Current business situation of H and M

Hennes and Maurits was founded in first 1947 by Erling Persson and later acquired Mauritz Widfoss in 1968. It really is a Stockholm- centered fashion company. After the business success at home, in 1964, Hennes launched its first international store in Norway, and three years later H&M entered the UK market and started her expansion strategies. With the mean time, H&M has more than 1600 stores in 32 countries and had become the 3rd greatest clothing retailer on the planet.

Hennes & Mauritz (H&M), the probably most legendary fashion retailing company lately, has spared out branches all over the world. In Europe, North America, Asia and even Middle East you will get H&M's stores. After achieved successful sales goal and popularity, H&M has got into a very challenging market, Japan, by starting its first shop in Ginza, Tokyo. Although at the start H&M has appeared to get great response and do a good work, Japan is definitely struggled with financial recession and continues sales drop. Could H&M keep its unbeatable data in Japan? The followings should analyse and recommend the retail strategies in Japan market H&M should take.

"Fashion and Quality at the best price" is the model of hers. H&M produces Women, men, youngster and children wear. Besides clothing, H&M also has its own brand in accessories, footwear and cosmetic makeup products. The "King of Fast Fashion" has its production office buildings in Asia and Europe to keep the purchase price down.

Business situation is definitely crucial for a company's success or inability. Both the global situation and Japan's market, there are factors that favor or discourage business sales. In the global level, the method of fashion retailing has been changing in recent years. Firstly, the affects of new brand or store string are growing in the international market. For samples, store chains like Zara and Difference, they make hugh gains and arouse publicity in international level. They gained reputations and captured raised percentage of market shares. Despite the earlier fashion industry that largely the high fashion merchants could gain their influences, nowadays string stores that sell avenue fashion for middle or lower classes can get their plaes in the style market. And it shows different fashion businesses can gain market stocks and impacts in the fashion industry. Subsequently, the changed life style of the clients of the style companies also gives opportunities. Nowadays fast fashion is prevailing and folks are receiving more conscious and paying more attention to fashion. The market for fashion industry is growing. More important is that customers want stylish items with lower price alternatively than expensive high couture, as they wish to change their clothing less than 30 days. That's the reason fast fashion is getting popular. Thirdly, e-market is one of the fields that fashion retailing organizations paying affords in. The sale in e-market is growing, as the sales in internet has no geographic boundaries. Also internet is an excellent media to market its company and products.

On the other hand, business of fashion companies also encounters an extremely serious problem -- economical tsunami. The economics tsunami affects customers' confidence in buying and purchasing. Also customers have a tendency to save alternatively than spend. The sales volume of many firms fell significantly within 1 or couple of months. More than that, the sales volume predicted to drop continually in next 1 or couple of years. Facing the monetary difficulties and negative information about the market's future, it further discourages the customer's buying behavior also the business sales.

In Japan, the business enterprise situation is start described as challenging and introduction H&M. Japan is a fashion capital in Asia and even the world. People especially youngster group paid much attention in developments and fashion. They tend to spend much on clothing and other family item to fashion. Because of the great fashion recognition, fashion organizations and chains can get ideal sales in Japan usually. Besides, Japan is the model and movements for the neighboring in countries, for example Hong Kong, Taiwan and South Korea. Success in Japan means easier entrance into the marketplaces in these Asian market segments. Moreover, statistics show that the men's wear market in Japan is great. In the past years, men's wear sales were comparable with women's wear. In 2007, men's wear sales were above the sales of women's wear. It implies that the men's wear market is in great prospect of firms to enter and provides great opportunities.

Although Japan seems suitable for fashion companies to get in, there're also shortcomings of Japan market. Japan encounters economic downturns in recent years. Before 10 years were the recessions of Japan's current economic climate. The sales volumes decreased and market for clothing and footwear declined. In the past 24 months things had been once better, however however there are global monetary tsunami. International predicts that in future years Japan's economy will stay in its downturn. Subsequently your competition between firms in Japan is ardent. As stated above, Japan's market is a paradise for old and new fashion brands. It allures many international brands for cases the high brands like Marc Jacobs, Gucci, Hermes and also having like Zara, Distance that operates stores in methods that very much like H&M. The competition between brands is keen. Also the local brands in Japan like Uniqlo abstract high market shares. For the coming into of new brand, it's important that one may stand for the harsh competitions. In enhancements, the maturing problem is another matter for the marketplace. As fashion is definitely viewed as the interest of youthful people, the aging problems directly affect the sales of fashion companies.

