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Case Study of The Growth Of H&M
Erling Persson established the business in Sweden in 1947 under the name "Hennez," which translates as "hers" in the local tongue, because at the time it solely offered clothing for women. After ten years, the business began to expand in Norway, a neighbouring nation, and began making clothing for men as well. His sons, Stefan Persson and Helena Helmersson, currently oversee the business.
Historical Background and Development
It can be studied under the following sub-headings
History − H&M (Hennes & Mauritz) is a Swedish multinational retail clothing company founded in 1947. It initially started as a women's clothing store and has now expanded to offer a wide range of clothing, accessories, and home textiles for men, women, and children.
Expansion Strategy − H&M has adopted an aggressive expansion strategy, opening new stores in new markets and entering new product categories. The company has also made strategic acquisitions, such as the 2007 purchase of the high-end fashion brand Cos.
E-commerce − H&M has also made a strong push into e-commerce, launching its online store in 1998 and now offering online sales in 64 markets around the world.
Sustainability − H&M has made sustainability a key part of its growth strategy, focusing on reducing its environmental impact, improving working conditions in its supply chain, and promoting a circular economy.
Fast Fashion − H&M is known for its fast fashion model, which allows it to quickly respond to changing trends and consumer preferences. The company has also invested in technology to improve the efficiency of its supply chain, enabling it to get new products to market faster.
Brand Recognition − H&M has become one of the most recognisable fashion brands in the world, thanks in part to its celebrity collaborations and partnerships with high-end designers.
Financial Performance − H&M has consistently posted strong financial results, with sales and profits growing steadily in recent years. The company reported revenue of more than SEK 230 billion (approximately USD 25 billion) in 2022.
Challenges − Despite its success, H&M has faced challenges, such as increased competition from fast-fashion and online-only retailers, changing consumer preferences, and the impact of the COVID-19 pandemic. The company has responded by focusing on improving the customer experience, expanding into new markets, and investing in sustainability and digital technologies.
Business Model
With more than 4,500 stores throughout 62 countries, H&M and its affiliated businesses employed about 132,000 employees as of 2015. It is barely behind Spain-based Inditex as the second-largest clothes retailer in the world (the parent company of Zara). With online shopping accessible in 33 countries, the corporation has a sizable online presence. Their business model includes the following
Direct Selling − Products from H&M are only sold through its chain of physical stores, catalogues, and online shop. As a result, the business is able to profit from capturing the entire retail margin and maintaining complete control over their value chain.
E-Commerce − In addition to its physical storefronts, the business also maintains an online store where clients can place direct orders and have their purchases delivered to their homes. Customers can shop for items in sizes that are out of stock in the physical store using the company's online store, as both offer the same selection.
Design − All H&M locations have the same straightforward, uniform store design. Simple racks and shelves are used to store clothes. Staff is there, but their primary purpose is to replenish racks and shelves rather than help clients with their shopping experiences.
Retail Stores − H&M has moved beyond just selling clothing to include accessories and shoes. Its clothing selection includes professional and casual items. As a result, H&M provides a comprehensive selection that enables clients to buy whole outfits from a single location.
Target Customer − All of H&M's products are quite affordably priced. This includes formal and business attire, for example, allowing retailers to reach a sizable consumer base with little purchasing power.
Marketing Strategy
H&M employed numerous marketing techniques that enabled the company to excel in the clothing retail industry.
Product Strategy − The business is known for its "fast-fashion clothing boutiques," which implies that they consistently present amazing apparel and accessories that are in step with current trends. Additionally, they are constantly ready to launch new product lines on schedule and offer European-influenced clothing in the American market because it promotes cross-cultural trends in this population. The goal of H&M's product strategy is to offer fashionable, high-quality apparel at competitive prices. The business maintains four product lifecycle stages: introduction, growth, maturation, and decline. During each step, a product manager studies supply and demand for H&M products and works to develop an efficient marketing strategy for the new product to help it compete in the market.
Price Strategy − Customers claim that some H&M clothing is extremely expensive to purchase since it is high fashion. H&M, on the other hand, concentrates on meeting customer needs by keeping labour and transportation costs as low as possible while still providing high-quality apparel. H&M clothing costs between Rs 399 and Rs 7999.
Promotional Plan − H&M created a multi-channel promotion strategy that includes advertising, sales promotion, and online promotion in order to increase brand awareness globally. Additionally, the business attracts clients by enhancing brand recognition and advertising discounted prices on the goods.
Place Strategy − By operating stores in numerous locations throughout the globe, H&M created a solid connection with its clientele. H&M manufactures its low-end products in Asia while producing its high-end products in Turkey, and it sells them in its 5000+ owned stores across 73 nations.
Cost leadership strategy − H&M delivers stylish clothing to large markets at a cheap price that is set in accordance with the going rate for a particular specialty. Instead of setting a high price to generate a large profit margin, the cost leadership strategy concentrates on working effectively to increase their market share.
People Strategy − H&M consistently places a focus on the demands of the client and offers them stylish things that are popular at the time.
Secret To Its Success
The fast-fashion business model of H&M is largely responsible for its growth. Fast fashion depends on transferring a sizable quantity of goods from the designer table to the showroom floor in the shortest amount of time and at an affordable price. Their items are hip and affordable, almost throwaway, and are marketed to young, urban consumers that care about fashion. They have unsurprisingly received some criticism for this from proponents of ethical and sustainable consumerism.
High product turnover and continuous restocking of the product pipeline with the newest trends are how fast fashion shops generate their revenues. The business model of H&M also depends on a strong marketing group that can swiftly ascertain what the target market wants and get it into the supply chain. After Inditex, the company that owns the Zara stores, H&M has developed into the second-largest fashion retailer in the world. The sustained success of both companies hinges on their use of "fast fashion," which is based on recognising trends as they emerge and producing low-cost versions of them as soon as feasible.
Conclusion
H&M is a massive global player in the fashion industry with a huge market share. They already have a fantastic business strategy and marketing plans in place, and they are doing a great job putting those plans into practise with digital marketing. H&M has enhanced its strategy and continuously changed its business model to keep up with the times in response to the escalating rivalry and rise of microbrands and websites. All of this has contributed to H&M's spectacular growth.
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