In Good Company with Nicolai Tangen - Helena Helmersson CEO of H&M Group

Episode Date: November 16, 2022

In this episode, Nicolai Tangen talks to Helena Helmersson, CEO of H&M Group, the second largest fashion retailer in the world. Do you know that we only wear our clothes seven times on average? Check this conversation learn more about the fashion industry!The production team on this episode were PLAN-B’s Martin Oftedal and Olav Haraldsen Roen. Background research were done by Sigurd Brekke with additional input from our portfolio manager Anthony Sleeman.Links:Watch the episode on YouTube: Norges Bank Investment Management - YouTubeWant to learn more about the fund? The fund | Norges Bank Investment Management (nbim.no)Follow Nicolai Tangen on LinkedIn: Nicolai Tangen | LinkedInFollow NBIM on LinkedIn: Norges Bank Investment Management: Administrator for bedriftsside | LinkedInFollow NBIM on Instagram: Explore Norges Bank Investment Management on Instagram Hosted on Acast. See acast.com/privacy for more information.

Hi everyone, and welcome to our podcast In Good Company. I'm Nikolaj Tangen, the CEO of the Norwegian Wealth Fund. In this podcast, I talk to the leaders of some of the largest companies we're invested in, so that you can learn what we own, and also so that you can meet these impressive leaders. Today, I'm talking to the CEO of H&M, Helena Helmholtz. Wow, really, really impressive lady. The company was founded in 1947 and has grown to become one of the leading fashion retailers in the world. We own 1% of the company, translating into 3 billion Norwegian kroner or 320 million US dollars.

In this podcast, Helena will talk to us about the sustainability of the fashion industry, the latest trends, and also why she loves fashion. So stay tuned. Helena, you are one of the most powerful women in the global fashion industry. You sell billions of products to millions of people. So if we were to just start with the very basics, what do you wear? So today I'm wearing an H&M blazer together with an Arket polo shirt underneath. How do you choose your clothes?

So usually, I mean, if you would see my wardrobe, it's obviously a mix of brands, mostly from H&M Group. I mix what to wear more from my personal style, I guess. So right now I buy a lot from, I think H&M Ladies has done a fabulous job. And also COS has, with such great confidence, also refined both the brand, but also their collection to be more edgy. So I bought a lot of that collection. What are the global trends now in fashion?

Well, it's still after the pandemic, of course, there's some kind of counter reactions when it comes to more color. People need color. The party will be true party wear with a lot of glitter and dresses and so forth, which will be fun. It seems like people really want to meet, socialize and have fun again. The tailored trend is more relaxed still. So if you would think blazers, for example, without lining, if you would see trousers could, for example, be with drawstring, these type of details.

But we have a lot of colors together with neutrals, such as pink and green and these kind of stronger colors. Okay, so we are celebrating the end of COVID, basically. Well, I think we're celebrating coming together again. Yeah. Well, it sounds like I need to visit my wardrobe a bit here. Please do. Who is setting the trend these days?

Where is the trend coming from? No, it's really a mix of influences coming together. I mean, it's always been like that with fashion, but of course with digitalization the spread of social media influencers etc etc it comes in different channels today maybe than what it used to but I would definitely say that the trends have been more global before while now it's moving more towards also, you know, you care for the neighborhood, for the community that you're part of.

So it has become more local. And definitely there is a clear trend that you mix and match according to your own kind of personal style, while before it was maybe more a pure outfit that was super trendy. But now it's more, which I think is healthy that you also mix and match according to who you are. And where that comes from is, of course, brands as our brands, influencers. It's from art still. It's from, you know, many different sources.

The fact that Taste is becoming more local what kind of challenges does that give that you as a company well of course in the past more or less it's been global collections global store formats you know all of that and to some extent that withholds so we can still build quite a lot of synergies but you also need to create more closer relationships with customers and a part of doing that is of course to be very locally relevant and that of course means that to some extent you need to also adapt the collections it can be the colors it can be how you style something. It can be separate orders, but you need to move closer in different ways than being more locally relevant, which is super interesting.

Now, your background is really interesting. You were leading the sustainability operations of H&M, which is quite unusual, actually, for a CEO. So when you talk about sustainability, you can feel that it's really heartfelt and the core of you as a person. How does that make you a different CEO, you think? Well, I guess others should answer that I'm just with my experience trying to do my very best for the company and for the industry. But I would say, I mean, this passion grew very strong since I've been living in Bangladesh. And I think that's when I saw things more clearly, maybe.

