H&M, one of the largest clothing brand in the world will be now be relying on data to bring more variety into their stores. This change does not mean there will be new styles that will be found in all the store locations, rather it will allow the brand to customize what they sell at each individual store, not have the exact products in all the store locations. With this change, H&M will be breaking away from its practice of having all the stores in the world have similar merchandise.
Such change was necessary for the brand because this 71-year-old fast-fashion chain suffered in their sales for 10 straight quarters. The company faced these problems because less people came into stores due to the spike in online shopping. Because of this H&M had to constantly reduce prices because they had $4 billion of unsold goods, a deal for the consumer, but not for the clothing brand.
Although H&M has acted in finding a solution to recover from their slump in the industry, RBC analyst Richard Chamberlain says, "It will likely be a long road to recovery for the main H&M brand". Already there are H&M stores that have analyzed what the customer's want, implementing a new focus for the store and according to Dina Mystris, a 35-year-old music manager that lives nearby, "They've nailed it... they've selected this more high-end look and have just scaled back, which is very appealing. Let’s look at what exactly is H&M's strategy in using data to better their sales and analyzing its benefits.
- To better know what their product will be, H&M is detecting trends by analyzing social media, search terms, and blog posts. Previously, their team of designers would attend fashion shows and remain updated on the latest editions of fashion magazines. With their new implementation of analyzing data, their product will be able to extend their target market.
- This new strategy will allow the brand to analyze inputs on every product in every store and that will benefit H&M because they will now be able to have unique sales predictions per product and store. Whereas, previously the brand could only process limited amounts of inputs and allocated products to stores categorized by location and size.
- Pricing for the clothing brand would also change because previously the prices were determined through a time-consuming and manual process. But now, H&M will determine their price by calculating price elasticity on individual products, taking into consideration the various changes that can occur in currency, tax, competition, and other factors.
Overall, H&M seems to have a plan in recovering from their collapse in the clothing industry as Arti Zeighami, H&M's head of advanced analytics and artificial intelligence said, "We can now be sharper, more accurate and hyper-relevant, not have one solution that fits all". What else, do you think, H&M should change?
Written By: Elsy Perez
WSJ Article: H&M Pivots to Big Data to Spot Next Big Fast-Fashion Trends
I love that the goal is to "not have one solution that fits all." That goal tells me that H&M is trying to transition to a more customer-focused approach to generate sales. As we've learned in class, a successful marketing strategy is one that is customer-focused.
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