H&M’s expansion plan calls for new stores and added emphasis on digital

In addition to reporting a strong quarter of earnings and store openings, H&M is slowing down its store growth and instead, bolstering its digital operations.



The company, which aimed to open 10% to 15% more physical stores each year, reported Tuesday, Jan. 31, is shifting its focus to increasing its omnichannel sales — including both stores and online sales — by 10% to 15% per year, according to H&M.



“During the year, we opened 427 new stores net worldwide and added three new markets. We also rolled out our online store to 11 additional markets,” said Karl-Johan Persson, CEO.



“This means that H&M is now present in 64 markets of which 35 offer e-commerce,” he added. “The year was characterized by the shift in the industry towards an ever growing online market and by digitalization. We are very pleased that our online business developed very well for all our brands, both as regards sales and profitability.”



The chain still plans to open approximately 430 new stores this year, a move that will help it enter five new bricks-and-mortar markets – Kazakhstan, Colombia, Iceland, Vietnam and Georgia – and six new H&M online markets – Turkey, Taiwan, Hong Kong, Macau, Singapore and Malaysia.



“Today we have a strong store portfolio with more than 4,300 stores which gives us a unique proximity to our customers,” he said. “Being close to the customers is key to success and even more important as the physical and the digital world become increasingly integrated.”



These changes come on the heels of a positive fourth quarter, which spanned September 1-November 30, 2016, and ended with an 8% sales increase. However, for the full year ending November 30, 2016, H&M reported a net income decline of nearly 11% from 2015.



Going forward, “we have a clear omnichannel strategy in which we are integrating the digital and physical world to offer customers a more seamless shopping experience,” Persson said. “This includes online purchases and online returns in stores, click and collect, mobile payments, further development of the customer club and use of the mobile in stores for increased service.”



The retailer is also upgrading its supply chain to make it faster and more flexible, and bolstering its use of analytics “to make improvements within everything from assortment planning and logistics, to sales,” he added.