"H&M will move from being a fashion company to becoming a data company" and this seems to be the direction retail is moving in, heavily shaped by the introduction of artificial intelligence (AI) into the sector, Alan Boehme, CTO of H&M, explained as part of talks taking place in Barcelona during Shoptalk Europe.
His advice to the industry: Data is everything today. We must listen to the stories data has to tell and not simply confine them to supporting only the story we want to tell.
AI, the third major revolution in consumer retailing
The three biggest technological revolutions in recent years have been the internet - the world's most important technological revolution that connected us all -, the mobile phone - a portable computer we all carry in our pockets -, and AI.
“These three innovations are changing and will continue to change everything about how we live our daily lives, how we work, how we shop and what we do. And that's where we should be concentrating our efforts, on the integration of those three things and what that's going to do for us," Boehme said.
Education would be the first step on the expert's list of how to integrate these innovations in the retail sector. He does not hesitate to point out that the second step is to understand that businesses cannot do it alone: "You have to be willing to share information with others. The only way to make this work is to have a lot of data. And none of us retailers have that data within the four walls of our company."
The need to educate in order to evolve
As he says from his more than 30 years of experience during which he has been working on the digitalisation process of different companies, "technology is never the problem, it's actually the easiest part. People always end up being the problem".
"All the support departments at companies are set up to not allow change to happen, worried about violating a policy," he says, citing as an example his time at Coca Cola, a large company whose policy, which often prevents the flow of information including internal data, goes back 150 years. Coca Cola's primary aim is to keep its formulas a secret.
"This becomes a culture, something that takes a long time to change. And sometimes the best way to change it is to move things outside the company and do small pilot projects almost undercover". Once these start to bear fruit, then you can start seeding it before the culture slows it down, as per the technology expert.
It's not just about working toward change, it's also about being willing to change
"Every company has its core values, which it stays true to at all costs", "but I think when you start looking for change, you also have to be willing to change", he said.
He gives the example of how at COS, one of the brands that is part of the H&M Group, they started to think how they could have up-to-date inventory information online, how that would benefit workers and how it would change the interaction with customers.
With a 60-day deadline, they then got to work researching existing technology on the market to be able to formulate the most effective answers to these questions.
There are all kinds of opportunities in the supply chain
"When you talk about innovation, most people think that you start doing new things with data, that you have to start from scratch, but most of the time the answers are already there, it's just about innovating and connecting the missing pieces," he said.
So H&M Group came up with the idea of offering smart fitting rooms, which allow customers to order items without having to leave the fitting room. The mirrors recognise products by detecting the item, size and colour, and in the pilot project installed at the Cos shop in Beverly Hills they also offered personalised product and styling recommendations.
"When you walk through the door, the RFID readers are embedded in the ceiling. Each product knows where it needs to be, when you pick it up and take it to the fitting room. If it doesn't fit, you just touch the mirror in the fitting room and someone brings you the right size, the right garment, then we take the old garment back to the exact place it belongs," he explains. It's how to make the most of the alarm location technology present in any shop, which the company turned into an innovative solution.
How do you make the most of customer data?
The fear of lack of privacy and security often has an impact on trust in online commerce, because people are really wary of the fact that data scientists are working with consumer information.
"At H&M we have almost 200 million people in our loyalty programme," a number that Boehme says translates into being able to get information you can't get anywhere else. "We have to start educating and making people feel comfortable sharing by breaking down the walls that separate us".
The amount of information that is available online today is overwhelming. All the more reason for the digitalisation expert to "learn to trust the machines", the algorithms. "Let the data tell a story and let it tell its story. And don't try, as we have done so far, to make the data justify the story you want to tell".
”We have to understand that this drastic change in business people will shape how we are going to have to start looking at the new world”
He recounts how when talking to a fashion company a couple of weeks ago, they were describing themselves as a social media company in the first place, and a fashion company secondly, because of the work they were doing with influencers that made him conceive of this social communication as a way of doing business.
"I think at H&M and other brands we're going to have to rethink where we are, how we fit into this new world, and how data is going to influence the future" in order to make further progress, Boehme said.
"We're still halfway through this journey," but from his experience in Silicon Valley he says that artificial intelligence is the future, as "they don't invest money in anything other than AI there".
Therefore, "we have to understand that this drastic change in business people will shape how we are going to have to start looking at the new world", H&M technology director summarised.
This article was originally published on FashionUnited.ES. Translation and editing from Spanish into English by Veerle Versteeg.