H&M increases supply chain investment following disappointing growth

H&M's end-of-year report includes the announcement of further investment in its supply chain after figures…...

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H&M’s end-of-year report includes the announcement of further investment in its supply chain after figures fell short of the company’s targets.

The Swedish fashion brand recorded 3% growth in 2017, which was lower than expected, while sales in the final quarter of the year were 2% lower than those in the last quarter of 2016. The drop was primarily in the organisation’s brick-and-mortar stores, where a decrease in footfall has accompanied significant changes in customer behaviour.

H&M is doing much better online, and its supply chain investment is part of a four-point plan to capitalise on the brand’s online success while reinvigorating its high street shops. The company hopes that investing in new technologies will lead to procurement transformation as well as faster, more flexible and responsive supply chains.

The report said that H&M intends to invest in analytics and intelligence to improve retail assortment planning as well as sales and supply chain performance. More money will be put into the organisation’s existing technology foundation in order to exploit developments such as cloud computing, 3D printing and the internet of things (IoT).

Last April, H&M announced an overhaul of their supply chain following a dip in profits at the end of the financial year. This was in response to a Goldman Sachs report revealing that H&M’s lead times were twice as long as those of Inditex – owners of the brand’s chief rival, Zara.

H&M hopes that the forthcoming investments will help them to better meet their customers’ fast-changing needs.

“The fashion industry is changing fast,” CEO Karl-Johan Persson said in a statement. “At the heart of the transformation is digitalisation and it is driving the need to transform and re-think faster and faster. This is presenting many challenges but we believe we are well placed to adjust to the new dynamics and take advantage of the opportunities in front of us.”

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