When one approach doesn't work, market it under another name. At least, that what the multinational retail clothing company H&M (STO: HM-B) has done. The clothing-retail giant announced the new H&M sub brand Arket in March, a new concept store that will offer higher-end clothing and items. While most are excited for the introduction of a new brand with a more mature concept, why is the multinational company building more brands?

Before analyzing the faltering sales of H&M as of recent, it is important to outline the 70-year old company's history. H&M, more formally known as H & M Hennes & Mauritz AB, is a Swedish multinational company that offers clothing for men, women and children. The company primarily operates its business by offering fast-fashion, or the quick-manufacturing of clothing from the runway to the hands of consumers at lower prices. Founded by Erling Persson in 1947, the Swedish born store began its dominance by selling only women's clothing. After expanding its retail choices to men, the name of the company became known as Hennes and Mauritz after Persson gained a men's hunting apparel company. Since then, H&M has expanded it's market by offering home decor in 2008, and has rapidly expanded its physical stores to more than 3,000 as of recently. The rapid growth of the clothing company is made clear with the opening of 427 H&M stores in 2016 alone. 

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While H&M seemed to be increasing exponentially, it's sales have been decreasing, leading to H&M's softer approach to building stores. The decrease in sales primarily comes from the rise of e-commerce sites like Amazon (AMZN  ), which offers quick fashion at the click of a button. In efforts to help their sales, H&M yearned for a broader consumer base with the construction of different sub brands similar to Arket. The last sub-brand before Arket was '& Of Other Stories' in 2014, which was another brand that promised to offer higher end clothing, but this time for women. Other sub-brands of H&M include Collection of Style (COS), Monki and Weekday, all of which claim a different concept from the main H&M fashion line. With the introduction of Arket, H&M's brand building will not stop soon. Ulrika Bernhardtz, the creative director for the Arket brand stated that it originated from their dedication to the "Nordic tradition of functional, long-lasting design" symbolizing a "blank sheet, [and] the sense of optimism and possibility we felt creating this new brand." While H&M is offering new creative brands, their reasoning for it lies in their bitter competition with the Spanish multinational clothing-retail giant, Inditex (BME: ITX). 

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Similar to H&M, the clothing company Inditex also has sub-brands, one of which is the well known clothing source ZARA. The 31-year old company has amassed a total of over 7,000 stores beyond its online-run flagship store ZARA, pushing the competition between itself and H&M. In fact, it is because of the online presence of ZARA that Inditex finds success. The focus that Inditex has put on e-commerce, coupled with the ever-growing dominance of Amazon, has caused H&M to desperately build up unique concepts that will appeal to its consumer base. What seems interesting however, is that Inditex, in addition to ZARA owns the sub-brands Pull&Bear and Bershka. While both companies own sub-brands, H&M shares have fallen past 17%, while Inditex shares have risen by approximately 10%. 

Concepts like Arket, while unique, may or may not support the declining sales of H&M. While innovative, the entire world will have to wait and see if Arket and other H&M sub-brands will prove themselves worthwhile in a market that is increasingly dominated by e-commerce.