COMPETITOR ANALYSIS

Company

H&M

Zara

Gap

Uniqlo

Start from

Sweden, 1947

Spain, 1975

America, 1969

Japan, 1984

employees

68, 000

---

150, 000

---

Target market

few middlemen

buying in large numbers

having comprehensive knowledge and understanding of textiles

few middlemen

buying in large numbers

having in depth knowledge and understanding of textiles

few middlemen

buying in large numbers

having comprehensive knowledge and knowledge of textiles

few middlemen

buying in large numbers

having comprehensive knowledge and understanding of textiles

price

Low

middle

low

low

Growth strategy

Fashion and quality at the best price with own design

increase the number of stores

zero advertisement

Increase the amount of stores

Design a new style every two week

A lot of brand inside

Low advertisement

Fashion and quality at the best price with own design

Cooperate with design and other brand

Sponsor some pastime team

Total stores

1, 600

3, 100

3, 139

800

The variety of Japan stores

4

30

130

750 (99in Tokyo)

Start in Japan

9. 2008

1998

1995

1984

Stores size

1, 000

square meters

1, 500

square meters

1, 000

square meters

Figure 1

Refer to Figure 1, evaluation is below.

As we realize, H&M is an enormous brand in the world. It started out at 1947 in Sweden. It offers 1, 600 stores in 32 countries H&M's major opponents are Zara, Uniqlo, and Space in Japan. They can be the complete well-known brand on the planet.

Although H&M's record is much longer than them, it' not suggest H&M is much better than them. Zara and Distance have significantly more stores than H&M, but their target market is virtually identical. , They also concentrate on for a few middlemen, people who can purchase in good sized quantities and having comprehensive knowledge and understanding of textiles, so that H&M have a huge challenge. Their price range also between middle to low, it can make more people find the money for it. H&M's absent is that fashion and quality at the best price and boost the amount of stores. However, Uniqlo likewise have the same missing, it want to give a good customer support at the best price and own design. Furthermore, Zara can design a fresh thing every fourteen days. It could design 10, 000 produce each year, it much fast than H&M. Their stores also increase very fast.

H&M only have 4 shops in japan, but Zara, Distance and Uniqlo have a lot more stores in japan, especially Uniqlo. Additionally, they have an extended background in Japan, but H&M just go into Japan market in 2008. It is a large problem for H&M, its rival have significantly more stores and steady customer.

ANALYSIS ON H&M EXISTING MANAGEMENT STRUCTURE

H&M has an obvious hierarchy composition as shown in Amount 2

The Annual Basic Reaching (ACG) is the best decision-making body where shareholders exercise their rights to make decisions for the company. Board of directors manages the company with respect to the shareholders. The board gives guidelines and instructions to the managing director. Hence, the managing director performs daily management as directed by the panel. Underneath, the executive managing team and country professionals are responsible for central functions and sales countries respectively.

Figure 2. 1

In most conditions, large corporation generally has a complicated structure. Here, H&M has a matrix organization which is a mixed form of useful and divisional structure. Typically, matrix business structure has two axes.

"Using one axis of the matrix is a variety of functional categories and on the other will be the products or projects with a administrator responsible for each. " (Boddy, D. , p246, 2005)

In the truth of H&M, the project is prepared by areas and each region has a number of stores. There's a supervisor in each country and he/she is responsible for success in their country and in that way comes with an overall responsibility for all the functions within the region. (refer to Determine 2. 1)

On the other hand, H&M also plan and focus on their tasks in task and team bases. By using these procedures, managements not only organize their work more adaptable with lower costs, but also giving out a faster response for his or her project or activity. (Boddy, D. , 2005) Here the executive management groups of H&M dependable for every single function are accountable for the results of work within their function in each country. What is more, specialists from various departments also helped bring together to create a project team and focus on different tasks.

Figure 2. 1

Regarding the matrix composition adopted by H&M, some benefits are summarized as follows: simplifying the creation of appropriate regimens and control systems, smaller devices enable closer guidance, higher overall flexibility, faster response, permitting comparisons between different companies within H&M. However, this might lead to a substantial drawback, which is low uniformity. Since there is high division of departments and regions, it is hard for the central management to regulate the management and procedure of different items.

