Introduction
Compensating for Pandemic Losses Through Online Channels: From 2019 to 2020, H&M experienced a 20% reduction in overall net sales, while its online sales proportion climbed from 16% to 28%.
Persistent High Online Sales Share: Since 2020, the eCommerce portion for H&M has stabilized at around 30%, marking a substantial rise from the levels seen before the pandemic. Nevertheless, total net sales have yet to return to previous figures.
Hybrid Strategy as a Future Path: With the reopening of physical outlets, H&M’s online operations are poised to keep playing a critical role in the company’s revenue, supported by an advanced hybrid sales model.
H&M, the Swedish fashion label renowned for its budget-friendly and swiftly evolving collections, is encountering issues typical of today's fashion sector. Could eCommerce be a solution to some of these widespread challenges?
Online Sales to Total Sales Since 2020
The physical store count of the H&M Group, encompassing all brands under the conglomerate's umbrella, saw consistent growth until 2019. Post-2019, the Group has reduced its number of physical stores annually. Although new stores have been opened in previous years, particularly in emerging markets, the overall number of physical outlets has continued to decline since the onset of the pandemic.
In 2019, the H&M Group reached its zenith with 5,076 locations, but over the next three years, it closed over 600 stores, reducing its count to 4,465 by 2022. The Group has acknowledged the drive for greater efficiency as a motive behind these closures, aiming to hone a more refined hybrid approach that better integrates online and offline channels while also reducing costs.
Looking ahead, the Group anticipates additional closures in the current year, projecting a reduction to 4,309 stores by the end of 2024. This strategy mirrors a broader trend among established fashion entities, as they adapt to the competitive pressures from new online rivals who offer lower prices and faster style updates. This shift towards a hybrid model not only boosts H&M's digital footprint but also incorporates emerging trends such as social commerce. Concurrently, H&M is expanding its reach by entering the Asian online market through a presence on JD.com, aiming to access a broader customer base
Conclusion
The advantages of online sales are becoming more evident to traditional fashion retailers, especially as online-exclusive competitors such as Shein emerge as market leaders. Despite the pandemic negatively affecting overall net sales, H&M has managed to offset some of these losses by emphasizing its online platform.
Recent communications from the company indicate that recovery from the pandemic-induced downturn has been gradual, and online sales alone have not been enough to fully offset declines in other areas. It is still uncertain how effective the hybrid strategy will be in restoring sales to pre-pandemic levels.
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