H&M Adapts to Tricky Seasonal Transition

Dow Jones
09/24
 
 

STOCKHOLM--H&M's efforts to bring manufacturing closer to its markets while giving regional leadership more decision-making responsibility are helping the fast-fashion retailer navigate the tricky transition between seasonal collections amid unpredictable weather patterns.

Many countries across Europe and Asia have experienced a very early and extended summer this year, shortening the spring season and delaying the start of autumn and the period when shoppers typically buy warmer clothing.

This would traditionally cause headaches for clothing retailers, as decisions around ordering and shipping new collections are made long before they are actually needed, especially if large parts of manufacturing take place in Asia for distribution in the West.

That was the model H&M had been operating under, but Chief Executive Daniel Erver has been working to revamp the Swedish company's supply chain and organization, bringing production, distribution and decision-making closer to its main markets. This approach aims to make the company faster in responding to new trends and shortening the time it takes to get collections in store.

Speaking in an interview, Erver said that with the warm weather extending into September, the demand for heavier garments has been delayed, but thanks partially to supply chain improvements, organizational changes and trend analysis, the company is better prepared.

"We adapted the setup to be more relevant through the transitional periods, to show autumnal colors but lighter fabrics and lighter materials," he said.

"With our new organizational setup we also have teams who can be closer to the customer and act to make it more relevant, but also briefing the assortment teams to develop products that are less 'need-sensitive' in these transitional periods."

But that doesn't mean the retailer is immune to supply chain disruption. The Middle East conflict has caused knock-on effects to maritime shipping and air freight, which has caused some delays to H&M goods, prompting the company to bring in more inventory earlier as it seeks to avoid delays later.

Extra stock has also been brought in to cover previous gaps in its product offering in some markets, after the company left its inventory pile a little too thin amid efforts to reduce the level of discounting it needs to offer.

"We assess the stock as it's fresh, it's relevant. We're set up for a good autumn," Erver said.

 
 

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