- REUTERS/Charles Platiau
- H&M has had a rocky few quarters. O perating profit at the company decreased 62% in the first quarter of 2018, following its biggest sales drop on record in the fourth quarter of 2017.
- As customers shop elsewhere, the company has been left with a mounting pile of unsold inventory – currently $4 billion worth of clothing.
- H&M is now using data to customize the product offering and prices at each store location. New technology will also help it to stay ahead of trends.
To combat its struggles and stay ahead of its rivals, H&M CEO Karl-Johan Persson said that the company is looking at ways to streamline its supply. But with some online stores turning around new products in as little as a week, the company needs other ways to keep up – and that’s where data comes in.
On Monday, The Wall Street Journal reported that H&M is using data to stay ahead of trends and customize the selection and price of products in its stores.
In the first instance, this will be done by using technology that has image recognition tools to analyze social media and fashion blogs for new styles and trends. This information will then be used to inform its collections.
Secondly, it will be customizing its stores to ensure that it is stocking exactly what its customers want. It does so by tracking what is bought and returned to each store to determine what resonates well with local customers.
This concept has already been tested out at one of its Stockholm stores, which, according to The Journal, cut its total number of items by 40% and replaced men’s, women’s, and children’s basics with more expensive items. The store now stocks $118 leather bags and $107 cashmere sweaters alongside its basic products, for example.
H&M would not confirm to Business Insider how much the changes impacted sales at the Stockholm store but told the Journal that it “significantly improved” sales at this location.
It’s been a rocky few months for H&M. The fast-fashion retailer finished off 2017 with its biggest sales slump on record and went on to report a 62% decrease in operating profit during the first quarter of 2018.
The store has increasingly found itself losing out to more fashionable rivals such as Zara or online stores such as ASOS, which have cut down supply chain times to as little as a week and are able to roll out new styles quickly. As customers head elsewhere for the latest designs, discounted clearance sections have become a common feature of H&M stores.
However, customers don’t seem to be biting – H&M has a mounting pile of inventory, which now amounts to over $4 billion worth of clothing of either unwanted stock or new clothing on its way to stores.