Betting big on the future
Businesses worldwide are investing more and more in ecommerce – but that doesn’t mean that brick and mortar stores are a thing of the past. In fact, some companies are putting just as much or more investment and energy into growing their store locations than their online shops.
Take, for example, Swedish clothing retailer Hennes & Mauritz, better known as H&M. H&M’s Chief Executive Officer Karl-Johan Persson declared that H&M plans to double its number of stores in an attempt to catch up with its rival, Inditex.
Persson reports that while they are “not stressed to reach a certain size or to be number one,” they are still focused on the “expansion ahead,” and will attempt to open more locations until they reach somewhere between 7,000 and 8,000 stores. Persson hopes to reach this goal within four to eight years by increasing the store count by 10 to 15 percent every year. Currently H&M has about 2,000 stores, and will soon open new locations in New Delhi.
This expansion contrasts competitors
This expansion of brick and mortar locations stands in contrast to other fashion brands, including Inditex, who plans to slow down store expansion while investing more and more online.
Meanwhile, online retailers like Amazon.com are revving up the competition. Amazon just released a catalogue of private-label fashion brands. Persson says that while he is “a huge admirer of Amazon,” he still thinks that “H&M and many other companies will bring something different into the fashion world.”
Declining earnings mean a new strategy is in order
H&M’s last quarterly earnings report saw the largest decline in five years, possibly as a result of a strong U.S. dollar inflating the cost of garments produced in Asian countries. Despite these losses, H&M’s earnings were still higher than analysts had predicted.
Just because H&M is investing in stores doesn’t mean they are ignoring their online customers. Persson says the company is continue to invest online wherever they have “good profitability.” The company plans to begin selling clothing online in eleven new countries next year, including Ireland and Japan.
H&M shows us another great example of a company that is following its own path, despite industry trends. Don’t be tempted to copy your competitors – stick to what is working for your brand.
