The Swedish group H&M is strategically reshuffling its factory base in Bangladesh as global demand shifts, and has begun phasing down orders from some garment suppliers. Industry sources say at least eight factories have been given notice or an informal indication of the pullback.

The move follows a year of warnings from analysts at Reuters, the Financial Times and McKinsey about sluggish demand, high inflation and falling consumer spending across the global fashion industry. Shoppers in Europe and North America are trading down to cheaper goods, while large brands seek to make their supply chains more cost-efficient and flexible. H&M itself has said it wants its global sourcing network to be more “resilient, flexible and agile”. In recent financial disclosures, the multinational company has flagged weak consumer demand, pressure on profits and rapid market shifts.

Asked about the changes, H&M Group’s Media Relations Officer Pernille Skanvig Schønau declined to discuss specific factories, saying the company does not disclose commercially sensitive details or share of business per market. She said the brand was constantly refining its sourcing approach. “With product and customers at the centre of everything we do, we’ve continuously evolved our sourcing approach over the years,” she told Bonik Barta. “We continue investing in a resilient, flexible and agile supply chain that can adapt to rapidly changing circumstances and customer needs, both in Bangladesh as well as in the rest of our sourcing markets.”

Pressed on whether the global shifts were already affecting Bangladesh in particular, Schønau said: “When we refer to changing circumstances and customer needs, this reflects ongoing shifts in the global landscape. These aren’t unique to any single market but are part of a broader global context.”

H&M stressed that Bangladesh remains a vital sourcing market. The company began buying from Bangladeshi producers in the early 1980s and has long-term partnerships in the country. Its latest published supplier list shows 188 production units or factories in Bangladesh, operated by 107 unique supplier companies.

That is down from at least 235 factories in the 2020 supplier list, industry sources say. H&M has been quietly compressing its supply network for several years. The Swedish company buys an estimated $3 to 3.5 billion in garments and textiles from Bangladesh annually, making the country one of its largest production hubs.

One factory owner who received a notice from H&M told Bonik Barta anonymously: “They told us demand is falling globally and market conditions are poor. We were a regular supplier. We’re trying to see if we can hold on to the relationship.”

Another owner, whose factory employs roughly 15,000 workers, said an abrupt cut would cause severe strain. “The factory has a strong score on international sustainability standards and has worked with H&M for a long time,” the factory owner said.

A composite knit textile exporter based in Bhaluka said its management received an email from H&M a week ago indicating future orders would be scaled back. Shipments for the current season and some orders for the next remain in place, the source said. The email did not cite a specific reason, though H&M had earlier flagged weak global demand verbally. The factory has already written back asking the buyer to reconsider.

Some industry figures claim H&M may further trim its Bangladeshi supplier base as part of a broader diversification strategy.

BGMEA President Mahmud Hasan Khan told Bonik Barta he had no specific information on the notices but said such adjustments are routine. “Every buyer makes its own strategic decisions. Suppose a buyer has a sourcing base of 50 factories. If it can handle the same volume from 40, its maintenance costs fall. Who it cuts and who it adds is entirely a business decision,” he said.

Khan noted that brands often shift orders to factories offering different product lines, but dismissed the notion that H&M would pull out of Bangladesh entirely. “I don’t believe they will stop buying from Bangladesh overnight or halt sourcing completely.”

Industry veterans said phased order reductions or “fade outs” are a regular feature of global apparel supply chains, with buyers routinely cycling factories in and out of their lists every six to twelve months. Several cautioned against creating unnecessary panic.