H&M Is About to Go Big With AI

H&M will soon reveal its secret weapon to fight supply chain woes and unite the business, from front to back, with data: Google Cloud. Read More...

H&M and Google Cloud are on the verge of disclosing a strategic partnership that will inject more intelligence into the very core of the Swedish fast-fashion retailer.

Notably, their connection isn’t brand new, as the companies have been working together for some time. But this will mark a new threshold in the partnership. In essence, it means they’re taking the relationship up a notch.

Alan Boehme, H&M Group’s chief technology officer, spelled it out in the upcoming announcement: “We are now further accelerating digitalization as we believe in sustainable growth powered by advanced analytics and tech.”

The work includes a so-called “data mesh,” a system designed to offer more access to all types of data and events from multiple parts of the business spanning stores and e-commerce, as well as its brands’ ecosystem and suppliers.

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The latter is significant. One of the stated goals for this deal is to address H&M’s supply chain — a key area that came up on a recent conference call.

Although the retailer reported a sizzling first half of the year, with sales jumping 20 percent, chief executive officer Helena Helmersson warned about inflation worries dragging sales, a concern that has H&M weighing price increases. Meanwhile, head of investor relations Nils Vinge noted that supply chain challenges may be easing on the textile and materials sourcing side, but not when it comes to other logistics, like transportation. That will necessitate adjustments to purchasing.

“Throughout the autumn we will start to adjust them to better tailor to the new situation and continue to have the high precision that we offer,” Vinge said. Knowing how and where to make changes will be crucial, and the Google Cloud deal appears to be at least part of the equation.

While that operates in the back of the house, the AI and data backbone may have implications out in front as well. According to Eva Fors, managing director of Google Cloud Nordic Region, the partners look forward to creating “new and exciting customer experiences, whether that’s in-store or online.” No other details were offered, but across fashion, home, beauty and other categories, algorithms are all the rage for everything from product recommendations to refinements in augmented reality.

Google’s cloud business clocked an excellent first quarter, with $5.8 billion in revenue soaring 44 percent. While it still follows Amazon Web Services and Microsoft’s Azure, which showed increases of 36 percent to $18.44 billion and 32 percent to $23.4 billion in the first quarter, respectively, Google Cloud outpaced its rivals for percentage growth.

Some of that momentum may stem from its retail outreach, especially in fashion. The tech giant has been steadily growing its base in that sector, especially in recent years.

H&M may be an ideal match as a partner, as the fashion retailer is no stranger to data intelligence. The company employs its own data engineers and analysts (more than 200 of them, in fact), and according to its current job listings, it’s still hiring. Their work goes into everything from demand prediction and trend-spotting to optimizing for a more sustainable supply chain — an issue that Google Cloud also advocates.

This week, the tech giant unveiled an “Earth Engine” service at its Google Cloud Sustainability Summit, to offer access to more than 70 petabytes of “analysis-ready geospatial data,” the company said.

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