To enhance uniformity throughout the whole company, management documents like recommendations and manuals are shipped within the business. In addition, the code of ethics permeated the whole company, describing just how employees should react with regards to the business and the outside world. For store procedures, detailed instructions are also directed at store staffs in order to control daily work in the stores. Though guidelines and guides are compiled by central departments, in 2006, inventory of the guidelines was carried out within each office so as to check any rules should be modified or created. This revealed respect towards each models' opinions. Analysis and changes of suggestions and manuals lead to better efficiency of work.

To further describe H&M's management composition, the amount of centralization could be reviewed. The code of ethics, interior policies, and guides are manufactured by central management. Important decisions that are strongly related to the company's revenue are also made by the very best management. Purchasing is centrally structured by the top office in Sweden as well. From the above, we're able to see high degree of centralization is exercised in H&M. Nevertheless, H&M has a decentralized system. There are 20 production office buildings working with 800 suppliers, and 20 country offices within 33 sales countries, handling all business affairs for the spot it responsible for. Planning and arranging, such as store procedure, advertising are completed by professionals.

There are certain advantages and disadvantages of H&M's decentralized system with centralized management. From the good side, uniformity can be enforced through clear and rigid regulations and rules. Besides, this permits higher overall flexibility in tackling small problems in each section and region. On the contrary, higher threat of unsuitable items for the sales countries may be resulted due to centralized buying decision in Sweden. In Japan, individuals are quite different and requiring on quality clothing which usual H&M products might not exactly satisfy them enough. In order to avoid such problems, more powerful research and country-oriented solutions are needed. It is suggested that research or buying teams positioned in the respected sales areas could be setup to execute closer watch on developments and interpersonal affairs that could modify sales greatly and too quick before response come from the head office.

ANALYSIS ON H&M EXISTING RETAIL STRATEGIES

H&M is a very successful and expansive Swedish fashion group in addition to a famous company in Japan. H&M's retail strategy has been growing in several aspects.

The Best Price Strategy

H&M aims to provide the customer unbeatable value by offering fashion and quality at the best price. It's been developing the very best Price Strategy. It retains the best price by restricting the amount of middlemen, buying in large volumes, relying on our in-depth, extensive expertise within the look, fashion, and textile companies, purchasing the right goods from the right creation marketplaces, being cost-conscious in any way levels and having useful circulation systems. In Japan, the merchandise price of H&M is leaner than others. Most international brands come to Japan and demand more than at home. H&M is looking to match global pricing. So now H&M is one-half the price tag on Zara in Japan, thereby making almost every other Japanese merchants look relatively expensive. If Japanese consumer spending is constantly on the decrease, this will play into an even more robust position for H&M.

Main Collection & Sub-Collection

The buying function focuses on customers, fashion and composition of the number. H&M's clothing choices are manufactured in Sweden by around 100 inner designers, 50 pattern designers and around 100 buyers. It manages with two main collections per 12 months, one in spring and coil and one in fall. Within each season, however, there are a number of sub-collections so that customers can always find new goods in stores. The purpose of the business is to get the optimal time to order each item.

Fashion For Everyone

H&M offers an array of fashion using various concept, from modified classics and fundamentals to clothes that indicate the latest international styles. Furthermore, they sell clothes, accessories and makeup products. The putting on range involves everyday clothes to partywear. To make things clearer for the customers, they have divided up a variety into a number of different concepts for women, men, teenagers and children. The clothes likewise have a high fashion content within each collection, so that customers can certainly combine different clothing and find their own personal style.

Online Shopping Service

H&M have three sales channels, stores, the web and catalogues. In 1998, H&M began its "shopping online" service which has since been continuously improved. A significant expansion of mail order and online sales is being prepared to accentuate the stores in the existing marketplaces. Stores continue, however, to be the primary distribution route. The strategy behind the owning from it is the fact that H&M can maintain control of the enlargement strategy and of business locations. But Japan does not provide online shopping service, the sales channel is thin.

