H & M Background
Erling Persson founded H & M in 1947 in Sweden when he opened his first stiore, which sold womenswear under the name “Hennes” (Swedish for hers). His initial business concept focused on o n offering “fashion and quality at the best price” and H & M has stayed true to this concept concept ever since. Over the last 64 years, H & M has evolved significantly. With acquisition of the hunting and fishing equipment store Mauritz Widforss in 1968, the company changed changed its name to Hennes & Mauritz and expanded its products portfolio to include menswear and childrenswear. Today, H & M offers a variety of different products within clothing accessories, shoes, cosmetics, and most recently interior textiles with the launch of H & M home. H & M is a global fashion retailer with more than 87,000 part and fulltime employees. The company distributes its products through more than 2,500 stores across 44markets in Europe, North America, Asia, Middle East and Northern Africa. The H & M Group includes H & M and H & M Home as well as COS, Monki, Weekday and Cheap Monday — Monday — independence independence brands that express their own sense of fashion. Germany is H & M’s largest market, fllowed by the US, France and the UK. Looking forward, H & M sees great potential for continued expansion in existing as well as new market. H & M, COS, Monki, Cheap Monday Monday and Weekday will all continue growing through more stores but also on digital platforms such as H & M.com, mobile apps and social media. In some markets H & M is collaborating with franchise partners, but franchising is not part of the general expansion strategy.
H & M’s Business C oncept
H & M’s business concept is to give the customer unbeatable value by offering fashion and quality at the best price. H & M’s own designers interpret the latest fashion trends and create collections that are accessible to all. They ensure the best price by:
Having few middlemen
Having a broad, in — depth knowledge of design, fashion and textiles
Buying the right products from the right markets
Being cost — conscious at every stage H & M is driven by seven important core values:
Keep it simple
Straight forward and open-minded
Constant improvement
Entrepreneurial spirit
Cost conscious
Teamwork
Belief in people
Growth Target
H & M’s growth target is to increase the number of stores by 10-15 percent per year, and at the same time increase sales in comparable unites. This growth, which is entirely self-financed, will proceed with an emphasis on quality, sustainability and continued high profitability.
Product Offering
H & M offers a number of different concepts under its parent name. these concept are collectively sold in H & M stores: Trend, Everyday, Divided, L.O.G.G., and Mamme to name a few. The concepts are diverse and aimed at different target groups across taste, sex and age groups. Any given H & M store sells a combination of these concepts and the specific store offering is adapted to demand in the specific location: e.g.: The Trend concept is the most fashionable, aimed at more high fashion consumers, and is therefore only offered in the largest flagship stores in big cities. H& M is constantly looking for new product categories and concepts that can complement the existing product portfolio and create additional value for its customers.
The Brand
H & M’s business idea is to offer fashion and quality at the best price. The company has true to its initial business concept and brand offering, which has brought the company, thought half a century and placed H & M in the top of the global retail st
industry. The consultancy firm, Interbrand, ranked H & M as the 21 most valuable global brand with an estimated brand value of USD 12-16bn in 2010. This makes H & M the highest ranked fashion retailer in the survey. The brand has proven its strength with the company emerging from the financial crisis in a stronger position in most of its markets. The Country Manager for H & M in D enmark, Christel Friis-Mikkelsen, explains: “We have a strong brand with a broad appeal in upturn as well as downturn periods. This makes us very attractive for customers. We have a long history in many markets and a high penetration rate, and this has est ablished high brand awareness.”
All branding activities aspire to create consumer preferences for H & M’s brands by optimizing the complete customer experience. The customer experience is best defined as the collective feelings a customer holds when buying an H & M product. Every parameter is carefully planned and designed to provide t he customer with the feeling or fashion at the best price without compromising garment quality or production standards. Since H & M relies on production outsourcing there is a solid focus on keeping up standards for the environment, the workers in all production facilities and to make sure that competitive prices are not achieved through exploitation of these resources.
All H & M advertisements are produced centrally at the head office in Stockholm. This means that the advertisements are largely the same in all markets, but the media mix is adapted to local needs and circumstances. The centralized, organizational structure ensures a uniforms branding of H & M in all markets. This means that customers will get the same H & M experience whether they enter a store in Stockholm, San Francisco or Shanghai.
While H & M engages consistently with consumers on Facebook, YouTube and Twitter to drive traffic to its online stores as well as the physical stores which continue to be H & M’s most important channel of communication as they give customers an immediate sense of what H & M is all about. H & M uses its online media more and more to communicate its activities externally.
H & M’s current brand portfolio is compried of brands with modern and trendy fashion profiles in the lower middle and middle range of the fashion retail i ndustry.
But H & M has recently started to broaden its upscale offerings by creating luxury collections in collaboration with guest designers such as Karl Lagerfeld, Stella McCartney and Jimmy Choo. This initiative is pushing the H & M brand towards the higher range of the industry. With the addition of Luxury products the company might be facing a challenge concerning which way to focus its brand in the future. However, H & M does not feel that these new initiatives conflict with the company’s existing offering. Christel Friis-Mikkelsen explains: “We are offering high-end designer clothes but at H & M price. It might be that the prices are higher than traditional H & M concepts, but we are still providing our customers with a luxury designer product at a significantly lower price than the original guest designer’s brand.”
H & M Position
H & M ranks as the second largest fashion retailer in the world (measured on annual sales) only surpassed by Spanish Inditex and closely followed by American GAP. However, this ranking dose not gives an accurate picture of the competitive landscape, which is highly influenced by regional and local retailers. Even though minor, reginal competitors are unable to compete on global sales figures; they can still affect H & M’s position in a given market. This means that H & M’s competitive landscape differs significantly across its markets. In new and unfamiliar markets such as the Middle East and South-East Asia, local completion, low brand recognition and unknown consumer preferences are some of the challenges that H & M faces in it s attempt to successfully establish itself. In established and more familiar markets such as Sweden and Western Europe, H & M holds a strong position and instead has to focus on maintaining its position in markets with low growth rates.
