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H&M’s chief executive has urged European politicians to create a level playing field for fashion retailers in areas such as tax, chemical regulations, purchasing practices and workers’ rights to combat unfair competition from Chinese rivals such as Shein and Temu.

Daniel Ervér told the Financial Times that the Swedish fast-fashion retailer was on “a very long journey” towards increased profitability after ceding its crown as the world’s largest fashion chain to Zara’s Spanish owner in “an industry that is changing at a furious pace”.

He added: “I don’t think we have seen a level playing field. If you don’t pay taxes, if you don’t comply with chemical regulations, don’t adhere to purchasing practices, protect the social rights of workers, that’s not a responsible way of conducting business. There’s a responsibility for lawmakers to ensure there is a fair playing field, [otherwise] it will weaken our competitive strength as European companies.”

H&M has been increasingly squeezed from above by the likes of rivals Zara, and from below by cheaper rivals including Shein, Temu and Primark.

Zara has been pushing upmarket with tactics such as displaying limited-edition collections at high-profile events such as Paris Fashion Week and revamping stores designed by leading architects. H&M has followed its lead to some degree in a bid to set itself apart from cut-price online rivals such as Shein and Temu, which benefited from sales surges during the pandemic.

Ervér’s plan to turn around family-controlled H&M has focused on boosting profitability and putting the customer at the heart of its focus — both on display at the refitting of a central Stockholm store around the corner from its head office.

The store is airy for an H&M location, with more space between displays and fewer clothes on show, while items from its upmarket Studio and Atelier ranges as well as beauty products greet customers at the entrance. Shoppers can scan a code in the fitting room to ask an employee to bring them a different size or order anything out of stock for home delivery.

“Previously it was high-density but we wanted to break that. With the right product, we sell more with less. It becomes a more effective way of running the business,” said Johanna Klingspor, H&M’s head of creative development.

The revamp is already bearing some fruit as Ervér also targets cost control. Operating margins fell from more than 20 per cent in 2010 to just 3 per cent in 2022. They reached 8.6 per cent in the third quarter this year, up from 5.9 per cent a year earlier.

“What I recognised when stepping in is that this company has so much untapped potential . . . given how the competitive landscape has changed, we need to step up our game. We need to stop doing what doesn’t make a difference for the customer and really shift resources and money to what makes the difference,” said Ervér, who took over running H&M in February 2024.

Shareholders have given his plans a cautious welcome. Shares are up about 16 per cent this year, but were higher just before he took over as well as before the pandemic.

One top-10 shareholder said: “H&M were caught in between — not in Zara’s price point, and definitely not in Shein’s. They let the margins slide for too long.”

A fashion analyst added: “Ervér’s elevation strategy is taking the company in the right direction as it helps to reduce the H&M brand’s exposure to value fashion — the most competitive segment of the market and the most exposed to competition from not only the likes of Shein, but also second-hand platforms.”

But questions remain. H&M has historically sourced more of its clothes from Asia leaving it less nimble than Zara, which has more production closer to its biggest markets in Europe and the US. H&M’s need to discount some stock has led to volatility in both sales and gross margins.

“We need to continue to become quicker. Nearshoring is one piece of the puzzle, but there are many others,” Ervér said. His aim is to have some items on sale between six and 10 weeks after the initial idea.

The 44-year-old pointed to H&M presenting its latest collection at London Fashion Week for the first time in two decades. “That puts a lot of pressure on us to step up because you have the whole world, journalists, influencers, looking at you and assessing you.”

H&M is controlled by the family of Stefan Persson, son of the company’s founder, who owns shares carrying 83 per cent of voting rights. He has gradually increased his ownership in recent years and many observers in Stockholm expect him eventually to take the company private.

Ervér said he did not think it was “so provocative” to put customers ahead of investors. H&M had been “fortunate to have one large shareholder” and that satisfying all investors meant “being focused on the customer,” he added.

