boutique at Raleigh's Seaboard Station.

According to the Piper survey, teens spend $70 billion a year in this country and 42 percent of that is on clothing and accessories.

H&M has been looking at the area for years. In 2006, the Downtown Raleigh Alliance was in talks with the company, but a deal never happened.

It will be one of a number of new-to-the-state openings in recent years. Other retailers, including Ikea and gourmet grocer Trader Joe's, also recently decided to open in the Tar Heel state.

For area fans of the chain, any location in the state is a vast improvement. Many travel to Virginia or Atlanta to patronize H&M stores.

Raleigh resident Heather Hefner said she shops at the H&M at the Short Pump Mall in Richmond, Va., every time she has the opportunity, drawn by the chain's fashionable styles, quality of clothing and low prices.

"The last few times I was there, I've gotten a bag of clothes -- maybe five or six tops -- for $50," she said. "My husband tries to give me a spending limit, and at H&M I can still stay under the limit and it's like, 'Look at all these clothes I got.' "

sue.stock@newsobserver.com or 919-829-4649

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