The Best Location Strategy

The Best business location is a firm basic principle of H&M since 1947 which is less important nowadays. The H&M store is currently a well-established presence in most visible shopping roadways with considerable customer moves around European countries. In London, for example, they can be found on Oxford Streets. H&M opened the store in Japan in Ginza, Shibuya and Harajuku. Before building stores in a fresh market they carry out a thorough research of demographics and purchasing behavior. They also carry out a local review of the shopping areas and shopping centres, record their size and where their opponents' stores can be found.

Product Quality Control

In order to keep the fine quality of products, they perform quality handles. They strive to ensure that clothes have been created with the least possible impact on the environment and under acceptable working conditions. H&M is recognized as the king of "fast fashion" and places emerging fashion trends, quickly creates knock-off designs and variant using 100 in-house designers. In Japan, the clients are nit-picking and require an exceptionally high quality fashion. H&M may well not fulfill their needs.

OVERALL SWOT Research OF H&M

The SWOT research is the advantages, weaknesses, opportunities and threats of the company. A SWOT analysis actually has two parts and both are evenly significant. Strengths and weaknesses are the internal research; the opportunities and threats focus on the exterior environment. Internal is about the information about company's market segments, their competitor's relative weaknesses and talents as well as the industry as a whole. When doing an external situational evaluation, the business' customers, market and opponents are analysed.

The overall SWOT evaluation included the global situation and Japan environment of H&M. Firstly, strengths and weakness of H&M is talked about as below.

Strengths

H&M was proven in Sweden in 1947; it has a long history and is around 62 years. Days gone by 62 years, H&M performed a great development worldwide. In '09 2009, there are 1, 700 stores propagate over 33 different countries and markets, and make use of over 73, 000 people. H&M offer each country exclusive preferences and needs. Also there is certainly exclusive clothing designs for online stores, and this system is provided in a few of the Europe, such as Austria, Denmark, Finland, Germany, Netherlands, Norway and Sweden. Informational website is also one of the advantages of H&M, everything about H&M shown in the state website. It really is convenient for customers to obtain the hottest issues of H&M, and also provides useful and modified information to all or any types of users. H&M Journal provides a good idea of how H&M views fashion. It includes readers a mix of fashion, motivation and the latest lifestyle tendencies. It is given four times per annum and is aimed similarly at customers and staff. Like all H&M's communication, the newspaper is seen as an invitation to H&M. It is important for building the brand in the long term and it is also on the H&M website.

Besides of the exclusive online shopping, H&M also collaborated with fashion designers, creator brands, fashion models and celebrities to provide customers the exclusive collection, such as Karl Lagerfeld, Stella McCartney, Viktor & Rolf, Kate Moss and Madonna. On 20 September 2005, H&M declared they have dropped Moss for the marketing campaign of their fall clothing collection, stating that her image was "inconsistent with H&M's clear dissociation of drugs" in light of recent medication allegations. H&M performed worried about the modern culture. In November 2008, Comme Des Garons, a significant body in modern fashion - Japanese creator, exclusive collection for H&M sold in 200 stores worldwide, including Japan, Hong Kong, US and UK. One of many information in modern fashion, Kawakubo has created a full men's and women's collection for H&M, filled with accessories and a unisex fragrance.

H&M provides variety in fashion, different sorts of clothing and accessories which could easy for customers to complement up with. The stores are refreshed daily with new fashion items. As with H&M's clothing traditions, the idea over the Home collection is the fact consumers combination and match items and increase their existing interior decoration and colour strategies. The first home collection will be available from February 2009 in the market segments: Sweden, Norway, Denmark, Finland, Germany, Austria and the Netherlands. Cushioning cover and bed linens sets will be the key portions. The materials are mainly cottons, linens, viscose-cotton mixes and organic and natural cotton.

The long-term investment in organic cotton is continuing at H&M, is designed to raise the use of organic and natural cotton and the introduction of new inexperienced materials such as recycled cotton, wool and polyester. H&M offering apparel that are both stylish and environmentally appropriate. H&M had an excellent response with their eco-fashion, which ultimately shows that the clients care about both environment and design.