The retailer is also making a push into second-hand through its Sellpy platform. Some of its stores, such as the one in central Stockholm, have curated second-hand sections that attract younger shoppers. Ervér said: “We see it becoming an important part of the way that you express yourself and the way you shop second-hand becomes a complement to the existing business.”

Ervér disagrees with critics who say sustainability is incompatible with fast fashion: “To do fully sustainable collections for the richest people is not so difficult. The big challenge is to do it at scale.”

He is happy that H&M has broken the link between growth and emissions, going up in sales and down in greenhouse gases although he concedes “we are far from done”.

The Swedish group has a partnership with start-up Syre, a sister company to bankrupt battery maker Northvolt, to recycle polyester that recently expanded to include products from sporting goods group Nike.

Ervér said that few customers “want to pay more” for green products but that entrepreneurship, creativity and policy should drive the change because it “won’t happen organically”.

On competition, the H&M chief executive argued that the big disruption came a decade ago when digitalisation changed how people shop, as well lowering the barriers to entry in fashion. That opened up the market for a “completely new set of competitors” without physical stores.

“We need to make sure we leverage the strengths of having 500 in-house designers, the strength of curating the experience, and really facilitating the shopping experience,” Ervér added.

David Abrahamovitch averages four cups of coffee a day; a fitting dedication to caffeine as the founder of Grind (and the father of two young children). But, he confesses, he wasn’t always a coffee aficionado. The first Grind café, opened in 2011, came about after Abrahamovitch, then aged 25, inherited his father’s mobile phone shop on London’s Shoreditch roundabout.

On the advice of a friend, he transformed the phone shop — where he’d once worked as a teen — into a Melbourne-style café. It was a success, but real growth came a decade later, when Grind launched online sales of pods and beans during Covid.

Today, despite having 13 cafés — including its newest branch in Dubai airport — online sales make up the lion’s share of the company’s revenue.

The business was last valued at £150mn, with annual revenue at £30mn for the 2023-24 year. It employs 350 staff.

“A lot of people get into coffee because they love coffee,” Abrahamovitch says. “I got into coffee because I had a building.”

You grew up on the outskirts of east London. What was your family background like?
My parents didn’t come from much at all, but both were smart and worked hard. In their generation, that was enough.

My mum was in the corporate world, and gave us stability. She was paying the mortgage and the school fees. My private education was amazing — it was cool to be clever there.

My dad was a classic entrepreneur, setting up shops across different industries. It was very much feast and famine, but it looked more fun than going to an office. My sister is also an entrepreneur now [running Dusk, the bar drinks app], so there’s a clear influence.

By the time I was born, my dad had moved into mobile phone repairs, spotting that it was going to become a big thing. From the age of 12, I would work all summer in the repair shop. I watched how to do sales calls, account management and customer engagement. I learned more from that about running a business than I did from my economics degree. I actually worked full-time during my final university year for a dispute resolution tech start-up, initially backed by [venture capital firm] Balderton.

I also did a few summer banking internships during my degree, but I knew immediately I had no interest in it as a career.

What inspired the first Grind store and how did you finance it?
When dad died, I had to figure out what to do with the shop he’d left behind on Shoreditch roundabout. It was a long-term lease, and the rent was £8,000 a quarter. My mum paid the rent for a few quarters, and I got a small amount from selling off the customer base. The shop had been wasted as a mobile store — the area had really transformed and my dad had always talked about changing it. When I mentioned it to my friend Kaz, from Melbourne, he said: “Let me put some money in. Let’s do a café with proper coffee.”

I didn’t have enough money to fit out the first one. I thought we would be doing it for £50,000 and it ended up costing nearly £200,000 because we had to do so much to make it commercial. I magicked a quarter of it up myself from credit cards and stocks. The rest we really had to beg, borrow and steal. I remember filling out business bank pages to borrow £20,000 for coffee machines and ended up having to agree personal guarantees. We even did some of the work ourselves, such as sanding down the stools — it was the first and the last time I’ve done any DIY. 

