H&M's Nearshoring Strategy
There’s a quiet reshaping happening in global fashion supply chains, and H&M’s nearshoring strategy is putting it at the forefront of the current transformation. This story explains how H&M rewired its sourcing model for resilience, speed, and survival. As well as critical lessons.
Key Nuggets
- H&M’s nearshoring strategy helped the company respond faster to demand and avoid overstock.
- The change followed pandemic disruptions, rising freight costs, and trade barriers.
- African supply chains can learn from this by becoming nearshoring-ready, as shorter routes, fewer delays, and better inventory control are now competitive weapons.
H&M Nearshoring Strategy: Why It Happened
H&M saw its global sourcing system pushed to the limit when COVID hit.
Factories in Asia got shut down overnight, ports were clogged, and deliveries were constantly delayed. It was so bad that late arrival became the norm, while some did not even arrive at all.
Clothing meant for spring was stuck in containers, far longer than anticipated, with many of them hitting store shelves when they were already out of season. But while the freight cost was devastating, it wasn’t the only problem.
Shelf cost, missed trends, lost sales, and dissatisfied customers compounded the problem. And it also exposed just how brittle long supply chains had become.
In a global briefing, H&M’s Adam Karlsson, the company’s finance chief, said, “the company learned through COVID that we need to create more resilience in our supply chain.” It was that insight that drove H&M to reduce its dependence on long-haul shipping from Asia.
There were other pressure points.
Tariff threats from the U.S. made China-based production risky, even as shipping costs from Asia to Europe surged. There were also the political flashpoints from the Red Sea to Eastern Europe, which made ocean freight unreliable.
For a fashion brand built on trends, the time lag was turning into lost profit.
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H&M’s Nearshoring Strategy Was Born Out of Rethinking Its Geography
Instead of concentrating production in Asia, the company decided to spread it across regions closer to the customer.
For example, for its European stores, H&M started sourcing more from:
- Turkey – a textile hub with short trucking routes to EU markets
- Morocco and Egypt – low-cost bases near Southern Europe
And for the U.S. and Latin American markets, H&M looked to:
- Mexico and Central America – especially for U.S.-bound items that risked tariffs
- Brazil – to supply the growing South American market locally
At the same time, H&M reduced its supplier count and worked more with large partners who could shift production between regions. This way, the company created a flexible network with faster response times.
But H&M didn’t just change factories. It changed how it buys.
This meant that instead of betting on big seasonal orders months in advance, H&M began buying closer to the season, allowing it to match supply with what customers were actually buying.
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The Impact of H&M’s Nearshoring Strategy
The payoff came quickly:
- Fewer items ended up on discount racks.
- Lead times shrank from months to weeks.
- Inventory levels fell, yet stores stayed stocked.
H&M’s inventory dropped to 15.8% of sales, down from over 17% the year before.
The company saw better full-price sales and less waste.
H&M’s nearshoring strategy also allowed the company to maintain stable prices in a tight U.S. retail market. This was happening even while competitors like Zara and Shein raised theirs. But it wasn’t just a pricing strategy. It was made possible by a resilient supply chain operation.
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Nearshoring did not eliminate risk, but it allowed for flexibility, which allowed H&M to protect its margins while remaining competitive. For example, when ships were rerouted due to Red Sea attacks, H&M had already spread enough of its sourcing to unaffected regions like Turkey.
Although the company still needed emergency plans, such as air freight when ships were delayed, its regional supply map provided options, which many brands lacked.
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Lessons From H&M’s Nearshoring Strategy
H&M’s nearshoring strategy offers several important lessons for the wider retail and supply chain industry:
1. Spread Your Supply Chain to Stay Resilient
Relying on one region for everything multiplies your supply chain risk. For example when COVID hit, companies without geographic variety had no backup. This is why H&M now pulls products from multiple regions.
The strategy ensures that one disruption doesn’t paralyze the entire business.
According to H&M’s finance chief, having a wide range of countries in your sourcing portfolio is an advantage in adapting to trade barriers. And this applies beyond apparel. Whether sourcing electronic parts or pharmaceuticals, regional diversity is a safety net.
2. Use Time As a Weapon
In fashion, a slow chain means missed trends. With the old model, H&M’s supply chain often had clothes arriving after the trend had passed, which was a colossal waste. However, he company was able to reverse the problem with that nearshoring.
Regional factories allowed them to reorder winning styles mid-season, which meant more sales at full price. This is true across categories. In electronics, automotive, and consumer goods, the ability to restock winners quickly can protect margins and limit markdowns.
3. Pair Supply Chain Changes With Business Model Changes
H&M’s shift worked because it wasn’t just about supplier geography. The company restricted how they ordered, how often, and from whom. They also:
-Simplified the supplier list.
-Kept capacity in reserve to respond to fast-selling items.
-Trained teams to act faster.
But the supply chain only moved faster because the business enabled it to. Without that internal shift, the external changes would have stalled.
4. Build Flexibility, Not Perfection
With this strategy, H&M didn’t just aim for a flawless network; the company aimed for a flawless one. To achieve this, it set up regional sources, watched geopolitical trends, and planned for disruptions—from port closures to tariff hikes.
This flexibility paid off big time because when the Red Sea became unstable, H&M had options.
When U.S. tariffs rose, the company was able to shift orders seamlessly. This is why the best supply chains today are not locked; they are built to bend.
Obinabo Tochukwu Tabansi is a supply chain digital writer (Content writer & Ghostwriter) helping professionals and business owners across Africa learn from real-world supply chain wins and setbacks and apply proven strategies to their own operations. He also crafts social content for logistics and supply chain companies, turning their solutions and insights into engaging posts that drive visibility and trust.
