Investments in customer data analytics have allowed the Swedish multinational Hennes & Mauritz to slim down its physical store inventory and compete more effectively online – and the company’s quarterly sales indicate those investments are paying off.
On Monday, the company reported a 9% increase in quarterly sales, a shift indicating some progress, the Wall Street Journal reports, keeping it in line with estimates.
One of the fast-fashion giants, H&M has struggled in the past few years as competition from faster-moving, digitally native brands bit hard on the company’s mostly brick-and-mortar sales network.
Consumers have taken much of their shopping online, where younger companies are able to buy far more nimbly than H&M’s more traditional bulk model.
Shares climbed on the news of the company’s progress as markets inferred the impact of its strategic change. However, with declines in major markets – such as Germany, its largest, and its native Sweden – doubt remains.
Questions, in particular, centre on its use of discounting in markets like the US, a tactic aimed at improving sales and shifting inventory, but likely to have an impact on profits.
But the company hopes for a brighter future buoyed by a granular analysis of customer and shopping data, part of a shift announced last March. At the time, CEO Karl-Johan Persson argued that “2018 is a transitional year for the H&M group, as we accelerate our transformation so that we can take advantage of the opportunities generated by rapid digitalisation”.
The data project, which requires intensive investment, sees a greater reliance on analysing online trends to help forecast store stocks and to calculate pricing, which in turn brings greater efficiencies.
Some observers have suggested that this has helped the company to ease its price reductions in order to improve margins and cashflow. But proof of the strategy’s effectiveness will be clearer when the company announces full-year results in January.
Sourced from the Wall Street Journal; additional content by WARC staff