I called my mum the night before opening to ask for a few hundred pounds for the float. She literally came with a bank bag of £400 or £500 in five, 10 and 20 pence coins. That £500 really was the last of what we had. We budgeted for a loss in the few months, but, luckily, people came in. The flat white caught on. 

For the first few years, I couldn’t afford to go full-time at Grind. I stayed working full-time at the Balderton-backed tech start-up. It nearly killed me getting the first one open. Then in January 2014, we raised £1mn. At that point, I thought I owed it to the investors to go all in. Plus, by then, we were making £15,000 a week, helped further once we got our late licence and could serve espresso martinis after 5pm. 

When did the business really take off?
In 2019, after we did a £3.5mn crowdfunding raise, we invested in building out a new direct-to-consumer arm. I wanted to make high-quality coffee pods without the sustainability issues, and we launched that in January 2020. 

I thought maybe the new website could generate one store’s worth of revenue. But by April, during lockdown, we were doing crazy numbers. One minute I was telling all the staff they had to go home. Then my phone was exploding with Shopify notifications. We had £2mn in our account earmarked for two sites in Canary Wharf and the South Bank, but ended up putting it all into the direct-to-consumer part of the business.

We didn’t even have all the stuff we needed, but I was just like: “Do not stop, no one touch that website. I don’t care if we don’t have the stock. We’ll figure it out.”

There were moments when I thought we would lose the business completely because of Covid. It was crazy to go from that in March 2020 to 18 months later, the business being worth way more.

It was only after that point that Grind became a cohesive brand. Beforehand, it had just been Soho Grind or Shoreditch Grind and so on. We became a different entity [Kaz James was a co-founder for the first physical stores, but Abrahamovitch is the sole founder of the broader Grind entity].

What was Grind’s approach to cracking such a competitive sector?
We knew from the start we didn’t want any other coffee brands sold at our cafés. A roaster took pity on us and was like, sure, I’ll give you 20 bags a week of your own white label blend!

In terms of flavour profile, we haven’t really changed much since. If you go to speciality grocery stores and get an espresso, it’ll be quite flowery and delicate. And coffee guys like that. But the reality is 95 per cent of the coffees we’re selling are flat whites and cappuccinos. And that [type of] coffee doesn’t work that well with milk. So it was about having something where you can still really taste the coffee coming through the milk, with a little bit of chocolate and nuts — that little bit of natural sweetness. Italians think their way is the best, with their dark, fast, $1 espressos. I love Italians’ obsession with food and drink, but I don’t necessarily agree.

How do you manage your personal finances now?
The direct-to-consumer boom prompted us to bring in a big investor [Richard Koch, who co-founded LEK Consulting]. Since then, I’ve sold down my stake a little in various rounds to de-risk a bit. That’s allowed me to buy an amazing house and all the stuff that comes with having two kids. 

Apart from my house, the vast majority of my money is invested in exchange traded funds, stocks and a pension. I also have seven or so angel investments. I mostly back founders I know.

On paper, 80 per cent of my wealth is still in the business. I think I’ll grow it faster there than in the stock market. But equally, I’ve got two kids and I want to make sure that if, for some reason I’m no longer here, there’s plenty to pay the school fees and have a nice life. Although my wife [Victoria Beckham’s make-up artist] is successful in her own right.

I subscribe to the American attitude that keeping founders poor doesn’t help anyone. They’re just more stressed about the day-to-day and won’t want to take risks in the same way. My lead investor has been super supportive in terms of allowing me to take money off the table.

What do you spend money on?
My main splurge now is definitely holidays. I’m never going to be able to travel with a three- and a four-year-old again. Plus, they won’t want to go on holiday with me in another 10 years probably. When it comes to material things, it’s as everyone says — as soon as you can afford the stuff, you no longer want it.