Hennes & Mauritz (H & M) is a Swedish fashion organization and best known for the fashion clothing of men, women, teenagers, and children. H & M functions in 62 countries along with its associated companies. It is one of the world’s leading fashion companies. H & M was established by Erling Persson in 1947. It is registered on the Stockholm Stock Exchange in 1974. The online retailing was started by the group in 1998. The H & M group comprises nine unique brands. The H & M group comprises nine unique brands which make great designs and area accessible to everybody. These brands are H & M, Monki, COS, Cheap Monday, H& M Home, Arke, Afound, Weekday & other stories. Each brand of the group works with the aim of constant improvement. The brands engage with the customers in stores, online as well as social media platforms. The group also integrates physical stores with the digital channels. The group leads the way towards a comprehensive and sustainable world. It has a substantial online presence with online shopping accessible in more than 33 countries. The company collaborates with the fashion designers time on time such as Karl Lagerfeld, Viktor and Rolf, Madonna and Roberto Cavalli. The group takes just two weeks to introduce a new product to the stores whereas other fashion brand takes at least 6 months. The company employs designers who can watch for the latest fashion trends and can push the products to the stores.
The group makes use of strategies and invests in analytics to respond faster to the customer’s needs. The distribution strategy is focused on integrating physical and digital stores and roll out online stores in the countries. The company faces huge competition from the unorganized sector so it makes use of competitive analysis in its strategy. The company serves a large number of the customers. So, it primarily focuses on the upper middle and upper-income group which is in the age group of 15-40 years.
H & M is the 2nd largest fashion seller in the world. It is well-known for its fast-changing clothing. The TOWS matrix is helpful tool to the company as it generates, compares and selects strategies. It makes a trade-off between external and internal factors. The strengths and weaknesses represent the internal factors whereas opportunity and threats represent the external factors.
The TOWS matrix is Strength/ Opportunity (SO). Weakness/ Opportunity (W/O), Strength / Threat (ST) and Weakness/ Threat (WT).
Strengths/ Opportunities (SO)
An extensive range of products: H & M has an extensive range of the product lines comprising attires, shoes, cosmetics, accessories, and shoes for a large group of the customers (Bhardwaj and Fairhurst, 2010). The group also have home appliances such as candle holders, vases, pots, blankets and more.
Exclusive identity for all brands: The group retails its products through various brands such as COS, H &M, Weekday, H & M Home and more. All of these brands have distinctive uniqueness depending on the customer target groups.
Emphasis on improving profitability: H & M adopts strategies for expanding its stores on the global basis. It has added 400 new stores in 2016. The expansions are helpful to the company in improving its bottom line as well as the top line.
E-commerce as a platform: H & M is expanding e-commerce platform in several nations in order to assist a larger market. The e-commerce can be the future of the attire industry in the coming years. The company is required to make use of the platform up to its prospective (Barnett, Grolleau and Harbi, 2010).
Weaknesses/ Opportunities (WO)
Dependency on the 3rd party suppliers: The H & M group is extremely reliant on the 3rd party suppliers for its products. The group subcontracts product manufacturing from almost 800 independent suppliers. It has less control over production (Rana, Short, Evans, and Granados, 2017). It can affect the order commitments of the company. As a result, the bad experience of the customers can affect the brand image.
Following after trends: The company is popular for producing affordable clothes. So, it depends on many independent suppliers (Mora, 2006). It prefers picking up after trends from the extravagance brands.
Expansion in the emerging markets: The emerging markets represent a great potential for the fashion industry. The company needs to explore the markets of the emerging nations such as Africa and Asia so that new demand can be captured.
Refining lifestyle: The purchasing power and the lifestyle of the people are refining worldwide. People are more sensible towards brands which provide an opportunity to the H &M to capitalize (Birkinshaw, Hamel and Mol, 2008).
