H&M redoubles efforts to reduce digital gap

Swedish fast-fashion giant H&M (owner of brands including H&M, Cos, Monki, & Other Stories) needs substantive efforts to remain competitive and ensure a bright future, notwithstanding its improved performance in the first quarter 2019 (up 10%, with a revenue of €4.89 billion). The group's efforts are chiefly focused on digitalisation and improved logistics efficiency within a changing retail environment.

H&M is working on many fronts, from an e-commerce offensive in India to selling directly on Instagram to upgrading its e-tail sites. “Having under-invested in digital tools in the past, H&M is reducing its gap, doing so via several initiatives,” said Kate Ormrod, a retail analyst at GlobalData. In this article, FashionNetwork.com analyses the new initiatives undertaken by H&M.

The H&M group, whose online sales rose by 22% in 2018, reaching a 14.5% share of its global revenue (compared to 12% for its competitor Inditex), has so far relied only on its own e-stores to attract new online customers.

The H&M label launched its e-store on the colossal Indian market last year, and has now announced it will distribute its products in the course of the year also on the country’s leading marketplaces, Myntra and Jabong. According to group CEO Karl-Johan Persson, “India is a growing, high-potential market, and we are eager to make our products available to new customers in the country. Myntra and Jabong will be a significant integration to H&M’s brick-and-mortar and online stores in India.” Since landing in India in 2015, H&M opened 41 stores in the country and, in 2018, it generated a revenue of SEK1.4 billion (€130 million). Also, in 2019 H&M will extend its digital footprint by opening dedicated e-stores in Mexico (directly) and in Egypt (via a franchise arrangement).

While each country operates a bespoke strategy, H&M is also keen to tap the new functionalities offered by leading global web players, social media above all. In the USA, it has been testing for the last few days the possibility of selling directly via Instagram, consumers not needing to leave the app to move to H&M’s site to buy, as was the case before. This offers genuine potential for additional sales, and could eventually be tested in other countries, according to Facebook-owned Instagram.

Same-day delivery to be extended to more countries

On the occasion of the publication of its Q1 results, H&M made an assessment of the progress of the programme for the digitalisation of its commercial operations. First of all, it replaced its German e-store, affecting the sales performance of the group's largest market worldwide, whose activity had to be reduced. This however enabled the fast-fashion retailer to offer quicker deliveries to its customers, one of the services on which it relies greatly for the future. Next-day delivery is currently available in twelve countries, while same-day delivery, now being tested in a handful of cities, will be extended to six or seven other markets in 2019, including the UK and the Netherlands, according to the group. The click & collect option, currently available in seven countries only, will be extended to ten more markets this year.

RFID labelling technology, enabling faster logistics handling, has been implemented in fifteen countries, and its deployment worldwide will continue in 2019. This will go hand-in-hand with the opening of new warehouses: three facilities were inaugurated in Poland and Germany at the end of 2018, while two new logistics platforms are expected to open near Madrid and in North London by the end of 2019 or early 2020. “Our transformation efforts are putting us on the right track, though we still face many challenges and there is much work to do,” said Persson. H&M plans to open 335 new stores this year, but also to close down nearly 160 existing ones, chiefly in Europe.

H&M redoubles efforts to reduce digital gap

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