Bulky store closures signal the digital transformation of retail

Often times, if a retailer closes more than 200 stores in nine months, it can mean things are not going well – sales may decrease or traffic may decrease, and executives may be trying to cut costs.

But for Swedish fashion retailers HM, third-quarter sales increased 14% compared to the same period in 2020 and 13% year-on-year between December and August – although sales in those nine months decreased more than 12% compared to 2019 this year So it’s less about whether sales are happening and more about where the sales are happening.

According to PYMNTS studies, conducted in partnership with Cybersource, the proportion of native online shoppers has increased 17% since the pandemic began, while brick and mortar shoppers have decreased 10% over the same period.

See more: More than forty percent of US consumers shop through digital channels … and stay there

Helena Helmersson, CEO of H&M, said the company is working to “continually improve both the customer offering and the customer experience to meet increased customer expectations, such as:”

H&M plans to open about 108 new stores in emerging markets such as Panama, Ecuador, North Macedonia and Kosovo later this fiscal year, but the expected 325 store closings in more established markets this year mean the retailer will have around 215 fewer stores than it initially had a year ago.

Most of the store closures were in Europe and Africa, while only 29 were in Asia and Oceania and 25 in North and South America, according to H&M.

“The pandemic has accelerated the ongoing change in the industry, with increasing digitization, which has quickly changed the behavior of customers,” said a statement by the company. “The current situation has changed the prerequisites for, among other things, rental conditions for stores.”

H&M is currently negotiating “a large number of leases” to optimize its branch portfolio; the retailer can renegotiate or terminate rental contracts at around a third of its locations every year.

Business diversification

Digital distribution isn’t the only new focus for H&M. Earlier this year, the second-hand marketplace Sellpy, majority-owned by H&M, expanded to 20 more European countries and increased its total markets to two dozen, betting that demand for sustainable fashion will continue to grow. Sellpy is also working with H&M on a new warehouse in Poland, along with sales, quality control and order processing.

See: H & M’s secondhand eShop Sellpy debuts in 20 European countries

Of course, a number of other brands have recognized the thrift market as a lucrative opportunity, especially as supply chain problems are slowing production. A report by thredUP and GlobalData predicts that in the apparel sector alone, resale is expected to grow 11 times faster than the broader apparel sector over the next five years, with the second-hand market reaching $ 77 billion by 2025.

Marcus Shen, B-Stock’s chief operating officer, told PYMNTS that some of the increased demand is likely due to a generational shift in which younger people “are far more socially conscious about the goods and goods they buy and consume, and so on they certainly have “increased demand for socially responsible companies.”

Continue reading: Second-hand market offers dealers a “great opportunity” before the holidays

Earlier this week, H&M also launched an on-demand print service for the merchandising industry called Creator Studio, which also enables e-commerce setup and integration. The retailer said its manufacturing expertise and working with designers and artists in the past will help “lower the barriers for brands and creators to offer high-quality goods”.

Bloomberg reported that the global licensed goods and services market was worth $ 293 billion in 2019.

“Today’s customer is demanding more personalized products and experiences than ever before,” said Ellen Svanström, director of business for the H&M Group, in a statement. “With our investments and initiatives in the field of on-demand printing, we can really create value for the customer, external partners as well as for the H&M Group and be a driving force for change in the merchandise industry.”