STOCKHOLM – H&M has taken a significant step towards increasing its share of the burgeoning Chinese apparel market by expanding its collaboration with Alibaba. H&M is to significantly expand its presence on Tmall, Alibaba’s Chinese e-commerce platform.
The announcement comes at a time when the Swedish company’s full year trading figures showed inventories rose and sales slumped in the fourth quarter of 2017. Q4 sales fell 4 per cent to 50.39 billion kronor (US$5.97 billion) from the same period a year ago and foot traffic to stores declined.
CEO Karl-Johan Persson has said the business will continue to scale back its physical expansion and close some stores, however, its collaboration with Alibaba is expanding.
China is a critical market for H&M, which opened its first store in mainland China ten years ago. Today H&M group revenues in China amount to SEK 11 billion (approximately US$1.3 billion) in more than 500 physical stores and online. The H&M group brand Monki has had a strong development in China since its launch on Tmall and the collaboration between the two groups is now being extended to include both the H&M brand and H&M Home. There are also advanced discussions regarding the launch of the remaining brands in the H&M group on Tmall.
“As one of the world’s most innovative fashion companies, H&M is a perfect fit for Alibaba’s Tmall platform,” said Michael Evans, president of Alibaba Group. “We are honoured to expand our cooperation with H&M and host their flagship store, enabling H&M brands to engage with our half a billion consumers.”
“We are very happy to be able to make H&M even more accessible in mainland China. Tmall is an important complement to our existing physical and digital stores. We see great potential for substantial future growth and Tmall will be an important part of this,” added Karl-Johan Persson, CEO of the H&M group.
The H&M group continued to grow during 2017 but growth was dampened by the fact that the sales development in the fourth quarter was significantly below the company’s own expectations. The quarter was weak for the H&M brand’s physical stores, which were negatively affected by a continued challenging market situation, with reduced footfall to stores as people shopped online.