H&M is one of the largest clothing retailers world-wide, second only to Indidex, with over 4.000 stores in 64 countries and 140.000 employees. H&M is also actively embracing the online market, where they are already active in 33 countries. This increasing popularity of e-commerce and the subsequent changing customer behaviour is changing the traditional way H&M does business.
Regarding the changing customer behaviours and demands, a questionnaire among H&M customers was conducted to identify what advantages customers see in either online or offline shopping for clothing. For online, we found the following main advantages:
- Convenience, shopping takes less time.
- Quantity of the offering, online can benefit from the long-tail effect.
- Availability of the offering, online is much more likely to have the correct sizes in store.
- Customers like personalised offerings.
- Transparency of product information, customers can easily check product descriptions themselves.
For offline, we found the following main advantages.
- Customers can feel the product before they buy it.
- Immediate ownership of goods, no waiting for the delivery van.
- Less possibility of having to return the clothes.
- Privacy concerns.
While, H&M’s growth strategy is to open more physical stores, our findings clearly see a great deal of customers prefer to shop online. However, H&M’s growth strategy is to open more physical stores. In order to allow H&M’s physical stores to remain relevant to both online and offline customers, we provide a solution which can help incorporate online customer expectations into the physical store.
For this purpose, we introduce Cisco StyleMe. This device uses a mirror that overlays the customer’s mirror image with pictures of clothing. Customers can quickly create outfits by mixing and matching a wide range of garments from the retailer’s in-store and online inventory. Cisco StyleMe also adds value by offering advice and recommending related products to customers.
The virtual fitting room brings several advantages from the online world into the physical stores. For example, the device allows customers to benefit from the long-tail effect by being able to display any clothes in the database. Also, as the mirror is also a display, product descriptions can be displayed conveniently on the mirror. Adding to this, the display also allows to offer personalised suggestions that go with the clothing that is being tried on. Lastly, if stores decide to limit the presence of physical clothing in their stores (for the purpose of showcasing or demonstrations), storage space of stores can be minimised and shoplifting can be brought down significantly. In short, implementing Cisco StyleMe allows physical stores to cater to the changing customer demands.
The virtual fitting room concept has the potential to change H&M’s current business model. As stores do not necessarily need large storage areas and bulky showcase areas, their design can become much more compact. This opens up a whole new location segment for H&M to open stores in. We propose venues that are always busy, such as train stations, airports, city centres or popular crossings. This concept of small technology-enabled stores will give H&M a new channel to reach customers. These small stores and, more specifically, the virtual fitting rooms, will change the entire value proposition of H&M’s physical stores.
Curious? Check out our video as well!
Group 62: M. Hazara (352438), C.T. Heesters (371723), T. Hoes (350000), N. Kießling (437348)
