All the right words, some in the right order, but none of the right actions - H&M's omni-channel thinking
- H&M's CEO has a big idea that she wants everyone to know about...again and again.
Even before COVID came along, the world’s second largest fashion retailer H&M was in omni-channel trouble. Back in 2018, diginomica asked if the firm had learned its digital lesson too late, observing that getting excited about rolling out retail basics like RFID at that point was indicative of years of neglect. As the then CEO Karl-Johan Persson put it with Scandanavian understatement:
Lately we haven't done this well enough.
Persson is gone and his successor Helena Helmersson was the helm when COVID took its toll on sales back in March. Back then she trotted out the party line that digital acceleration would get faster as a result of the crisis and that H&M could emerge stronger.
If so, there’s little sign of it yet. H&M last week reported sales of SEK 50.9 billion ($5.69 billion) for its third quarter to 31 August, down 16% year on year. The firm has got the majority of its stores open with only 900 out of 5000 worldwide shuttered in during the quarter. Online sales rose 27% year-on-year.
The retailer now plans to close at least 250 physical stores and focus on a faster shift to digital transactions. That’s fine, but it’s a claim that’s got a horrible familiarity to it. It’s what Helmersson has been saying for the past 6 months. That being so, you’d expect by now to have a lot more meat on the bones of the strategy than there is. Instead, there’s still a lot of generic pointing to a desirable direction of travel, but precious little evidence of how it’s to be journeyed.
So we get statements like:
COVID has fast-tracked many of the changes we saw happening in the market already before the outbreak and this means that our focus will be on digitalization and omni-channel, speed and flexibility, and on sustainability and resilience.
More and more people have started to shop online during the pandemic. Our customers are showing us clearly that they value a convenient and inspiring experience where stores and online interact and strengthen each other…Now, we are speeding up our transformation work further in order to meet our customers' expectations.
Rinse and repeat
There’s also a lot of repetition of the same basic ‘good idea’. Now, in media training sessions spokespeople are taught - or ought to be taught - not to try to ‘boil the ocean’ in interviews or presentations, but to have a small number of messages to convey, to stick to those and to repeat them as many times as possible for emphasis.
I was reminded of this when listening to Helmersson on the post-results analyst call as the same digital talking points were aired and re-aired. In H&M’s case the simple ‘good idea’ message is the importance of having integrated channels for the customer to engage with the retailer. That’s a great idea - if we’ve somehow slipped back in time and we’re supposed to be blown away by the innovative thinking on show. This is omni-channel retail 101 stuff. But Helmersson persists as though this is some great revelation on H&M’s part. So we get:
We clearly see that customers want to meet us in both channels and in different channels. So our agenda to continue to integrate the channels going forward is really, really clear to us.
At the same time, of course, we work on growing digitally and in our online channels, but again, back to the importance of integrating the channels.
Take 3 - and finally a little bit of expansion on theme:
I guess what is becoming even more clear to us is that customers, they don't want to meet us in one channel; they sometimes want to meet us online, they sometimes want to go to a store, they could order something online that they want to pick up in store, or they might want to find something online that they can then go to a store and find their size. So just to give a few examples, it becomes clearer and clearer when looking at the data that we can - through our loyalty program - interact and engage with customers in new and very interesting ways and it becomes even clearer that customers want to meet us in both channels.
But then Take 4:
Obviously, we believe a lot in also physical stores going forward and we see that that is what the customers tells us, they want to meet us in physical stores and online. So, continuously, we work with this development agenda…But again back to the importance of integrating the channels, which would be key.
So, everyone got the message? Two-in-one, physical + digital, online + offline. Hey presto - omni-channel! Simple, huh?
If only they’d thought of that before…
It’s just a mess. Basic omni-channel retail concepts being caught up with and talked about in the vaguest of terms. The net positive that some analysts took away from the presentation last week was that of physical store rationalization, but even that’s very theoretical. There’s a target number, but no specifics as yet, so this strategy will be an evolving thing as the firm manages to get out of leases around the world.
Just to make things even worse for H&M, it’s just been hit by a fine of €35.3 million ($41 million) for spying on its own employees in Germany. The firm is accused by the Hamburg Data Protection Commissioner of collecting private data about employees working at a customer service center in Hamburg. This is said to range from “rather harmless details” through to highly personal information, such as religious beliefs. In a statement, the Commissioner said:
The combination of collecting details about their private lives and the recording of their activities led to a particularly intensive encroachment on employees civil rights.
Verdict - thumbs down all round.