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  • Europe

H&M Invests in Klarna

Online pure players and brick-and-mortar retailers alike are betting on the e-commerce sector to boost their business. This strategic focus on merchants’ part actually leads FinTech to win the game. The e-payment specialist Klarna, for instance, just announced an investment from Hennes & Mauritz.

The world number 2 clothing-retail company announces a strategic partnership with Klarna to improve their customers’ experience. H&M is investing 185 million Swedish krona (€18 million) to acquire less than 1% of the FinTech’s capital.

In line with this investment, they will jointly develop an omni-channel payment solution later to be added to the Swedish retailer’s online and brick-and-mortar stores. Their partnership will also lead them to craft an after-sales service for the H&M app, as well as flexible payment options, including try before you buy, and enhancements to the H&M Club loyalty program.

Their partnership will be effective early next year in Sweden, prior to being expanded worldwide. Concerned services will first be rolled out in 14 European countries (including the UK and Sweden). The US and Asia will be addressed later.

Comments – Upholding an omni-channel approach

Traditional retail and e-commerce industries are now converging: retailers increasingly have to make do with online competition –from Web giants such as Amazon– and keep focusing on their online reach. The idea is to drive in-store traffic through betting on online visitors. Given this situation, H&M is opting for Klarna.

Over the past year, H&M’s stock prices dropped after their sales went down to their investors’ surprise: this investment in Klarna is meant to win back their trust. It would, indeed, contribute to increasing sales, especially since payment facilities would be featured. Relying on the e-commerce sector also makes sense to aim for more targets, especially young customers.

Klarna has likewise partnerships in place with Asos and Ikea, but this specific announcement seems way more ambitious. This agreement could help them consolidate an already well-established position on the market for in-store financial services. Considering their banking licence, they would also be preparing an IPO.