Fashion industry : Why H&M is on a downward trend

As Stefan Persson enough, it went quite quickly. The 71-Year-old is the son of the founder and Chairman of the Board of the Swedish fashion retailer, H&M, he had headed until 1998 as the Director-General. He is considered to be the richest person in Sweden. Private he resides, in the meantime, however, in the British community Axford. And because the Internet connection was much too slow and by the government, no Expansion was planned, took Persson, the things even in the Hand. Short-hand he had broadband-cable. Today, not only his property, but the whole village quick Internet has.

It is a story that stands in stark contrast to the pace, is addressed with the Persson's company, H&M, where he holds 31 per cent of the shares, the digitization. The former top dog among fashion retailers has been struggling for years with problems. Some have seeds with long Online-to-do efforts of the fashion chain. But others go beyond that.

today, Thursday, H&M presents the balance sheet for the year 2018. The business figures of the group were last taken care of, rarely for pleasure. A year ago, the group had to announce a profit decline of 14 per cent, six months later, CEO Karl-Johan Persson described the sales as "not satisfactory" and said it was a tough half of the year.

The new App is a Disaster

In the third quarter, revenues had increased surprisingly. Nevertheless, a glance at the share price makes the current Trend at H&M, clear: Since February 2015, the shares fell in value by 38,99 Euro to the current level of just under 13 euros.

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For the bumpy path into the digital age H&M delivered until the beginning of this week a new example. The company presented a new App, with even easier for customers should be shopping. But the Start of the application, the error is accumulated.

Many customers were not able to log in, the passwords were not recognized, customer data and payment methods were faulty and the prices of the items in the shopping cart changed constantly. The discount is about 15 percent, the customer had been promised, if you order through the new App, many users also.

the new App should be a big step to a better Online business for H&M. A year ago, Karl-Johan Persson stressed that the company had to transform itself in terms of digitization. Because in Online retail, the competition was faster. While the customers of Internet retailers such as Zalando or Asos were used to being able to order free shipping, were the supplies at H&M, a comparatively expensive.

The stationary competition will get ahead of H&M

the competitors of retail stores such as Zara, the price threshold set for the free shipping initially lower than H&M. Services such as click & Collect, where you order products on the Internet and in a store can provide, in the case of Sweden, also in vain. In addition, it takes in the group of Persson significantly longer than the competition, until the package arrives at the customer.
From the point of view of Gerrit Heinemann has pushed H&M to be a long time before investments in the Online trading. "You have a lot of set to long on the large branch network," says the Professor of business Economics at the Niederrhein University of applied Sciences. "Because it was in a doubt easier and cheaper to open a new business to invest in digitisation."

competitor in the West of the City: Since last year, there are the cheap fashion retailer Primark is also at Bahnhof Zoo.Photo: Constanze Nauhaus

to have But also beyond the digital world, the Management of H&M seems to have some missing Trends. Quite literally, because since years it is known that the Inditex group, its main brand, Zara, is much faster than H&M, when it comes to new Trends.

is How inefficient the production, also shows the fact that H&M has been sitting for months on a mountain of finished clothes, and you barely get rid of. Last autumn it became known that the company stocks fashion to a value of 3.5 billion euros. H&M fights since then, the products sell off, and you must repel some with strong discounts.

The Image is tattered

reports that H&M destroys new clothing, even willfully, because the disposal is cheaper than the other storage, and harm in addition to the Image of the chain. However, many customers already battered since the group for a promotional campaign photographed a dark-skinned child in a sweater with the inscription "Coolest Monkey in the Jungle", or in English "the coolest monkey in the jungle",.

With 458 branches is Germany the most important market for H&M. However, especially in Germany, where the Swedish company is since 1980, active, kicked in the past few years, new competitors on the market. With a strong emphasis on features such as quality (Uniqlo) or price. (Primark), you have created distinct Profiles, while H&M is missing such a clear Image.

In Terms of brand development of H&Ms biggest competitor, the Inditex group has been, always a step ahead. During the Spanish group diversified since the beginning of the 1990s, with brands such as Massimo Dutti, Bershka or Stradivarius, the offer and the target groups away from the main brand, Zara opened up, followed at H&M this step much later.

Cos, Weekday, & Other Stories and the service industry are young

in 2007, the group spoke with the brand Cos, a higher priced clientele. Also brands such as Weekday and Monki (both in 2008 bought out), & Other Stories (founded in 2013) or since last year, service industry are comparatively short in the market. The brand Cheap Monday should be set in the middle of this year.

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On the question of how much of a percentage of the sales goes to the account of this new brand, H&M and no answers. From the point of view of Professor Heinemann, you will not be able to help the group but still. "Given how many branches there are in the world of the brand H&M, and like many of the other brands, can account for the share of these new brands is hardly more than one or two percent of the entire group," says Heinemann. "Even if you would run well, they would be a nice addition to the business, but they could not solve the Problem H&M." Under certain circumstances, these brands are even a subsidy business for H&M, because the market would be the cost of the introduction of a lot of money.