I was so incredibly proud when I lived in Bangladesh and saw the kind of impact that we have, especially on women and indirectly how we provide good jobs. indirectly how we provide good jobs and what it meant you know for women to have a monthly salary and how that also trickled down to more kids in school and all of that so that was a true pride where I just felt we are in the lead of a movement that has to become industry-wise. And on the other side, also the negative effects on the planet, which made me also think that we should be able to provide fashion to many people without damaging the planet. So how can we do that? So that was kind of a passion that grew. How do you strike the balance there? Because on the one hand, you want to produce as cheaply as you can. Your company is about making profits. At the same time, you want to pay proper wages. Just how do you find that balance? That's why our responsibility is so important to make sure that the jobs that we provide,

even though it's indirectly, that we are part of securing the human rights and part of securing the working conditions in those factories together with our partners so that we can provide good jobs. And we know that this industry has always been kind of the stepping stone out of severe poverty. So I think this is also part of why I feel my job and our role within H&M Group is so meaningful. That as we grow, we should also create that type of positive impact for people.

You also talk a lot about circularity and reuse of clothing. What are your thoughts on this? Well, if you think about our industry, I think everybody agrees that having a vision where you can give access to sustainable fashion to many is an awesome thing. You know, people use fashion to express who they are and it's something really positive. But the system behind fashion is not sustainable as it's built right now.

I mean, the foundation is more built on a linear flow, which actually means that every time you design a new product, you extract new natural resources. And circularity is all about making sure that fashion never goes to waste because it goes back into the flow. Which is, I would say, it's the way to decouple our growth from the use of natural resources. And of course, decouple our growth from the CO2 emissions as well. So it's a core strategy that is really important to make sure that the system

behind fashion becomes sustainable. But you think more about reusing fibers and the fabrics rather than actually reusing the clothes itself? It's both. That's why we work with both in parallel. So of course, once you have produced something from recycled fibers and in the processing you of course have used renewable energies that's also circular in itself but you need to make sure that the product can live as long as possible that means that when a customer is done with an item how can you make sure that it's sold to someone else and once a garment cannot be used anymore either you repair it or you make sure that it gets recycled so again it's a whole system to get in place and we were early on with for example doing garment collecting in our stores that was 2013. And right now, for example, getting feedstock back to supply chain and get that circular

flow is a challenge. So we obviously need to work harder. I read somewhere that the average clothes is being worn seven times. But clearly, the more of this that happens, the less growth you have as a company no no because it's possible to decouple growth from the use of natural resources so again if you reuse fibers over and over again if you make sure that you use renewable energy in the processing if you use climate smart fuel in the transport then we're going to be able to grow and on top of that if we can have more than one transactions on a product so we're part of the resale flow I mean now we're

majority owner of the amazing company Selpi which is an amazing platform for resale so of course we see great opportunities for growth that That's in our DNA. But we have to grow to some extent in a different way or, again, change the system behind fashion to make sure that we use less natural resources as we grow. Moving on to competition, you have some large online-only competitors. How do you view the competitive landscape just now? Well, it's a very, very competitive industry.

And lately, I would say when we saw digitalization coming, also new competitors have emerged and some of them doing only e-commerce. New competitors have emerged and some of them doing only e-commerce. There's a lot of local players. So it's also easier as a small company to emerge on the market. So it's very competitive, but also very interesting, I would say, because you really have to come down to who are we and what is our competitive advantages. And of course, adapt to the digitalization and pursue your own vision. That's super important. But I would say it's a very competitive landscape, but very, very interesting. And we do see that our sweet spot and our position is strong when it comes to the basic business idea of combining fashion quality, price and sustainability. So that's what we pursue.

