Dive Brief:
In a valiant attempt to escape the clutches of a ten-quarter sales slump, H&M has decided to embrace big data and artificial intelligence, presumably after exhausting all other options, like voodoo dolls and four-leaf clovers. According to The Wall Street Journal, our favorite fast-fashion giant is now customizing store merchandising like it’s prepping for a clandestine dance competition—less “every dress for every guest” and more “let’s find out what that one guy on the corner really wants to wear.”
One can hardly be surprised that H&M has turned to algorithms, which are apparently more reliable than their last round of seasonal sales. The Swedish retailer has pinpointed a store in Stockholm’s fancy Östermalm neighborhood as its data playground. In doing so, they realized that the local clientele is mainly women, and guess what? Floral skirts and overpriced leather bags are flying off the shelves faster than you can say “I need to update my wardrobe.” Apparently, the store didn’t know that women like wearing clothes that don’t look like they’ve been sourced from a discount bin. Go figure.
Dive Insight:
Now, you might be wondering how H&M predicts trends three to eight months in advance. Spoiler alert: It doesn’t involve crystal balls or tea leaves. Instead, the retail giant has recruited a small army of 200 internal and external data scientists who analyze everything from blog posts to search engine queries. These data sleuths sift through 5 billion visits to H&M’s stores and websites yearly—because what could be more thrilling than examining the internet’s collective shopping habits?
H&M is staunchly resisting the siren call of online shopping with its innovative strategy: fighting technology with technology. This plan entails abandoning its one-size-fits-all merchandising model for 4,288 stores worldwide—because why should every store look the same when they could undergo a unique identity crisis tailored to local tastes? It’s like H&M is on a mission to win the award for Most Obsessed with Data Collection—now with extra analytics!
But don’t worry, H&M has a safety net. During an investor event that sounds suspiciously like the fashion industry’s version of a “state of the union,” executives predicted ongoing same-store sales woes due to excess inventory and markdowns. Not to worry, though! They also expect that e-commerce and new brands will miraculously grow by 25%, while new physical stores will rise a mere 4%. Any bets on how much longer those stores will last post-expansion? Spoiler alert: it’s called ‘closing the barn door after the horse has bolted.’
In typical retail drama, H&M is also launching three new store concepts: Afound, which promises a “treasure hunt” shopping experience (because who doesn’t enjoy hours of sifting through discount deals?), Nyden, aimed directly at millennials, and Arket, where you can buy sweaters and utensils as if they belong to a particularly hipster household. Meanwhile, H&M is enhancing supply-chain tech, probably in hopes of appeasing the data gods.
The plot thickens as H&M’s competitors join this high-tech circus. Zara is automating its store pickup process for online orders with probably more robots than you can shake a price tag at. Meanwhile, Gap is using Google Analytics like it’s the Magic 8-Ball of consumer preferences. But here’s the kicker: with H&M’s vast empire of stores, correcting every little hiccup in inventory might just take longer than a sale on summer dresses in January.
So, in summary, it appears that while H&M is taking the “data is the new oil” trope to heart, we’re left wondering if anyone has told them that sometimes, less really is more. But hey, at least we’ll know what to wear while pondering economic pitfalls in the sample sizes of our dreams.
