Lockdowns, Consumer Backlash Force H&M to Close Shanghai Flagship

Fashion retailer H&M has closed its Shanghai, China store, the latest move in that nation after consumer demand is flagging as the country has just begun to lift restrictions related to the COVID-19 pandemic and shoppers are fighting back against companies that won’t use Xinjiang cotton.

It’s unclear when the three-story H&M flagship location closed, but it was open earlier this month and was boarded up Friday (June 24) with no H&M signage evident, according to a Reuters report. The store opened in 2007 when H&M came to China and expanded to 500 stores by early last year. The company lists 376 China locations on its website, including the now-shuttered flagship outpost.

The company wouldn’t comment on the situation, saying it’s in a blackout period ahead of its first-half earnings report scheduled for Wednesday (June 29).

China lifted its pandemic-related lockdown almost a month ago, but that hasn’t translated into a brisk return of customers to malls and other shopping centers. As a result, fashion retailers are navigating piles of unsold stock, the report said.

Retailers jumped on the chance to sell off their merchandise after the shutdowns from April and May ended a few weeks ago, with Lululemon, Victoria’s Secret and many other big-named sellers using sales to entice customers to visit their stores, per the report.

H&M has also been hampered by its outspoken opposition to using cotton produced in the Xinjiang region since forced labor allegations last year. Inditex’s Zara, Nike and Adidas have also felt the brunt of Chinese shoppers steering clear of their wares because of their opposition to using Xinjiang cotton.

U.N. experts and rights groups estimate more than 1 million people, mainly Uyghurs and other Muslim minorities, have been detained in recent years in a vast system of camps in China’s western Xinjiang region, with many former inmates saying they underwent ideological training and abuse, accusations China has denied.

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