But of course, also integrating tech and making sure that we also use digitalization as a means to reach more customers. How is the way you market your clothes changing? Well, there's so much marketing touching people now. It's like, how will we be unique? What will be different from us? How do we show our values in our marketing? And show who we are, both when it comes to creativity and fashion,

but of course also when it comes to, for example, sustainability. I think it's very important to do that in an integrated way. What are your most important channels now, if you look at social media, for instance? Social media is, of course, really important, but I would say that still one of the most important channels is still our stores. Obviously, that's where we meet many, many customers still. And again, the strength of having both physical stores and being

present online and digitally in so many countries, that's kind of where we interact and meet most customers and social media, of course, we're in many different channels like everybody else, but the most important part is how we meet our customers within our own sphere. I think you mentioned seven values officially that are important for you. What would you say is the top two, three values that you think about? I guess where we are right now, believing in people, I would definitely pick. Also because the world around us is moving so fast, it's pretty complex. And also competition is fierce. So being a big global company, we have to move fast. So we kind of have to create an organization that is empowered to

take decisions so that we move fast. Speed is a mindset thing. How do you install that in the organization? I think it links back to what we just discussed about. If you're going to get speed in a large organization, you kind of need to make sure that you have teams with different roles that has their mission that is aligned with the company goals. So that they get the freedom to take the right decisions and to decide how. Well, to me, it's empowerment and it's truly using the strengths in the organization. And if you are very clear with where we're headed, what goals to reach, of course, it's much easier to let go of control on how to get there. And I do think that is important.

And of course, as all companies, we are challenged right now because when you transform, when you are in big change, you have to make sure that you're on the same track. When do you feel you are in the flow? When are you the most happy at work? I'm very result driven. So when I meet teams that have collaborated in the right way and I see progress and often when it's linked to us having challenges within a certain area and I see that I can be part of unlocking things and that we move with speed, that to me is amazing. When I see a team that has been struggling

and that has come up with ideas and had the energy to pursue their plans and see them successful. I think that's when I feel that I'm in a flow. And what is most fun with your job? Meeting our teams in both production countries, sales countries. I think it's amazing. Together with meeting, I love fashion, so I love meeting the brands and looking at new ideas when it comes to

both how to develop a brand and looking at collections. That will always be a fun part for me. Why do you love fashion? Instantly, I would answer it's because I think myself that it's a great way to express yourself. And I think it brings such kind of joy in some way. And the other part of the answer would be that I have been working for more than 25 years in this company. So somehow being so outspoken with growing a fashion and design company and at the same time be part of changing the industry has made me really proud. So if fashion can truly be that force for good, I think that's awesome. We are seeing in many places some reversal of the globalization and the outsourcing and so on.

Do you think we'll see the same with H&M? Yeah, I mean, I've been working so many years myself in sourcing and production. So I've been part of kind of always developing new markets, developing the network of suppliers to develop certain capabilities. And that continues. And right now, it's quite a lot around nearshoring also. So that's part of the development we are doing ourselves. And that is, of course, to be really quick on meeting customer demands and hitting new trends. And that's really, really interesting. Talking about markets, what do you think about the Norwegian fashion industry?

I don't know if it's that different from the Nordics or from Sweden. And of course, there are different communities and neighborhoods also in Norway, but we have a long history in Norway providing many customers sustainable fashion. So again, we look forward to continue that journey and becoming even more relevant also in Norway within different communities and so forth. And also in Norway, we have a lot of competition, which is really, really interesting.

And I don't know, competition kind of makes you stay on your toes and always try to do your very best. Some personal questions at the end there, Helena. Do you meditate? It depends on what you mean with meditate. Like I don't go to classes, but I walk a lot in nature. So that's my way to kind of relax my mind. And why is nature important for you?

I actually think I'm not the only one that finds nature very relaxing. No, no, I'm another one. I'm another one. I love it. So, no, but it is something with nature. It's de-stressing. Yes, especially the sea and mountains for me, at least makes you feel small in a nice way.

And it truly makes you relax your mind and be present here and now. And I try to do that as much as possible. And I've always done that also with my family when I grew up. Going to the mountains and skiing and hiking and stuff like that. There is research showing that people who spend more time in nature are less depressed. I believe that's true. Last question. We have a lot of students and young professionals listening into this.

What is your advice to them? The first one is truly to follow your passion. I mean, if you can identify what you're truly passionate about and let that lead you, that is so, so powerful. And then when you start to work and you're about to choose an employer, I think it's really, really important to not only let kind of the employer choose you, but also choose a company where you feel you can be yourself and that you like the culture, you like what they are doing, so that it's a choice that you make. And of course, that choice can be remade. You can choose other things as you go. But that has been key, at least to me.

Well, Helena, big thanks for taking the time today. Good luck with your continued work on sustainability. And thanks for dressing up the world. Thank you so, so much. It was really nice talking to you. Thank you. Thank you.