Faced with an identity crisis and stagnating sales, can the fashion brand regain an edge with Charli XCX’s help?

H&M says its music push is central to a plan to sharpen its identity.

H&M HM.B 0.17%increase; green up pointing triangle has a unique problem for a mass retailer: It has gone too mainstream.

Or to paraphrase this summer’s chart-topper Charli XCX—and star H&M collaborator—the brand isn’t nearly brat enough.

For decades H&M enjoyed a sweet spot where it offered shoppers affordable but fashionable clothes, with collections from designers including Karl Lagerfeld and Stella McCartney alongside the brand’s own $20 hoodies and $40 dresses.

Now it is being undercut by lower-cost, faster-moving online brands such as Shein, while its collections haven’t always connected with younger consumers in recent years, analysts say.

In a growing and increasingly competitive fashion industry, H&M’s sales have stagnated, while rivals like Shein and the more upmarket Zara have thrived. H&M’s 2023 revenues of around $21 billion were barely higher than its 2017 total, whereas Zara-owner Inditex’s sales rose 42% over the same period. In the first nine months of this year, H&M’s sales fell 1% compared with a 7% increase for Inditex.

To regain its edge, H&M appointed Daniel Ervér as its new chief executive in January. Under the 43-year-old former intern, the Swedish company has lowered prices, modernized stores and spent more on marketing.

More specifically, H&M is making a play to regain cachet with young shoppers by tying the brand to Charli XCX and pop music more broadly, a campaign that included a series of live events in cities around the world this fall.

H&M’s sales have stagnated, while those of rivals Shein and Zara have been strong.

H&M has also lowered prices, modernized stores and spent more on marketing to woo younger consumers.

The priority is “regaining the brand heat, regaining that excitement,” Ervér said. The idea is to use music to forge a stronger identity that “resonates really well with the customer we want to reach,” he said.

Hundreds of Charli XCX’s fans recently descended on New York’s Times Square for a show starring the singer and hosted by H&M. But it isn’t clear how much of the stardust is rubbing off onto the brand.

“I like what she’s doing with the shop,” said Alyssa Migliarini, a 21-year-old college student who attended the gig. “But I wouldn’t shop there.”

H&M is also experiencing the perils of trying to piggyback on pop culture.

In a recent interview with Rolling Stone magazine, another of the summer’s breakout stars, Chappell Roan, clapped back at efforts by brands trying to attach themselves to her. “F— H&M,” she said, questioning the relevance of H&M and other brands to her “world.” The remark caused a brief flare-up between camps of the two singers, with Charli fans interpreting Roan’s attack on H&M as criticism of her collaboration with the brand.

A spokesperson for Charli XCX declined to comment on her partnership with H&M or on Roan’s remarks. A representative of Roan didn’t respond to a request for comment.

H&M says the music push is central to its plan to sharpen its identity.

“Music is more fashion than fashion,” said Jörgen Andersson, H&M’s creative director, observing that young people are usually more invested emotionally in their favorite musicians than in their preferred fashion brands.

H&M’s creative director Jörgen Andersson said there were signs that its events are having an impact.

H&M has sought to link music with its clothes by making Charli XCX the face of its autumn-winter collection. A leopard-print coat the singer wore for the campaign sold out within minutes, according to the company. It is also putting more emphasis on music in its stores, where songs being played are carefully chosen to reflect young consumer tastes, said Andersson.

The retailer has set up a public Spotify playlist, “The Sound of H&M,” which has been saved by the music platform’s users over 125,000 times. It is updated every week with the latest in-store tracks, which represent “the vibe and sound of the brand,” Andersson said.

H&M worked with a Swedish music agency called Ohlogy, which specializes in pairing brands with suitable artists, to hone the lineup for its shows and campaigns. With Charli XCX, H&M got lucky: It had an existing relationship with her from previous marketing efforts and was able to capitalize when the success of her “Brat” album catapulted the musician to superstardom over the summer.

The company has dipped into the music world before. In 2007, it flew Kylie Minogue to Shanghai for a concert marking the opening of its first Chinese store. Around the same time, it launched a collection designed by Madonna. But the one-offs had only a limited impact, encouraging the company to pursue a deeper program of events this time round, Andersson said.

H&M has put on a series of music events since September, including another Charli XCX show in London and a block party in New York’s SoHo hosted by model Amelia Gray. The audiences are typically a mix of VIPs, members of the brand’s loyalty program and the public. It plans a second series of shows next year to sustain its push into music.

H&M has set up a public Spotify playlist that is updated weekly with the latest in-store tracks.

H&M said a leopard-print coat Charli XCX wore for the campaign sold out within minutes.

An H&M afterparty following a Charli XCX performance in Times Square.

By Trefor Moss and Owen Tucker-Smith | Photographs by Jessica Foley, WSJ