H&m Retailing Strategy Case Study

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The H&M Group consists of several clearly defined fashion brands – each with their own unique identity. All brands share the same passion for fashion and quality and a drive to give the customers the best value for money. The brands are: COS, Cheap Monday, Monki, H&M, & Other Stories and Weekday. (H&M, 2016)

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Existing Retailing Strategy

The existing retailing strategy of H&M is described by Petro as a combination of its main competitors’ strategies. H&M takes the advantage of the fast fashion concept that is short sighted and created by Zara and the longer perspective that Uniqlo uses (Petro, 2015). H&M itself only promote the long term objective and wants to be portrayed as sustainable and guided by their core values in all actions. Through their six brands, their physical stores and online markets, H&M is one of the world’s leading retailing corporations and it wants offer a dynamic and workplace with shared goals in all markets. (H&M, 2016)

The retailing strategy of H&M can be described by the principles stated by deWit and Meyer (2014), the so-called outside-in and inside-out strategies. When analyzing H&M it is clear that the corporation has characteristics from both mentioned strategies. To some extent, one can claim that H&M is using the inside-out strategy since they are using the expertise and knowledge collected by the H&M management when expanding the newer brands to new markets. On the other hand, the strategy is similar to the outside-in strategy. H&M Group is responding to the demand of the market and criticism directed towards them when it comes to sustainability and climate awareness by developing sustainable collections and projects financed by the H&M Foundation. One can also say that H&M in a way are responding to the demand for an extended e-commerce in different markets as well as using acquisitions to fulfill the demand for other brands and identities.

According to the paradox of responsiveness versus synergies, described by deWit and Meyer (2014) the H&M approach is clearly identified as more responsive than synergetic. Even though synergies always are highly recommended they always come in second when there is a conflict of being either responsive or synergetic. One example of this could be seen in the logistics of the different brands where brands to a large extent are shipped separately in order to be more flexible rather than coordinating the transports to save money.

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Target Customer

The typical H&M customer is a female, aged 18 to 24 years old, who feels the importance to look good (Tobin, 2015). The products offered by H&M applies to a wide range of consumers though, both men and women as well as different age categories. H&M has clothes especially for women, men, kids and teens as well as for different occasions and working situations. On the other hand, Research and Markets (2007) describes the H&M customer as a mainstream consumer that demands low prices and high fashion. The customers are as well characterized as loyal in a sense that responds to H&M’s efforts to try to change their clothing habits and by doing so, H&M is perceived as energetic and enthusiastic.

By introducing designer collaborations H&M has been able to satisfy a wider range of target customers, in this case, customers with high fashion awareness. H&M have been collaborating with for example Karl Lagerfeld, Stella McCartney and Kenzo. Furthermore, the corporation itself has been able to diversify its targets customers by the acquisitions of the newer brands like Monki and & Other Stories by providing alternative styles and diverse types of qualities and price ranges compared to H&M.

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Market Positioning

H&M is using several methods to strengthen their brand and take market shares in the markets that they operate on. One successful approach has been the designer collaborations mentioned earlier, in recent years that have got a lot of attention.

In the latest annual report from 2015 CEO Persson reveals that H&M made one of their largest investments in 2016 in broadening the product range to build an even stronger brand and a further expansion. Also investments in IT have been made to also strengthen the brand online and ensure better service to customers. More brands are planned to be added in the future and the positioning of COS and & Other Stories are highly prioritized in the group. These smaller brands show a high potential and a stronger position for each brand will be achieved by strengthening the unique identity of each brand. (H&M, 2016)

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Retail Format

The retail format is said to be “an optimized mix of great stores and e-commerce”. Even though H&M were late to the mobile market they are one of rather few successful online retailers. The reason for the late e-commerce, in the U.S. the e-commerce started as late as in 2013, is according to Petro because H&M wanted to build many successful stores first that could lead the potential e-commerce shoppers to the website when it later was introduced (Petro, 2015). The number of e-commerce markets will continue to grow during the years to come (H&M, 2016). Some of the brands within the group use other retailing firms to sell their products, e.g. Monki sells their merchandise online through the website Asos in order to reach more potential customers. (Andersson, 2013)

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Competitive Advantage

The competitive advantages of H&M group are many and of varying impact to the group. The most obvious ones will be summarized below.

First of all, H&M has managed to create a good mix of flexibility and high speed in all operations of fast fashion as well as continuity and a long term perspective. This allows them to be agile enough to catch up on new trends and collaborations and still satisfy the mainstream customers. Also the mix of physical stores and e-commerce markets and their interaction have been highlighted as a competitive advantage. (Petro, 2015)

H&M have good IT-systems that connect H&M with their partners and suppliers in an efficient way to be able to act quickly and get new clothes in the stores very fast if needed. The IT-systems enable wise use of the customer data that are analyzed and used