A little less than a year ago, H&M was grappling with a number of issues that diminished the retail experience and their bottom line. Not only was it suffering from a sales slump, but the company had a stockpile of unsold inventory worth $4 billion, struggled with style misses and snafus, and was falling behind some of its digital-savvy competitors.
Things were looking bleak. But thanks to several steps in the right direction, H&M seems to be getting back on its feet.
In March 2019, H&M reported an increase in online and in-store sales in key markets including Sweden (11% increase), UK (8%), Poland (15%), China (16%), and India (42%). The retailer also announced plans to open 175 new stores worldwide by the end of this year.
To be sure, H&M still has a way to go. But if its second quarter results are any indication, the retailer is on the right track.
So, what did the company do to turn things around? One thing that stands out is H&M’s investments in technology. While the retailer was a bit late in adopting e-commerce and other digital solutions, it’s making up for lost time by rolling out some key tech innovations. Let’s take a look at some of them below.
A New Website and Mobile App
H&M introduced a new website and mobile app equipped with capabilities that promise to improve the retail experience of shoppers both online and in-store.
Some of the new features include visual search, which allows users to search H&M’s catalog using images. Let’s say a shopper sees someone wearing a T-shirt she’d like to buy. She can take a photo of the top using the app, and H&M will search its catalog for similar items.
There’s also Scan & Find, a feature that enables in-store customers to bring up additional product information (such as available sizes) by scanning an item’s tag using their phone.
In line with these changes, H&M also introduced live chat, PayPal payments, and additional shipping options.
These e-commerce and mobile enhancements seem to be paying off. In February 2019, H&M reported a 22% increase in online sales.
AI and Big Data to Spot Trends and Improve Product Assortments
While H&M still uses designers and merchandisers to figure out consumers’ preferences, it decided to add another component to its trendspotting efforts: data.
In 2018, H&M started using big data-processing algorithms to analyze store receipts, loyalty card information, and returns. It also started analyzing data from web traffic, online articles, and search engines to predict trends months in advance.
Doing so enabled H&M to have a better handle on supply and demand, and allowed the retailer to localize assortments for each of its stores. A prime example of big data and AI at work can be seen at the H&M store in Östermalm, an upper-class neighborhood in Sweden.
According to The Wall Street Journal, after analyzing shopping activity at the Östermalm store, H&M discovered that some of the staff’s assumptions were wrong. For instance, the store staff assumed that local customers were interested in basic apparel for men, women, and children. But after analyzing the store’s sales and product returns, they discovered that most of the shop’s customers were women who preferred fashion-focused pieces such as floral skirts and higher-priced merchandise.
So, the company decided to revamp its assortments by carrying more trendy styles, while moving away from basic apparel. H&M also reduced the number of items in the store by 40%, slashing its menswear assortments, and instead added more homeware and high-end products based on the data’s findings
The move paid off. The company told WSJ that sales for the store rose significantly, and one local customer even commented that H&M “nailed it,” which speaks to meaningful improvements to the brand’s overall retail experience.
Mobile-Friendly Workforce Management
A good chunk of H&M’s workforce consists of non-desk employees who are on their feet 80% of the time. Because of the nature of their work, they need a mobile solution to communicate with each other.
In October 2018, H&M addressed this by implementing an employee communication platform that lets users chat with other team members and manage their tasks from one system.
Because the solution is mobile-friendly, employees can read and reply to messages and manage their to-dos from anywhere. The platform also eliminates the need for email and other apps, so users don’t have to switch from one program to the next when replying to messages or carrying out their tasks.
All that can increase employee efficiency, which can ultimately improve the retail experience for customers. When H&M’s staff are devoting less time to checking their emails and switching from various apps, they’ll have more time to focus on shoppers.
Integrated Payments to Improve Retail Experience
Payments are a critical part of the retail experience—and this is a fact H&M clearly recognizes. The company is currently using the fintech company Klarna to power its online and in-store payments in select markets, essentially integrating H&M’s payments across various channels.
According to H&M’s announcement, the integration enhances the retail experience by giving shoppers frictionless in-store, mobile, and online payments. It will also allow for easier deliveries and returns and give customers flexibility to decide how and when to pay through a “try before you buy” service.
H&M’s partnership (and investment) in Klarna is a smart move and will help the company further connect with younger shoppers. Why? Simple: flexible payment solutions and services that let customers try products before buying are rapidly gaining steam. Research from Klarna and Retail Connect found that 71% of consumers would consider ordering products and paying for them after they were delivered (and if they decided to keep them).
Flexibility is clearly the name of the game in modern retail, and H&M is taking the right steps towards it.
Flashy Customer-Facing Innovations
H&M has unveiled a handful of flashy customer-facing initiatives this past year. Some of those technologies include:
- Voice-Activated Mirrors. H&M installed voice-activated mirrors in its Time Square flagship in NYC, with features like facial recognition, as well as the ability to provide style advice and QR code-enabled discount codes.
- H&M Home Stylist. Created together with Google, the Home Stylist is a Google Assistant that can offer style recommendations and create mood boards to give users room design inspiration.
- AR Holograms. H&M teamed up with augmented reality company HoLoMe and are looking into creating high-definition holograms that let users explore clothes in greater detail.
These initiatives are undoubtedly buzz-worthy and can contribute to a more interesting retail experience; but whether they actually move the needle for H&M remains to be seen. If past retailers’ efforts have taught us anything, though, it’s that unless a trend or piece of technology has hit critical mass among consumers, it’s unlikely to create noticeable growth in a business’ bottom line.
So while the above-mentioned customer initiatives can certainly increase buzz and awareness, H&M can’t count on them to turn things around. At least, not yet.
Pulling off a Retail Comeback Doesn’t Happen Overnight
Coming back from a major slump isn’t easy, so H&M’s efforts are commendable. What’s most interesting about the company’s strategy is it’s simultaneously running various pilots—from backend employee solutions to sexy initiatives like AR—in several markets.
It may be too early to tell which specific projects will make the most difference, but we know one thing: in the commerce industry, the initiatives that add the most value to the retail experience are the ones that win. And the “sexiest” investments aren’t always the ones that yield long-term returns.
Speaking of return on investment, at CB4, we’re completely transparent about ROI. In fact, each of the recommendations CB4 sends to your stores has a specific sales lift associated with it. Implementation takes days and, once enacted across your chain, CB4 creates 0.5-2% in net new sales. Find out more.
Editor’s note: At CB4, we’re inspired by retail industry innovations and the brands leading the way. The retailers we highlight are not necessarily CB4 partners, but simply ones we find interesting and think you will, too.had fallen