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|H&M would offer many sales promotions to reduce its stockpile. Photo: kenh14.vn|
H&M's promotion campaigns may intensify due to ballooning inventories.
Cnn.com quoted a H&M representative as saying that on June 28 that the value of its unsold global inventory ballooned in the latest quarter to SEK36 billion ($4 billion), up 13 per cent on-year. H&M’s profit in the first half of 2018 fell by 28 per cent.
Accordingly, the reason of this record stockpile is because its growth was weaker than expected.
According to cnn.com, Adam Cochrane, an analyst at Citi, said that the company would offer discounts in markets where consumers respond to sales, either in stores or online. The company may also sell stock to retailers that operate in the countries where H&M does not have a presence.
Since its first launch in Vietnam’s capitol Hanoi in November last year, H&M deployed six sales promotions, more than twice than competitors Zara in Vietnam.
|Early last year, H&M announced its plan to open 430 more stores globally and focus on five markets, including Vietnam, Kazakhstan, Colombia, Iceland, and Georgia.|
“It is feasible to cut prices to sell inventory, but it does come with some brand reputation risk attached, H&M’s executives want to prevent consumers from seeing the fashion company as a discount-led brand,” Cochrane added.
The Swedish fashion brand also said that the extra clothing would be donated to charity or recycled if it cannot be sold.
In 2017, a thermal power plant to the northwest from Stockholm (Sweden) used H&M’s unsold clothes as fuel instead of burning coal or oil.
Many experts stated that the fashion company is too slow in keeping pace with modern selling strategies when implementing its online retail strategy since February 2018. Its stock also reduced by 18 per cent since early this year.
motions, more than twice than competitors Zara in Vietnam.