Nobody immediately considers Sweden as a country well known for its fashion, but its Hennes & Mauritz retailer has profitably dominated the globe, with almost 1,000 stores in 20 countries. It is now Europe’s foremost clothing merchant, and at present appears resistant from the anguish confronting other sellers. Even though Europe is the chain’s domination, H&M is one of the few fashion retailers to have created a flourishing hold in the US market, with additional outlets by the end of the year, and more planned thereafter.
A large deal of H&M’s accomplishment can be accredited to the aptitude of its internal designers, examples of piggy-backer style, swiftly acknowledging trends then acting on it, and being able to turn out patterns that look very much like what other expensive designers are creating. This might appear a little immoral from a fashion standpoint, but H&M supporters don’t care. In fact, they some what are pleased in thinking they got one up on the head honchos of fashion.
Another important draw of H&M’s retail strategy is the stores get new merchandise daily. Much of the new stock comes through a rotation system between stores experiencing runs on certain lines. Sources report that H&M “turns over its entire inventory a whopping eight times a year.” Furthermore, they are recognized to have one of the best rotation cycles in the business, turning “merchandise from drawing board to store shelves in as little as three weeks.”
As mentioned before, H&M’s success is its ability to quickly recognize fashion trends and get them into its product line. Its merchandise is designed by an in-house staff of more than 60 designers and is sold under more than 20 H&M labels. However, H&M doesn’t own any real estate. Instead, the company believes it should concentrate all its resources on retailing. This could be problematic if the owner of the property finds a higher bidder; this could force the retailer to move its business outside of a ‘prime’ area. Another concern is that the company does not have any manufacturing facilities of its own; the clothes are made in Bangladesh, China, and Turkey. Some European countries that have been known in the past to have sweatshops filled with children laboring for hours. Once this company drives full force into the United States, it only takes one environmentalist to get wind of the manufacturing plants to begin detrimental allegations. The company would most likely deny such an accusation and might be innocent, but often “corporations involved are unaware because they buy from suppliers or brokers.”
Aside from these possible threats, H&M persists to make the journey across the Atlantic. However, the United States in general, and New York City specifically, can be harsh terrain for European merchants, as viewed by the 1994 departure of Galeries Layfayette , the French department store chain. It is not like jumping across the line into a different European country, where the merchant can depend on its previously developed stock network and its reputation with patrons; in the states, H&M is gripping to a tiny association and is far from home. H&M will need to splurge millions of dollars to make its name identification, particularly if it anticipates competing in a city by now overflowing with discounted fashion.
H&M will discover itself contending with many American retailers. To compete productively, the company will have to start by importing large amounts of inventory to create an impression on the consumers. In the long run, considerable development will be necessary. They will want to attain some pretty serious scale. Other challenges exclusive to the U.S. retail market include customers’ obsession to marked-down merchandise; H&M may discover it has to open stores in factory outlet centers to move unsold products at low prices.
Any of these are possibly opportunities or threats for H&M and none of it will be a small task in itself for the company as it makes its voyage across the ocean. The U.S. financial decline is certain to suppress H&M’s numbers for the immediate future, although, as a discount chain, it should progress better than many, as well as its competitors. In reality, reduction in spending practices may create the exact sort of client H&M aspires to allure; those looking to look as good as they looked in the boom years without the boom.
www.heraldonline.com “H&M Marketing Strategy.”
“Best Managers”; Business Week; Stefan Persson, Hennes & Mauritz; New York; Jan. 13 2003, pg. 63
www.rachel.org Rachel’s Environmental Health News. “Assessing Business Impacts.” July 1994
www.hoover.com “Companies that couldn’t make the voyage.”