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Case Study: H&M: smarter on stock, personalisation and loyalty

Swedish fast fashion retailer H&M has been hit by a significant profits drop, having struggled to shift some stock. It’s now taking steps to turn things around. To this end, it is becoming more flexible about the inventory it carries at individual stores, backed up by more targeted and smarter merchandising.

Not so long ago, fast-fashion retailers landed as the disruptors in the fashion marketplace, with their success built on predicting and delivering against market trends. But if a fast fashion retailer gets it wrong, due to its tight margins, it’s easy to take a big hit.

With more than 4,000 stores worldwide, H&M is looking to climb out of its temporary difficulties by using big data and artificial intelligence (AI) to analyse returns, receipts and loyalty card data, thereby starting to tailor its merchandise more precisely to the vagaries of each store.

It’s a localisation strategy that can be hard to execute for a global chain such as H&M, because its model is based in part on leveraging economies of scale with its global network of suppliers. But it is clearly achievable and well worth doing with the right tech in place.

What kind of tech? In order to get customised inventory to each store and still deliver hassle-free shopping, H&M is investing in automated warehouses to support next-day delivery for 90% of the European market. Consumers today want anytime, anywhere delivery, plus free shipping and returns, and it is algorithms, data and RFID tech that are making smarter warehousing, loyalty programmes and supply chain efficiencies more viable than ever.

Personalisation reached the online version of H&M some time ago but bringing a degree of that capability into its brick-and-mortar stores is an important step to take. When in a store, customers can now explore suggestions for merchandise selected for them by algorithms.

There is also better integration between the online and offline shopping experience through a Find a Store feature that lets customers find out if an item they discovered online is available at a physical store nearby.

Flipping this around, H&M’s Scan and Buy functionality in-store also lets customers scan a label in a store and find out whether that item is available at another location or online.

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