H&M’s latest concept Afound will “bring something fresh” to the off-price market when it launches online later this year, the group’s chief financial officer Jyrki Tervonen has said.
Afound, which will stock both external and H&M group’s own brands, will launch online and in physical stores in Sweden later this year, before looking at international markets.
Tervonen said the UK will be one of the first global markets to get the Afound platform.
“The brand will start in Sweden, but we have a strong belief that the concept will also work in other markets. The UK is a big market and it is one we know well, because it is where we launched [H&M stable mate] Cos, so it will be one of the markets next in line. We expect Afound to attract existing customers from within the group and attract new ones,” he added. .
He stressed that although Afound will sell clearance product from within the H&M family, which includes Cos, Weekday, & Other Stories, Arket and Monki, the focus will be on external brands.
“The main idea is to bring something new to the off-price market, which is huge and growing. There is a great opportunity for Afound to take a big part of [the market] with a well-curated and wide assortment. It will offer stylish product and great deals.”
Tervonen also outlined H&M’s plans to invest in technology, concentrate on its brand’s core offering and improve instore shopping experience following the ‘mistakes’ which led to a slip in full-year profits in the year to 30 November 2017.
Operating profits dropped by 13% to SEK 20.6bn (£1.85bn) during the period, while sales including VAT grew by 4% to SEK to SEK 232bn (£20.8bn.)
“The first area of action will be the core offering of each brand. We’ve grown rapidly over recent years, but we haven’t focused well enough on customers and that needs to change,” Tervonen said.
“Stores need to be more inspiring and more convenient for the customer and their needs. We have tested a number of new initiatives in selected stores with successful learnings and will scale this up [throughout the estate.]
“H&M will also invest in new technologies and new ways of working. The first area will be to improve the supply chain to make it even faster and more flexible. We’ll invest more in artificial intelligence, which will be used in everything from advanced analytics to assortment planning.”
CEO Karl-Johan Persson said H&M’s performance during the year had been hit by some “imbalances” in certain aspects of the H&M brand’s assortment.
Expanding on Persson’s comment, Tervonen said: “The assortment can always get better and in the fourth quarter of last year we had too much of certain products we should have had less of and too little of the products we should have had more of. We made some mistakes connected to prices, the fashion level and the product type. Normally, we’re good at this is but we made mistakes in Q4. The good news is that we know what those mistakes are and it is something we can correct.”
He added that H&M is exploring a number of new concepts and business models.
The group is gearing up to launch new online brand Nyden, which is aimed at millennial customers and is expected to debut early this year.