Strengths/ Threats (ST)
Differentiated global presence: The H & M group has a robust and expanded presence geographically worldwide. The group has stores in more than 65 countries across six continents. It has made expansion in the prospective markets such as Asia and Africa. The strong presence of the H & M worldwide minimizes the business risks (Pedersen and Andersen, 2015).
Strong financial performance: The strong financial performance of the company can be evaluated in the previous financial years. The group attained profits of 19.4% in the financial year of 2014. The robust financial performance of the group enhances the confidence of the customers and offers financial flexibility to the company.
Developing fashion trends: The fashion industry is subjected to rapid changes as trends keep on moving. The social media has an important role behind this. So, H & M need to launch products as per the latest trends otherwise it can lag behind.
E-commerce permits new entrants: E-commerce represents an advantage as well as a threat to the company as it allows new brands to exist on the same platform. The new entry is potential enough to affect the business of H & M (Mihm, 2010).
Weaknesses/ Threats (WT)
Reasonable pricing affects quality: H & M is known for the reasonable clothing but sometimes low prices have an effect on the quality of the clothes and other products.
Strong competition: The fashion industry is exposed to intense rivalry from the local and international brands. H & M is required to be attentive of the competition along with the new trends and the fashion (Rost and Osterloh, 2009).
Risk of foreign exchange fluctuations: The currency of the H & M group is Swedish and most of its sales are generated from the developed economies like Europe and the US. The group faces the threat of the foreign exchange rate as it affects the profitability.
The industry analysis of the H & M can be made with the help of Porter’s five force analysis. It determines the intensity of the competition and profitability to be expected in the fashion industry.
The threat of new entrants: There are no barriers to entry in distribution in the UK market. It is due to the requirement of the low capital to open a store. There are obstacles to entry in the manufacturing due to the scales economies and the requirement of the high capital investment (Brun and Castelli, 2008). The fashion products have a high margin (Macchion, Moretto, Caniato, Caridi, Danese and Vinelli, 2015).
The threat of substitute products: There is the threat of the replacing brands not products in the industry. There is a huge number of fashion retailers in the fashion industry. The demand is variable in the industry due to the continuous changes in the needs and the requirements of the customers. There is an improved relationship between because of the outsourcing of manufacturing in countries along with low labor costs.
Bargaining power of buyers: The switching cost is low in the industry. The price is an important variable for the customers. The volume of the purchase is small but a single buyer is inappropriate for the company (Seifert, Siemsen, Hadida and Eisingerich, 2015).
Bargaining power of the suppliers: The bargaining power of the suppliers is not very high. It is low because there is large group of suppliers with low labor costs. H & M can impose demanding conditions as it is having more power the suppliers.
Rivalry among existing firms: H & M has a large number of local, national and international competitors. The growth prospects are not very high because of the maturity of the fashion sector. The customers influence the prices and consider alternatives (Kozlowski, Searcy and Bardecki, 2015). The rapid changes in the customers’ preferences do not allow developing strong scale economies.
H & M is a fashion organization and offers to clothe for men, women, and children. The company has an extensive product portfolio which comprises men; women and children wear along with footwear, accessories, cosmetics and home furnishing. H & M aims everyone having interest in the fashion. It offers a varied range of the products which allows customers to find their own style (Caniato, Caridi, Moretto, Sianesi and Spina, 2014). The portfolio of the H & M includes the brands given below:
H & M: It includes range everything from basics, yoga wear to the designer wears. It focuses on 28% of the offerings on the accessories and 21% on tops.
Other stories: It offers women wears like shoes, accessories, bags, beauty and ready to wear. It weighs 25% to the accessories and 21% to the tops.
COS: It offers classics and wardrobe essentials for the sections such as men, women, and children. The designs of the COS are inspired by the art and the technology across the globe. It has 37% focus on the tops and 18% on the dresses (Subrahmanya, 2015).
Cheap Monday: This brand provides denim, fashion collections, and accessories for both men and women. This brand is inspired by the music and pop culture. It weights tops at 30% whereas 28% to the bottoms.
