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H&M talks online growth, sustainability and recovering from the pandemic

Fashion giant H&M is expanding its online presence around the world, as it continues to recover from the coronavirus pandemic and work toward its goal of becoming climate positive by 2040.

The company said it will expand the digital presence of its brands Cos, Weekday, Monki, & Other Stories and Arket in Europe from May onwards.

The company said it will also push through with its plans to launch an e-commerce site for its H&M brand in Australia later this year, and open a digital flagship store of its lifestyle brand Arket on Alibaba’s e-commerce platform Tmall in August.

The world’s second largest clothing firm said the current situation highlights customer desire for digital solutions and the importance of integrated channels.

“We are glad that we are able to provide this in most of our markets and in even more markets from May onwards, as Cos, Weekday, Monki, & Other Stories and Arket are set to expand, making their collections available online to nine additional markets across Europe,” the company said.

H&M said with the world experiencing this health crisis, digital solutions are needed as cars and homes are becoming safe havens for shoppers and mobile devices and computers will be their main point of locating products before going to stores.

The fast fashion giant announced in March that the second half of its first quarter sales were negatively impacted by the outbreak of the COVID-19 pandemic, particularly China.

Total sales in March dipped 46 per cent compared to the previous corresponding period but online sales saw a 17 per cent increase.

H&M’s total sales during the period between March 1 to May 6 this year decreased by 57 per cent in local currencies compared with the same period in 2019.

Online sales, which are open in 46 of the company’s 51 online markets, increased by 32 per cent in the same period.

Helena Helmersson, H&M’s new chief executive, said they think the pandemic will lead to a fast shift towards digital and that they need to be ready for it.

At the group’s recent annual general meeting, a new board member was elected, Danica Kragic Jensfelt, who is a professor at the Royal Institute of Technology in Stockholm and does research in robotics and artificial intelligence.

When asked if the new board appointment means AI and robotics are what H&M will be concentrating on in the near future, H&M said they have always made big investments in its tech foundation and AI. 

“We continuously see clear signals that we are on the right track and we will continue to invest in this area in the future, to secure an organisation that drives innovation and optimises business decisions,” the Swedish fashion retailer’s media team said.

According to H&M, their AI work spans across the entire value chain – from design to customer experience.

“By analysing the large amount of data from our operations within the group, we can align supply and demand much better, with the goal of only producing what we are selling.” 

H&M said the pandemic has affected their day-to-day operations as well as their outlook for the future.

“Due to the exceptional situation caused by the spread of COVID-19, we are reviewing all parts of our business,” the company said. 

“The world continues to adapt to a situation like no other, and H&M Group, like so many companies around the world, continues to navigate the effects of the coronavirus crisis.”

The group said they have been forced to make difficult decisions and take strong measures across all parts of the business but that in everything they have been doing, the customer is always in focus. 

“We believe that customer-centricity, strong collaboration, subsisted sustainability and expanding digitalisation are key factors for our success.”

Progress on sustainability

Helmersson, who once headed the sustainability department in the company, said sustainability work is an integral part of the whole business and includes every area of the company, hence its growth targets and sustainability goals have equal weighting, live side by side and are entirely interconnected.

“I know the importance of environmental protection, people empowerment and industry transparency to build a sustainable business,” Helmersson said. “These areas are not only close to my heart but very much part of my business perspective.”

With the release last week of the 2019 Material Change Insights Report compiled by the global non-profit Textile Exchange, H&M said it seems their efforts on sustainability are showing progress. 

The report showed the H&M Group leads the ranking in the use of organic cotton and down certified by the Responsible Down Standard. This means the company is recognised as the number one company sourcing preferred cotton. This includes organic cotton, recycled cotton and cotton sourced through the Better Cotton Initiative, among others.

“Being ranked as a leading company in sustainable materials sourcing is a great recognition of all the hard work we do every day to make our business more sustainable,” said Cecilia Brännsten, H&M’s Environmental Sustainability manager.

“But that doesn’t mean we are done yet, there is still work to do to increase the use of recycled materials and push for innovative materials.” 

After cotton and synthetic materials such as polyester and nylon, the materials the H&M group use the most are man-made cellulosic materials such as viscose.

Sourcing them in a more sustainable way has been a big part of the company’s goal, H&M said.

The company has announced its commitment to become climate positive throughout its entire value chain by 2040 at the latest.

“That means we will reduce more greenhouse gas emissions than our value chain emits  — all the way from cotton farms to the customers’ washing machines and the recycling baskets,” the company said.

H&M said to become climate positive, they need to change how their products are made and enjoyed.

“About 70 per cent of a garment’s climate impact arises during the manufacturing process itself. Making fibres, processing materials, dyeing and fabricating requires a lot of energy,” the fashion giant said. “We make tough demands on our suppliers, and we also help them to switch from fossil-based to renewable energy sources such as wind and solar.”

H&M cited as example that the group is currently implementing energy efficiency programs throughout its supply chain in close cooperation with its business partners.

“We also work on putting pressure on and collaborating with governments and authorities. This is a way to create positive changes beyond our industry.”

But, the company said, to be completely climate positive, they need to find new solutions.

“We are exploring new techniques that potentially could absorb greenhouse gases and turn it into new fabrics and products,” H&M said. “We are constantly exploring new ways of making our products, such as making fabrics out of citrus peel and old fishnets.”

The H&M group said it wants to make sustainable fashion affordable for everyone.

“It’s the essence of what we do and why we exist,” the company said. “As part of an industry facing significant challenges, we want to ensure that we move away from a linear system to a circular one that ensures long-term sustainability. As a major player in the industry, we are well-positioned to lead this change.” 

Stores reopening

According to the retailer, the current situation with the coronavirus crisis remains challenging for them but they are happy to be gradually re-opening stores in markets where governments have eased restrictions.

“Safety measures vary from market to market based on recommendations and guidance from the relevant authorities,” the company said.

The company’s media team said some of these recommendations and guidance include the use of plexiglass, limiting the amount of customers in stores, closure of fitting rooms and use of personal protective equipment to name some.

“These measures have been well received by customers,” the team said.

The team said it is in extraordinary situations like this current pandemic that people see how interconnected human health and planetary health are.

“This is why the H&M Group, together with other leading companies, just joined the Uniting Business and Governments to Recover Better statement, the latest initiative of the UN Global Compact.”

The Recover Better statement, signed recently by around 150 companies, is a call to action for governments and policymakers to reimagine a better future grounded in bold climate action.

“It is now more important than ever that companies and governments show leadership standing by their commitments in climate action, and that we take responsibility together,” H&M said.

The company said it expected to make a loss in the second quarter but pointed to a rebound in demand in China.

H&M said in those markets that have begun to open up, trade in the stores has initially been muted. At present 3,050 stores, representing 60 percent of the group’s 5,061 stores, are still temporarily closed.

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