H & M advertising charges of racism reveal wider malaise in Swedish giant’s management
H & M’s accusations of racism reveal a greater malaise in the management of the Swedish ready-to-wear giant, which has not been able to negotiate the shift in online business and cash pay.
Owned by the Persson family, listed on the Stockholm Stock Exchange since 1974, the H & M group (Hennes & Mauritz) is one of Scandinavia’s industrial champions, alongside Ikea, Spotify, Electrolux and Volvo.
The mainstream label has been able to associate its name with the faces of Madonna and Beyoncé, the prestige of the houses Sonia Rykiel, Lanvin or Kenzo. She is one of the best known throughout the world, 23rd in the 2017 Interbrand ranking, ahead of Ikea and Hermès.
And yet H & M seems struggling to stem the disenchantment of customers for its 4,553 physical stores (at August 31, 2017) and react energetically by developing its online catalog. „This is one of the most difficult years for H & M“, whose share has lost some 35% since January 2017, summarizes for AFP Joakim Bornold, economist at investment bank Nordnet.
The group announced in December a stronger than expected decline in sales in the fourth quarter of 2017 (-4% year on year), to 50.4 billion crowns (5 billion euros). The results for the year 2017 will be presented on January 31st.
„They have failed to set a course in terms of online commerce and to draw a strategy that allows them to compete with truly digital businesses,“ says Joakim Bornold. „Combined with lower than expected sales, this has affected investor confidence in the company.“
At the head of other brands such as COS, Monki, Weekday, Cheap Monday, Arket and H & M Home, H & M announced in December its intention to close sales outlets, without specifying the number or location.
„Our digital strategy is clear,“ defends the little finger on the seam of the pants, the CEO Karl-Johan Persson, heir to the brand created by his grandfather Erling. „Online business in all brands is really part of the business“.
At the age of 42 – eight of whom were at the head of the company – Karl-Johan seems to have temporarily saved his head, but for how long?
-Accusations of racism-
As if that were not enough, H & M has been in the midst of a controversy that has spread like wildfire on social networks.
The object of the offense? An advertisement showing a black child wearing a hoodie with this inscription: „Coolest monkey in the jungle“.
These setbacks, says Eva Ossiansson, a marketing specialist at the University of Gothenburg, testify that H & M has lost its compass.
„The company has problems managing itself, both in terms of business development, e-commerce, digitization and communication,“ she says.
The group tried to extinguish the fire by ensuring that they removed the offending photo and apologized. But the damage was done.
NBA superstar LeBron James expressed his indignation on January 9, a few hours before the announcement of the withdrawal of the sweatshirt, which was still available.
„@hm you have it all wrong!“, wrote the basketball player, accompanied by a photomontage showing the boy with his head crowned, and the slogan written on the crossed out sweatshirt, masked by another crown.
Canadian singer The Weeknd, who collaborated with H & M in 2017 for the spring and fall campaigns, ended his contract with the brand.
„In some cases, to create a buzz, companies like to extend their communication and advertising beyond reasonable,“ says Eva Ossiansson. „It’s risky“.
For Lisa Magnusson, editorialist of the daily newspaper Dagens Nyheter, the scandal is more the working conditions of small hands that, in the furnace of garment workshops in Asia, make sweatshirts H & M for a pittance.
„It would be enough for each item to be sold three more crowns to double wages,“ she wrote.