Monki: Monki offers on-line lifestyle collections for the young women. This brand gives 27% weight to the tops and 19% to the accessories (Kant Hvass, 2014).
Weekday: It makes available clothing options for the young and style aware young adults.
H & M is a popular Swedish fashion group. The strategies adopted by the company in the different aspects are:
The best price strategy: H & M intentions to provide matchless value to the customers by proposing fashion and quality at the great prices. The company makes continuous efforts to develop the best price strategy. It sustains the policy of best price by controlling a number of middlemen, stocking in large quantity, wide expertise, purchasing right merchandise from the appropriate production markets and having capable distribution systems (Carson, Lanier, Carson and Guidry, 2000). H & M aims to match global pricing which helps the company to endure strong position.
Main collection and sub-collection: The company focuses on the customers, fashion and as well as the conformation of the range. The clothing collection is produced in Sweden with the help of hundred internal designers, fifty pattern designers, and nearly hundred buyers. H & M makes available two collections per year, one in spring and the other one in autumn. There are sub-collections within each season so that the customers can get something new in the stores. It is the purpose of the company to find the ideal time to order items.
Fashion for everyone: The company provides a wide range of fashion by using diverse concepts from classics and basics to the modern international trends. H & M sells clothes, accessories, and cosmetics. The range of the clothes consists of everyday clothes to the party wears. It has derived different concept for the kids, teenagers, women, and men (Turker and Altuntas, 2014). Each collection of the brand comprises a high fashion content so that the customers can combine garments with style.
Online shopping experience: The group has 3 sales channels, stores, internet, and catalogs. H & M started its online retailing in 1998 and have been continuously improving since then. The extension of the sales order and online sales is organized to counterpart the stores in the prevailing markets. The stores are the main distribution channels of the company (Iles, Preece and Chuai, 2010).
The best location strategy: The best location is the principle which is practiced by the company since 1947. But it has lost importance nowadays. The stores of the company are established in the prominent shopping streets and malls with the considerable customer flows. For instance, the H & M stores are located on Oxford Street. The company conducts a thorough investigation of the demographics and the acquiring behavior before establishing stores in a new market. It also conducts a local survey in order to successfully compete with competitors (Castelli and Brun, 2010).
Product quality control: Various quality control methods are conducted by the company in order to uphold the quality of the merchandise. It strives to ensure that the garments are manufactured by putting least impact on the environment and under the suitable working conditions. The brand is popularly known for the fast fashion and emerges fashion trends rapidly by creating the latest designs with the help of in-house designers.
In order to raise competitiveness, H & M is suggested to recommend some retail strategies in the future such as:
- H & M is suggested to offer several distribution channels to increase the sales and enhance its effectiveness. Firstly, the online shopping is a good way to sell fashion products of the company. There are also no limitations on the online shop locations of the company. It can help the company to broaden its demographic market in order to enhance its sales. The company can also make use of Automatic Vending Machine (AVM) in order to be successful. It is becoming popular buying behavior in the countries.
- H & M can launch family set outfit as a latent product to increase the sales. People nowadays love wearing family set outfits. These products can attract and target families. The family set outfit is a corresponding merchandise product which denotes that if parents select an outfit for themselves than they buy for their child also. H & M can also improve its product quality in order to be successful worldwide (Hines and McGowan, 2005).
- The effective promotion strategy can be used to introduce merchandise to the customers and attract them to shop the products. Mobile is a good option of media to promote the products. The messages can be transferred to a targeted group of the customers. The matrix (2 D barcodes) code is also a popular method of promotion. It is in the designs of squares, dots, and other geometric designs. The QR code is the common type of 2D barcodes. The quick response can be derived from it. It is commonly found in the magazines and the internet (Cerruti, Mena, Skipworth and Tavoletti, 2016).
