Post releasing its Q4 results for 2017 in January, H&M which had its biggest profit decline in six years — 14 per cent for the full year —shut down 170 stores in 2018. Speaking on their results, Karl-Johan Persson, CEO, H&M said the fashion industry is changing fast. At the heart of the transformation is digitisation, and it is driving the need to transform and rethink faster and faster. Experts said it’s the company’s lagging production cycle vis-à-vis its competitors such as Zara, Asos and Boohoo (H&M’s cycle can take up to six months with much of its production in Asia, while others are able to manufacture and deliver product in a matter of weeks), that has caused trouble for the company. While some argued it’s merchandising for being less than savvy, with too many basic tees and jeans, and not enough trends to compel shoppers.
Now, to drive growth, fast fashion companies are taking various initiatives. For instance, this year, H&M is launching two initiatives that could help it diversify. First is Afound, a brand that will sell various clothing labels — including H&M — at a discount. Second, it has dropped a prelaunch collection for /Nyden, an affordable luxury brand aimed at millennials. The new collection will focus on what the company calls ‘cocreation’, culling designs from various personalities to create capsule collections, even inviting fans to submit photos of themselves via an Instagram hashtag ‘iamnyden’ for a chance to win a trip to Los Angeles to design their own collaboration for the brand. /Nyden will also use the ‘drop’ system that even department stores like Barneys New York have enacted outside the traditional four-season system.
It remains to be seen this strategy proves to be successful for the company. Indeed, the moves the brand has planned for itself could help reignite interest for H&M and transform deliveries into ‘drops’ may help retain the attention of distracted consumers. The co-creator initiative is a new way for the company to continue its collaborative reputation.
Other brands adopt new strategies
Zara is steadily increasing higher-price-point items within its Studio collection, while lowering its entry-level price points by as much as 50 per cent in markets like India. It is also launching an augmented-reality presentation to debut in stores. It will allow shoppers to view specific looks from the spring collection when a mobile phone is held up to a sensor within the store on in shop windows. On the other hand, Asos witnessed a jump of 145 per cent last year. This reflects that fast fashion is here to stay. With the right balance of luxury markets, midlevel brands and department stores, these companies must diversify their marketing and merchandising and digital/brick-and-mortar mix to retain the attention of a younger, dramatically different customer.