Are we hearing a sale buzz?
In the times of comfort where online shopping is just a click away, it’s a tough task for fashion retail stores to keep the store footfall going. With almost everyday online discounts, selling a pile clothes in the store is a competitive deal. The stores still try to keep up because even a small stack of unsold clothes is a bad sign. In that case, $4.3 billion (Rs 2,80,20,95,00,000) worth pile of shirts, dresses and accessories is definitely not good. Yup, that’s the big number H&M has lying around!
H&M, the Swedish fashion retailer is struggling with a massive stack of unsold products. H&M outlined it’s latest quarterly report which prompted a question about dealing with the fierce competition, a discussion about reshaping the global apparel market and catering to changing consumer demands.
Last year, an evident drop in sales was seen which was the first time in two decades. In two decades, H&M has expanded from womenswear store in Stockholm to 4,700 stores around the world.
The biggest challenge hitting a wide array of fast fashion retailers is the reduced foot traffic due to online shopping and attractive discounts. The company revealed that the pile of unsold items had grown 7 percent in the past year.
H&M has become vast over the years and is one of the world’s largest clothing manufacturers. The fashion house produces hundreds of millions of products each year. The amount is so high that a power plant in Vasteras, the town where H&M founded its first store, partly relies on burning defective items from H&M to create energy.
Karl-Johan Persson, the company’s chief executive has been warned about the issue by the analysts. H&M was planning to open 220 new stores and expanding the brand on its online platform.
The company’s profit dropped by 62 percent in three months since February. Adding to the trouble is H&M’s recent controversy. The brand had to close stores in South Africa and face social media backlash after it ran an ad in January showing a black child model wearing a hooded sweatshirt that read, “Coolest monkey in the jungle.” After seeing the picture, The Weeknd stated that he would no further work with the brand.
With millennials shopping through their smartphones and becoming quality conscious, the company seems to be having a tough time as some critics blame the product quality for its downfall.
In a recent article, Rahul Sharma, founder of Neev Capital, called H&M “a slow-motion wreck” after the release of the first-quarter results. Analysts are not looking happy. But H&M has asserted that it has a plan. H&M is working towards expanding its online business by 25 percent this year. The company plans to slash the prices to reduce the stocked pile and go slow on its expansion in stores.
With H&M becoming available online in India, it is perhaps time to give the online store a visit if the physical one is inaccessible. If you ask us, we feel the retailer should slash the prices and host a sale instead of burning stock. A win-win for both parties and the environment in that scenario.
So get ready to buy some cool pieces from H&M!
Featured Image: H&M