Weaknesses

H&M business theory is to provide the client unbeatable value by offering fashion and quality at the best price. When comparing with competition, the garment quality of H&M is doesn't at advanced. Since all stock is shown on floor, there is absolutely no backup stock for customers. The customer service is relatively low if the customer cannot get any help from the salesperson. For the garment creation, H&M will not own any factories, but instead purchases its goods from around 800 indie suppliers, mainly in Asia and Europe. The catch is that H&M cannot get tightly controlled to the circulation network to get new product to the stores. The web shopping store is merely provides in Europe, such as Austria, Denmark, Finland, Germany, Netherlands, Norway and Sweden. The web store cannot gain worldwide customers attention. In Sweden, Norway, Denmark, Finland, holland, Germany and Austria H&M offers fashion by Internet and catalogue sales. For the employees, there is not a fundamental respect for the individual, which pertains to everything from good pay, reasonable working hours and flexibility of association to the possibility to increase and develop within the business.

Opportunities

It is the positive towards future extension of H&M and the company's business opportunities. In the past couple of years H&M has been tinkering with new fascias including market company, which it debuted on London's Regent Street in March 2007. A second company store will open this week in Westfield and the shop thinks there are further opportunities for the offer in the united kingdom. The 14th store in European countries will open next planting season in Paris. Since H&M has agreed upon a contract for its first store in Japan in end of 2006. The store is opened up in 2008 November. "It has been H&M's aspiration to open up in Japan. " says Rolf Eriksen, CEO H&M. There will be more stores in Japan in the future. H&M has got into into franchise agreement with Match Retail Ltd. for store opportunities in Israel. The first H&M store is planned to start during 2010.

H&M provides online shopping in a few European countries, but still hasn't announced strategies to take action in Asia, THE UNITED STATES and Midsection East. It really is a sizable market for H&M. There can be an opportunity to setup online store in those countries.

The designer cooperation is the most important for H&M. The crossover series with the famous artist have made a stir popular industry. Many designers are prepared to cooperate with H&M, see it as a stage for demonstrating their new design. It brings the new notion to the H&M product and enhances their product competitive. H&M crossover with Matthew Williamson do a springtime collection for 2009.

As japan has a strong interest in fashion and Japan is a major fashion market. Japan fashion market is maturing, with competition between global companies intensifying in the Japanese market and with consumers becoming more and more selective about products that they purchased. There is growing presence of shopping centers and fashion malls in and around cities providing consumers increasing selections of locations for shopping. That is creating change in the composition of japan fashion market as well as consumers' buying patterns.

Threats

There will be a keen competition between the similar style rivals, such as Zara, Difference Inc. , and Uniqlo in Japan. And, the changes in consumer conducts are also the risk of fast fashion. "End of fast fashion" as customers allegedly switches to less throwaway items. Fragile holiday sales, economic downpour sales will be conducted in H&M stores. There will be frantic battles over products, the indegent quality contend with the blissful luxury goods; fast fashion compete with high fashion.

Exchange rate fluctuations are strongly related to the export levels of firms. Since there are a lot of stores all over the world, the rate changes is a large issue of the business.

Internationally, H&M has experienced some sales declines lately and sales over the business were two % down 12 months on time at set up stores in September. However, refuses to declare any serious risk to H&M's success, stressing again its sound offer. It is not about value, but affordability and H&M think they can be unique when it comes to combining price, quality and fashion. It's the responses that H&M get from customer which is their success factor.

3 RECOMMENDATIONS

In order to raise the competitiveness of H&M in Japanese fashion market, some retail strategies are advised. We offer some suggestions predicated on 4Ps.

Place

For place aspect, it is suggested that H&M should offer various distribute channels for raise the sale and enhance its competitiveness.

First, providing On-line-shop is an excellent way to sell H&M products. Matching to Mark Hogan, GM Group vice leader said, Japan is the Internet giant of Asia.

There are 47. 08 million Internet users. 62 percent of them use e-commerce. It can prove that online shopping is a favorite shopping method in Japan. Besides, there are no restrictions of online retailers' locations. This means that even there is only 1 H&M shop in Tokyo, people who live outside Tokyo can still buy its products although online shop. Thus, On-line-shop can help H&M broaden its demographic market to increasing its sales.

Second, providing Auto Vending Machine (AVM) can help H&M to reach your goals. Japanese demand for automation. According to the Japan Vending Machine Manufacturers Association record, there are 5. 51 million machines in Japan in 2007, Japanese spend nearly 7 trillion yen (around US$ 58 billion) per annum by shopping though AVM. It really is a popular buying action in Japan.

