H&M is moving away from their usual approach to retail by monitoring customer data and implementing artificial intelligence in an attempt to comeback from their poor sales slump.Wall Street Journal reporter Saabira Chaudhuri reports that the retail giant is moving towards customizing which products are offered in each of their 4,293 stores. An important shift from their previous mindset geared towards stocking similar products worldwide.
Chaudhuri goes on to note that this evolution was likely motivated by the 10 straight quarter slump in sales H&M has experienced. Factors that influence this include a movement away from in-store shopping in favor of online, competition from digital startups and the large discounts they’ve repeatedly had to do in order to clear out $4 billion worth of unsold merchandise.
Previously, H&M relied heavily on designers to innovate and produce items consumers would buy. But by using algorithms to analyze returns, receipts and loyalty card data they can better predict and meet customers needs and hopefully reduce the amount of discounts needed to sell goods.
H&M’s bid on data is unique to the retail industry. Former retail executive Ludovica Dodero is quoted as saying:
“Most companies are still used to taking decisions not driven by analytics at all, only based on the experience of the manager”
Despite no longer depending on the intuition of their managers and merchandising heads, H&M realized that this change doesn’t mean they have to replace those positions. Instead they are focusing on providing those merchandising heads with the data and tools to better inform decisions moving forward.
Arti Zeighami, head of H&M’s advanced analytics and artificial intelligence, notes that this shift is going to help the company “…be sharper, more accurate and hyper-relevant, not have one solution fits all.”
I am interested to see how this move will impact the overall approach of other retailers. As competition continues to grow, putting customer centricity at the forefront will be what helps certain companies stand out and offer value both to investors and shoppers alike.
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