H&M To Add Fewer Outlets Globally, Strengthen Digital Store

Swedish fast-fashion retailer Hennes & Mauritz will add fewer physical stores this year and strengthen its digital offering by investing in artificial intelligence and advanced analytics as consumers move online.

“We need to follow the consumer. Digital is the most clear trend,” Fredrik Olsson, managing director at H&M, told BloombergQuint in an interview. In more mature markets, the digital store is growing fast and traffic to some locations is declining, he said. “If it (customer traffic) goes low, we will need to act and close such stores,” he said, adding that digital is a high priority for investment as well.

H&M Group is only looking to add 130 stores globally this year, most of which will be outside Europe and U.S., he said. That’s lower than the 384 stores, on average, the group opened in each the last three years, according to its annual report.

The Stockholm-headquartered company launched its digital store in India last year. Of the 72 countries where H&M is present, it offers digital services in 48. Olsson said the digital share in the first half of 2019 is already more than 20 percent. In India, contribution from online is higher than the average of 15 percent as of 2018.

H&M has started selling products on Walmart-owned Myntra, giving it access to 30 million active customers. Olsson expects this will not only boost online sales but will aid the growth of offline store sales as well.

India Expansion Plans

H&M, which will complete four years in India this year, will bring its omni-channel experience—integrating physical outlets with online store— that it introduced in the European market. But that doesn’t mean it will slow down opening new stores in India.

“We will continue to add on an average one store per month strategy,” Janne Einola, country manager of H&M India, told BloombergQuint, adding that the group is on track to reach 50 outlets in 20 cities by 2020.

Einola declined to name where the new stores will come up, but added that H&M is eyeing equal number of stores in tier 1- and 2 cites. At present 70 percent of its outlets in India are in tier 1 cities. “Tier-2 cities are developing fast, but the only challenge there is the availability of real estate.”

(Corrects an earlier version that attributed Einola’s quotes to Olsson.)