Third, it is suggested that H&M should allocate AVM at Railway channels. Regarding to a study about Japanese Commuting conducted by japan-guide. com, coach (JR) is the mostly used of transportation for commuting in Japan. 53% of students and 48% of company staff mentioned to commute to institution/work by coach or subway. Students and staff is the main focus on of H&M. Thus, the advice is a fabulous idea for H&M certainly.

Product

For product aspect, release family-set clothing is a potential product for increase the sales. Most Japanese love wearing family-set attire. Providing family-set attire can appeal to those family focuses on. Besides, family-set clothing is complementary products product. It means that if parents choose and decide to buy an outfit, they should but a different one with their child. The deal can increase doubly.

Second, H&M should improve its quality of products in order to succeed in Japan. The cloth of H&M is not first class quality. Japanese are known notoriously for rejecting products for minute reasons such as poor stitching, loose button, and second-rate fabrics and the like. Moreover, manufacturing specifications are so uniformly high in Japan a business modal cannot be successful on design and good deal pricing by themselves. However, Uniqlo, one of the H&M opponents, provide high quality products with a reasonable price. If H&M thirst for success in Japan, it is important for it to improve the quality of its products.

Promotion

For promotion aspect, effective campaign is needed. Promotion can present merchandizes to customers and also entice them to come to the shop. There are so many ways to promote the merchandizes. Choosing suited ways are very important since it affect the effectiveness of the promotion.

First, cellular phone is a good media for promotion. Nowadays, almost everyone have one mobile phone. Through cellular phone, information can be easily and effectively transfer to many different people. SMS (Short Communication Service) is one common method. In Japan, lots of people prefer to use Text to talk to each other, especially for the youngsters. Recently, Japan Ministry of Education, Culture, Sports, Knowledge and Technology surveyed over 10 thousand students. In 5 supplementary school students, there is one sending at least 50 announcements by mobile phone every day. 7% of these even said that they directed about 100 messages every day. This demonstrates the majority of the teenagers like using Text. Therefore, SMS is really a good method to send messages to be able to promote products.

Another common way for advertising is using matrix code (2D barcode). 2D barcode is a two-dimensional way of representing information. It is similar to a linear (one-dimensional) barcode, but has more data representation functionality. 2D barcodes are in habits of squares, dots, hexagons and other geometric patterns. QR Code becomes typically the most popular type of 2D barcodes in Japan recently. The "QR" comes from "Quick Response". QR Codes are commonly found in the web and magazines. Most current Japanese mobile phones can read this code with the camera of the cellular phone quickly. QR Code can encode Japanese Kanji and Kana personas, music, images, URLs, messages. Through this type of barcode, information can be easily stored and draw in people to obtain it.

The QR Code

Price

Apart From using mobile phone, some programs can be launched to be able to promote the merchandizes. Price offer is an example. Price offer is a momentary reduction in the purchase price in a short period of time. It is very effective because good deal can attract customer to go into the shop and pay more. Price deal is well suited for short period promotion. Another good example is faithful incentive program. Consumers can acquire points, mls, or credits for purchases and redeem them for rewards. To be able to get the rewards, customers would like to come more often and purchase more products. The program can go on for longer period, usually a month. Launching different sorts of programs can increase sales effectively.

Not only campaign, a good costs is also very important to reinforce H&M in Japanese fashion market. Low price should be taken care of. H&M have previously set good deal for the goods. A lot of the products are affordable. This can draw in customers, especially young people who cannot afford high price. The merchandise are already at a best price and it is also one of the competitive advantages. Therefore, low price should be maintained. Another recommendation for pricing is the fact that there should be a price lower for the last season's fashion. Previous season's product have less attractiveness than the services. To be able to sell them easier, lower price is required to set. Low price is actually effective because it can catch the attention of customers.

CONCLUSION

To concluded, H&M has great probable to increase in the Japanese fashion market. It has recently built up a good image in Japan effectively. However, there are still many strong competition on the market. To be able to stick out from competitors, H&M should put more effort to fortify its competitive advantages. Through the finical crisis, great expansion during these couple of years since positive activities from H&M establishments in Japan, Hong Kong and China.

All in all, H&M is hit in the Japanese fashion market.

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