Fashion behemoth H&M has $4.3 billion in unsold clothes: Another case of clicks hurting bricks?

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Published: March 28, 2018 3:49:40 PM

The continued preference for online channels has hurt even iconic businesses and the latest case belongs to Swedish fashion giant H&M which has a whopping $4.3 billion in unsold inventory. We take a look at two other cases.

H&M unsold inventory at .3 billion. A case of clicks vs bricks?H&M reported that its pile of unsold stock consisting of shirts, dresses and accessories had grown 7 percent in the past year. (Image: Reuters)

The continued preference for online channels has hurt even iconic businesses, and the latest case belongs to Swedish fashion giant H&M which has a whopping $4.3 billion in unsold inventory. In its latest quarterly report released yesterday, H&M reported that its pile of unsold stock consisting of shirts, dresses and accessories had grown 7 percent in the past year.

Media reports in the United States attribute the growing pile of inventory to fall in foot traffic in the past year, as customers ditched crowded shop floors in favor of online shopping, or lower-cost offerings elsewhere. In the previous quarter too the fashion giant had reported an unexpected fall in total revenue. Notably, the decline was the first in two decades, which have seen 4,700 new H&M stores around the world.

H&M is not the only one hurt by the rising preference for online retail around the world. Many top voices worldwide and back home attributed the Toys ‘R’ Us bankrupt, an American toys and juvenile-products retailer, which was founded way back in 1948, filed for bankruptcy on September-17, prompting many to believe than the online revolution was responsible for the company’s fate.

Interestingly, even as the retailers continue to struggle Jack Ma’s Alibaba and Jeff Bezos-run Amazon are seem to be thriving. Vetri Subramaniam of UTI AMC says that the consumer preference for online channel as opposed to retail in the United States has eroded the market capitalization of retailers built over the last 6-7 decades. “Thanks to the rise and continued rise of online and particularly Amazon, you are now seeing a decimation of the market cap that got created in organised retail over maybe six or seven decades,” the expert told ET Now in November-17.

Apart from retailers, there have been instances of even smaller online businesses such as Aditya Birla Online Fashion getting Amazoned. After winding up Trendin.com for similar reasons, the Birla Group said announced the closure of Abof.com in December-17.

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