Global fashion retail giant H&M Group is using a combination of digital and data to turn lessons learnt during the coronavirus pandemic into a competitive advantage for the Vaccine Economy.
That’s the main take away from Alan Boehme, CTO of H&M Group, who says pioneering digital leaders should now be thinking about how their IT organizations will contribute to business growth during the rest of the decade and beyond.
With executive responsibility for the company’s IT organization and its digital transformation program, Boehme has helped support a jump in the share of sales conducted online from 16% to 38% across the past two years at the Stockholm-based retailer. He arguesthat many of the changes associated to this shift in technology and behaviour were coming anyway, but the pace of transformation has been accelerated by the pandemic, a common story across the retail sector. Such is the scale of change that he believes retailers have reached an inflection point, where decisions made now will define the shape of the sector during the next 25 years and beyond:
I think what we've really found is that omni-channel – meeting the customer where they want to be met, be that online or in the store – is really where you have to be and we're very fortunate that over the years we've been making the investments necessary in order to provide those types of services.
While the overall trend is towards further transformation, Boehme says it’s important that business leaders who want to make the most of digitalization don’t rely on broad-brush generalisations. We may be part of a global economy, but the relationships that matter most often still have a local component. He cites an example from his own business. While European shoppers went back to H&M stores quickly to resume the social experience following the end of lockdown, US consumers have continued to enjoy the convenience of online shopping that became predominant during lockdown.
Boehme says retail IT professionals must be careful to remember that “one size does not fit all”:
Our consumers are changing. They're more and more digitally native. People want to buy and they want to experience things. It's no longer simply about affordable fashion, it's about affordable, sustainable fashion. Doing things with a purpose and values matters to our consumers. And again, all those trends differ across parts of the world.
Boehme says technology will continue to have a big impact on how sustainability is considered across the retail supply chain, from being able to prove the provenance of materials used in clothing onto using information to provide a better experience to consumers. For a company looking to make these moves proactively, he says data is metaphorical gold:
We want to be able to use information in a way to be able to make consumers’ lives easier, make our employees’ lives more efficient, and be able to create this ecosystem where we’re really incorporating sustainability into everything that we do.
Being able to make those moves relies on access to high-quality data, so Boehme says H&M is focusing on its digital foundations. The company’s IT infrastructure was built for a different time and purpose, when the fast-growing retailer was serving the majority of its customers through physical stores. Now, at a time when the company will be serving people both online and offline, the company needs a new approach to networks, the cloud and big data. He says this ongoing transformation involves “dramatic change”:
The device you have in your pocket is a store. We have to start thinking about edge computing more and more, the use of artificial intelligence and machine learning to take in all of this information and understand it, and democratize the data, so that everybody in the company – whether you're one of the people working in our stores or in our head office – has access to the information they need in order to be able to make assisted decisions, real-time anywhere.
Boehme says the sheer volume of information being created means it’s crucial data is democratised across the business. One challenge is latency – despite the use of the cloud and the increased prevalence of 5G networks, H&M faces variable physical infrastructure across the 75 different markets it serves. He says it’s crucial that the business can send information to the right people at the right time in a compliant manner. For that to happen successfully, people will have to adopt the right data-led behaviors:
The hardest part of digital transformation is the people, the culture, the capabilities and the new business model – it's not the technology. So, we're very much investing in our people. And we're investing in the training and we're investing in what we need to do to take advantage of the technology.
Boehme says the next decade is likely to be one of almost-constant change, where his team will work hard to help H&M stay on top of new demands from customers, consumers and colleagues. He says many hyped technological advances – from the data mesh to the metaverse – will arrive faster than many business leaders envisage. However, all these innovations create opportunities in terms of both instore and online retailing:
New technological advancements continue to skyrocket and we're putting things in place and making the investments to take advantage of those. That approach is to help with the shopping experience and to help with production, support, sustainability and circularity. We're making the investments now because now is the best time to do it for the future.
Of course, stealing a march on other retailers will not necessarily be straightforward. Boehme says what keeps him awake night is thinking about companies that have mastered the use of data and information. This includes start-ups that have been able to create new products and services, which have then taken these innovations to market effectively. He says H&M will continue to look for new opportunities across the business and technology ecosystem:
We're very fortunate that we participate and we have a cooperative environment with a number of these companies. But many companies don't. And many companies are being very insular and they're trying to go back to how things used to be pre-pandemic. We'll see how many of them make it during the next five years.