H&M Group continues to bolster its digital presence and customer experience strategies as it navigates a shift in its store portfolio and enhances its online platforms.
H&M Group, which generated $7 billion from online sales in 2023 — accounting for 30 percent of its global revenue of SEK 236 billion ($23.35 billion) — has prioritized investment in digital technologies, including artificial intelligence (AI), 3D design, and virtual showrooms.
H&M has proven that advancements will support in-house creativity and optimize product development and sales processes. Despite significant investment in digital technologies, H&M posted operating profit of SEK 14.537 billion with 6.2 percent operating margin in 2023. H&M is indicating that its operating margin will be less than 10 percent in 2024.
“Our initiatives in areas such as tech and AI are a significant factor in our work to always have the right product in the right place at the right time and at the right price,” H&M Group CEO Daniel Erver said in the annual report.
Alan Boehme is the Chief Technology Officer (CTO) of H&M. H&M Group sells 3 billion articles across 70 countries around the world every year. H&M’s Alan Boehme believes the retail giant can use this volume of data at scale.
H&M recently decided to stop Afound.com, a digital platform available in Sweden, the Netherlands, Germany, Austria, Denmark, Norway and Finland.
Store Portfolio Evolution
H&M opened 101 new stores and closed 197 in 2023, leading to a net closure of 96 stores. At the close of the fiscal year, the brand operated 4,369 stores across 78 markets. While closures occurred predominantly in established markets, the company expanded its footprint in growth regions. Looking ahead to 2024, H&M plans to open 100 new stores, particularly in high-growth markets, while closing around 160. Despite the net reduction of 60 stores, the changes are expected to have a positive impact on the group’s overall sales.
Notably, H&M has its sights set on further expansion in Latin America, with plans to enter the Brazilian market — both online and with physical stores in Sao Paulo — by the end of 2025.
Enhancing the Digital Customer Experience
In line with its digital focus, H&M is rolling out multiple customer-centric innovations. These include expanding its membership program, which offers personalized shopping recommendations, exclusive event access, and rewards for garment recycling. The program has proven instrumental in enhancing customer loyalty and delivering a seamless shopping experience.
To further streamline online shopping, H&M has introduced visual search technology, enabling customers to upload images for styling suggestions and item matches. In select markets, customers can now opt for sustainable delivery methods, including bicycle couriers and biogas vehicles.
Other key initiatives include:
Next-day and express delivery in more markets.
Find in Store: Customers can locate products in their desired size and color across physical stores via the mobile app.
Scan & Buy: Shoppers scan QR codes in-store to purchase items online.
Self-service checkouts: Available in more markets for faster in-store transactions.
RFID technology: Helping customers find items and check availability with real-time inventory updates.
Growing E-commerce in China and New Technologies
H&M took a major step in its China expansion with the launch of a flagship store on JD.com, the country’s largest online retailer. This move is part of H&M’s broader digital growth strategy, ensuring greater accessibility for consumers in one of the world’s biggest e-commerce markets.
H&M is also experimenting with smart mirrors in fitting rooms, which recognize the products customers bring in and suggest additional items or different sizes and colors.
As the retail company continues to invest in technology and innovation, H&M is well-positioned to meet the evolving needs of its customers in a fast-paced digital world, blending physical and online experiences to remain a leader in global fashion retail.
Baburajan Kizhakedath
