H&M reports shift towards online and digital

H&M has said that it saw a clear shift towards online and digital in its latest financial year, although it also it still made financial sense to continue to invest in stores.

The fashion retailer reported sales of SEK 222 billion (£20.3 billion) in the year to November 30, 6 per cent up on the same time last year, but pre-tax profits, after one-off costs of SEK 24 billion (£2.2 billion) were 12 per cent down on last year following increased costs and rising levels of markdowns.

By the end of the year, H&M sold online in 35 markets, 11 more than at the same time last year. Its latest online markets were Canada and South Korea, which had a “very good start”. Offline, it had 4,351 stores in 64 markets, following the addition of 427 new stores. In the year ahead, it plans to open 430 new stores in markets including Iceland, Kazakhstan, Colombia and Georgia, while opening ecommerce stores in six new markets: Turkey, Taiwan, Hong Kong, Macau, Singapore and Malaysia.

H&M chief executive Karl-Johan Persson said that ecommerce represents “a significant share of our total sales in several markets”. But he also says that “being close to the customers is key to success and even more important as the physical and digital world become increasingly integrated.” Investment in new stores will see an early return on investment. “In view of this,” said H&M, it is only natural for us to continue expanding with our physical stores too.”

Persson said the last year was characterised, “by the shift in the industry towards an ever-growing online market and by digitalisation. We are very pleased that our online business developed very well for all our brands, both as regards sales and profitability. From an already high level we took further market share, which clearly proves that our investments in our online business have been successful. Our brands COS, & Other Stories, Monki, Weekday and H&M Home had apart from strong online sales growth also very good store sales.”

H&M aims to bring the digital and physical worlds closer together to give customers “a more seamless shopping experience”. That includes enabling shoppers to pick up and return online purchases in the store, and to pay via mobile. Mobile will also be a focus as a way of delivering online service, while loyalty, in the form of the customer club, will also be a tool to deliver service across channels.

Next-day delivery, now available in five markets, will expand over the coming year. H&M now offers delivery time-slots in Japan. The retailer says it is upgrading its supply chain to make it faster and more flexible, investing in RFID technologies and in automated warehouses.

The retailer has also started to introduce algorithm-driven advanced analytics that it says will contribute will “contribute to improvements within everything from assortment planning and logistics to sales”. It says that by investing it positions itself for long-term and profitable growth.