Just a few years ago, H&M was charging along as a leading purveyor of “cheap chic.” In recent times, it has not done nearly as well. Hence, H&M is now using data analytics more actively than before.
Why and How H&M Is Now Using Data Analytics
As Saabira Chaudhuri reports for the Wall Street Journal:
“The world’s largest clothing brand is turning to artificial intelligence to win back shoppers, as it works to reverse one of the worst sales slumps in its history. Hennes & Mauritz AB’s H&M retail chain is ramping up its use of data to customize what it sells in individual stores, breaking with its longstanding practice of stocking stores around the globe with similar merchandise.”
“The 71-year-old fast-fashion chain is aiming to arrest a slump in same-store sales that has lasted 10 straight quarters as it faces problems bedeviling the industry: A spike in online shopping has led to fewer customers visiting stores, and digital startups are putting up fierce competition. H&M has repeatedly slashed prices to clear out $4 billion of unsold goods. And its shares are down 56% in the past three years.”
“H&M, like most retailers, relies on a team of designers to figure out what shoppers want to buy. Now, it’s using algorithms to analyze store receipts, returns, and loyalty-card data to better align supply and demand. With the goal of reducing markdowns. As a result, some stores have started carrying more fashion and fewer basics such as T-shirts and leggings.”
As the chart below shows, H&M is using data analytics to detect trends, stock stores, and set prices. Click the image for a larger version.
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