What's going on?

H&M, the world�s second-largest clothing group, saw its stock price tumble 10% on Wednesday after it said its profit fell by almost a third in its latest quarter. Talk about a sale!

What does this mean?

When it comes to shifting sales online, the krona has been slow to drop at H&M�s Stockholm HQ. Although it�s now belatedly built a digital presence, that�s not making up for falling sales at its physical stores.


In the latest quarter, poor sales led H&M to drastically cut the price of its merchandise � which hit its profit hard. To make matters worse, the retailer said on Wednesday that sluggish sales have continued into 2018 � and that it expects to have to once again mark down price tags. That�s good for the savvy shopper, but not so encouraging for H&M�s shareholders.

Why should I care?

For markets: H&M�s stock price hit its lowest level in nine years.

The company faces a tough battle to get control of the steering wheel, although it does have a satnav. H&M says it will expand its online offering to more countries, invest further in digitally driven strategies (e.g. crunching customer data) and better integrate its physical and online stores. It�s also closing several locations in oversaturated areas, while opening more in emerging markets. All of these initiatives are costly, however � and H&M has a lot of ground to make up on the digital highway.


The bigger picture: Companies need to keep up with customers� rapidly increasing expectations � or else.

Retail companies are at the sharp end of the stick when it comes to a demanding clientele, as the way in which they interact with consumers has been completely transformed by the internet. But similar challenges abound in all industries (shout out to the financial services massive): those companies that don�t invest in better � and usually more tech-driven � customer service will almost certainly struggle.