H&M reveals how digital transformation is boosting efficiency

H&M, the world’s second-largest fashion group, is making huge investment in its digital transformation programs.
H&M digital transformationH&M’s management team includes Arti Zeighami for Advanced Analytics & AI; Morten Halvorsen for IT and Patrik Berntsson for Logistics.

H&M in its annual report 2018 said: “We are expanding online, through physical stores and digital marketplaces. The global roll-out of online continues, with the ambition to offer online in all our 71 markets and in other markets too.”

H&M in January 2019 completed the transition to a new online platform globally. This means that all H&M’s online markets are now on the new platform, enabling further improvements to the shopping experience for customers.

H&M is also implementing new logistics systems. In 2018 problems arose in connection with the implementation of new logistics systems in the US, France, Italy and Belgium, which had a negative impact on the group’s results.

H&M said digital investments will continue to increase as a share of Capex. We will invest to accelerate the development of customer-facing technologies.

H&M is taking advantage of the opportunities created by the digitalisation of the industry to meet customers’ expectations. H&M is integrating the physical stores with the online stores.

H&M has opened online in four new markets in 2018 and today has 47 online markets.
H&M is ensuring next day delivery in 11 markets including Germany, the US, UK and Sweden. Same day delivery is being evaluated in certain of these markets with planned launch in a further 6 or 7 markets in 2019.

Perfect fit is an app that H&M is testing in Sweden in 2019. The app allows customers to create a digital avatar based on selfies taken on their mobile, allowing the customer to try items on virtually to find the right size and fit when shopping online.

In partnership with Google, H&M Home developed a voice app – H&M Home Gift Guide. It allows customers to make a purchase entirely through the voice app.

RFID (Radio Frequency Identification) will expanded from 12 markets in 2018 to more markets in 2019. RFID technology means items with a digital price tag can be located quickly, to get precise information on an item’s availability.

H&M is using 3D technology in the design process for several product groups, enabling streamlining of the process and less material being used. New technology, training and a physical 3D studio have been implemented.

H&M has also created Take Care, currently in stores in the UK, France, Sweden and Norway. Take Care provides everything customers need to repair, remake and freshen up their clothes, shoes and accessories.

H&M online sales already make up a significant proportion of total sales in a number of markets, and for the group as a whole online accounted for 14.5 percent of total sales for 2018.

H&M is investing in areas such as artificial intelligence and customer loyalty as it looks to improve the way it spots trends and plans logistics, Reuters reported.

The strategy of Sweden-based H&M is starting paying off as the company extends pilot projects that seek to use data to match supply and demand more closely.

“Allocating the right goods to the right stores in the right markets is one of the key projects we are working on,” Arti Zeighami, H&M’s head of advanced analytics and artificial intelligence said. “For 2019 we have huge plans for growing that and hopefully, by the end of next year, covering globally.”

H&M produces most of its garments in Asia, far from its major markets, making it less responsive than its rival Zara-owner Inditex which boasts it can get new designs to its stores within a week.

H&M had seen stocks of unsold goods pile up. In the quarter through February, inventories grew to $4.3 billion, or 18.6 percent of sales. H&M said this is a sign its overhaul is working, and it expects a better offering and improvements in buying and logistics to help it reduce inventories to between 12 and 14 percent of sales by the end of 2022.

H&M has a fast-growing customer loyalty scheme from which it is harvesting information, in addition to analyzing data from social media.

The club, which doubled membership to 30 million in 2018, is in 16 of the H&M brand’s 71 markets and will add seven more including the United States by the end of the year.

Rajani Baburajan