H&M to push on with global online growth strategy

Fast fashion retailer H&M plans to be operating transactional websites in four new markets by the end of 2014, following a successful launch in the US in August last year. 

The French operation will open in time for the spring/summer season, and this will be followed by online retail sites in three other major territories which have yet to be revealed. H&M has spoken in the past about significant potential for its business in Russia, Poland, Germany and Italy, but confirmation of the new online locations will be made in due course.

Online shopping at H&M is currently available in nine European markets and the US, although its sister brands COS, Monki, Weekday and Cheap Monday serve online customers in 18 European markets, while the Other Stories brand is available online in ten European markets.

The company was relatively late to the important UK online retail market – launching a transactional site in September 2010 – and it unveiled its digital offering in the US last summer following a delay caused by IT and security concerns. Postponing its online arrival in the US gave fashion rivals such as Zara a head-start in building an online presence in North America, but H&M has plans to ramp up investment in eCommerce in 2014.

H&M CEO Karl-Johan Persson said that online sales are "becoming increasingly important" to the retailer, and there are plans to continue investing in this area of the business.

"Our online sales continue to develop very well and Hm.com, which is one of the world's most visited fashion websites, allows us to reach even more customers," he noted.

Persson added that the US online store launch has received "a very good response from customers", with the site contributing to a 13% US sales increase in local currencies during the course of the year. This was also significantly aided by the addition of a net 36 new stores in the country during the 12-month period.

H&M's profile in the US is set to be raised further this Sunday, when it broadcasts an interactive TV advert during the Super Bowl. Traditionally one of the most lucrative TV ad spots in the world, the marketing opportunity is being used to promote David Beckham's exclusive fashion range – and consumers watching on Samsung Smart TVs will have the capability to order and purchase goods via their TV remotes during the commercial.

It's a ground-breaking move by H&M and shows the retailer's commitment to innovation, but with not everyone owning a smart TV it does restrict the company's audience. Analysts in the US expect the process of purchasing goods via televisions – known as T-commerce – to grow in popularity in 2014, and it appears that H&M is aiming to steal a march on its rivals in this area.

Investment is now firmly being placed in IT and online development, and the retailer is upbeat with an annual profit increase, taking into account financial items, of 11% to SEK 7.3 billion (£675 million). Store openings in four new territories are planned for 2014, while a net addition of 375 stores is set to be made across its global portfolio.

Verdict Research retail analyst Kate Ormrod hinted to Essential Retail that this planned online investment is necessary, suggesting that the company is currently is not on par with rivals Zara and Topshop in terms of fulfilment options and delivery times.

"The lack of delivery options and long standard delivery times will continue to dissuade shoppers from purchasing, despite the use of frequent online discounts to encourage shoppers to switch to the online channel," she explained.

Ormrod also acknowledged that the retailer has been late to roll out transactional websites to new markets, allowing its competitors to gain a head start in international eCommerce.

Commenting on the overall business strategy, she added: "Aggressive expansion has bolstered group sales, however entry into Australia which is planned for 2014, is long overdue as its rivals are already present.

"However the retailer's aim to reduce its dependence on Europe is sensible given the prolonged recovery and stronger growth opportunities elsewhere. With like-for-like sales flat on the year, the retailer needs to look at renovating existing stores to drive additional sales."