- H & M can also promote the products by making use of pricing strategies. It can be helpful to the company as low prices can attract customers. The price deals are offered by the company for the short period of time. The loyal reward programmes can also be used by the company to increase sales effectiveness.
Guerrilla Marketing Strategies
The H & M group can make use of Guerrilla marketing strategies for its H & M brand. Guerrilla marketing is a perfect substitute to the traditional marketing. It is cheaper than the traditional marketing. It is an advertisement strategy used to indorse products and services on the streets and public places with little money. It is done at shopping centers, park or beaches to attract the attention of the people. The main objective of the guerrilla marketing is to attain supreme reach and brand engagement. It is a pocket-friendly campaign and targeted reach strategy. It is economical as well as effective and focuses on creating campaigns to reach customers through word of mouth and publicity. It includes fewer resources and big messages. The channels of communication used in the guerrilla marketing are word of mouth, social media, publicity and more. H & M does not do much to communicate it. It is just the campaign which can be implemented by the company and the rest of the communication is done by people who are involved in it (Cillo and Verona, 2008). The options of the guerrilla marketing strategies are:
Graffiti: H & M can make use of graffiti marketing at streets and passages as an enormous canvas. More covert operations can be used to make their mark wherever is wanted. The company is required to get approval from the property owner before going Monet on their walls.
Stencil graffiti: The stencil graffiti make use of patterns. H & M makes use of stencil graffiti to make repetitive works of the street arts. The benefit of this strategy is to generate multiple instances of art across different places in the short period of time. The stencils comprise simple designs and are tend to be small (Godart, Maddux, Shipilov and Galinsky, 2015).
Reverse graffiti: The reverse graffiti of guerrilla marketing strategy is recommended to use by the H & M in its place of adding to a surface. The company can eradicate dirt and grunge from a street to generate natural marking messages. A stencil is put on a footpath and then the exposed spaces are washed out (Wade, 2003).
Stickers: The innovative use of the stickers is a great guerrilla marketing strategy which can be very effective when executed in an efficient way.
Undercover marketing: The undercover marketing is also known as stealth marketing. This strategy can be used by the H & M to advertise products to the people without their knowledge that they are being marketed. The product placement is a part of the undercover marketing and features a product by making use of mass media or entertainment. It is the most effective way of raising awareness about the products of the H & M (Clark, 2004).
The guerrilla marketing strategies are:
Be in customers’ shoes: Before planning any strategy, it should be learned that how customers think and react to the certain incitements. Anything which is normal for the company can be special for the customers.
Be creative: H & M is recommended to create brand equity by launching the best marketing campaigns. The company is required to focus on the campaigns which have not launched yet.
Visuals: The visuals are handled 60,000 times faster than the text messages. The shapes, colors, abstracts added with a few words in the visuals. It has a psychological impact and is capable of attaining a great response from the customers. The visuals help to make the products feel by the customers.
Don’t tell everything: The messages can be left by the H & M to make them customers come back to it. It creates more engagement than telling everything.
Be responsive: The customers react, ask questions and respond in various manners. H & M is required to response them by telling about itself and what it can do to help them.
Stick with brand identity: H & M is required to stick to its brand identity and represent to the world creatively. The company should not do anything just for the sake of being different (Ye and Lau, 2018).
Offer gifts: H & M is recommended to make quality products by making use of guerrilla marketing strategy. The company should offer products which are desirable to the customers. The company can also offer products to the companies for free.
The above report reflected current and complex fashion market situation. It has examined H & M which offers fashion and lifestyle products. The environmental analysis is done which comprised SWOT matrix, industry analysis, portfolio, and strategies. The company has a wide product category which is offered by its nine brands. The environmental analysis reflected the market situations. Further, the recommendations are given which are categorized into general and guerrilla marketing. The guerrilla marketing strategies are suggested for the H & M which is one of the brands of H & M group. The strategies explained in the report are sufficient enough to explore its external environment.
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