H&M Shifts Strategy In Favor Of E-commerce Platform

H&M Shifts Strategy In Favor Of E-commerce Platform

A shift in strategy is on the cards for H&M globally as the retailers have realized that people are increasingly resorting to online shopping. In response to this development the H&M management has decided to open far less number of retail stores in the year 2018. In addition, H&M has also disclosed that they will open new outlets that will showcase external brands apart from their own range of clothing.

H&M had over the years enjoyed accelerated expansion globally. It happens to be next only to Zara in size. However, in recent times, the retail sections of H&M have struggled to cope with the growing e-commerce wave. Besides, the corporate has taken a sever image beating in the previous month owing to the release of an ad that was dubbed racist by many.

The company despite the blushes has declared an unchanged dividend for its shareholders. The 33% family owned business of the Perssons might however, offer shareholders the option of reinvesting their dividends for purchase of new shares, which in turn will back their financial requirements.

Currently, the company is planning a net addition of around 220 stores for the year 2018. This is in stark contrast to the 388 it had opened in 2017. H&M gave the break up as closure of 170 stores and opening up of 390 stores resulting in the net 220. The European giant plans to enter Uruguay and Ukraine for the first time.

According to financial analysts who have observed the performance closely, H&M for the first time in 20 years has ended up with a net debt on its balance sheet. Besides, the cash flow in the fourth fiscal quarter suffered because of high inventory.

The trend so far in recent years has been that H&M has launched higher-end brands in huge numbers. This was intended to broaden their customer base. This year around, it’s planning to launch “Afound” that will offer budget products from both its stable and that of external brands. H&M has decided to pursue this line of business by setting up a store in Stockholm and at the same time promoting online sales.

Also contemplated by the management is the sale of H&M home brands on Tmall which is an Chinese e-commerce platform in March this year. On the cards are also online stores in four more markets including India for the year 2018.