H&M SWOT Analysis
- The new strategy of H&M announced in April 2017 is hailed as being an economic revolution, in that it is a role model for the circular economy and is touted as leading the change towards renewable and circular fashion (Pergrankvist, 2017).
- H&M has a strong digital presence and operates stores in 66 markets (H&M, 2017b).
- H&M continues to open in new markets in 2017, including Georgia, Iceland, Vietnam, Colombia and Kazakhstan, and opened six new online markets in Spring 2017 in Taiwan, Turkey, Macau, Hong Kong, Malaysia and Singapore (H&M, 2017a).
- H&M includes six brands which are becoming increasingly popular on the UK high street, including H&M, COS, Weekday, Monki, & Other Stories, H&M Home and Cheap Monday. This beats the number of high street stores the brand’s main UK competitor Inditex has, which includes Zara, Massimo Dutti, Pull and Bear, Stradivarius and Zara Home (H&M, 2017a).
- High online growth and emerging markets have enabled the main competitor of H&M, Zara owner Inditex, to outpace H&M. Inditex remains the world’s largest clothing retailer, and has consistently outperformed H&M over the past few years (Dowsett and Ringstrom, 2017).
- Inditex has been quicker than H&M to diversify into brands which are higher-priced, meaning that H&M have already missed out on a significant proportion of market share and will have to provide a unique service proposition in its higher priced brands such as & Other Stories or Cos in order to gain market share (Dowsett and Ringstrom, 2017).
- The firm recently reversed upon its intended strategy of increasing its store count from 10% to 15%, instead opting to increase its sales by the same percentages via its online channels and physical stores (Howland, 2017). While this strategy is not necessarily weak, the fact that the brand did a U-turn upon its originals strategy indicates weakness in the internal strategy planning model of the business.
- In the first six months of 2017, H&M were able to come halfway as far as Zara did in seven years upon entering the Indian market, turning profitable after only six months of operation in the country (Malviya, 2017). This indicates that global receptiveness to the brand is high, and H&M should seek to further expand into new markets and new locations.
- H&M has steadily climbed the ranking lists of the most sustainable companies in the world over the past seven years, and in light of the organisations new circular strategy, they have the opportunity to be at the top of this list, above revered brands such as Tesla, Patagonia and Unilever (Pergrankvist, 2017).
- While H&M faced profitability in India, it is limited in the locations of expansion in developing countries, where more rural areas are not as built up, easily accessible or have less GDP per Capita than that of the brands main strongholds in Europe.
- As a global firm, H&M is increasingly vulnerable to currency effects, with evidence for this last seen in 2015 when the organisation cited the stronger dollar and price mark downs as the reason for a larger than anticipated fall in quarterly profits (Vandevelde, 2016). This threat is still present for the firm, with the currency of one of its biggest markets, the U.K. being increasingly unstable.
- In 2017, the chairman of H&M Stefan Persson acquired more shares in the company, meaning that the Persson family own 40% of H&M’s shares and controls around 70% of the voting rights of the firm (Van Looveren, 2017). This may mean that the strategy of the company may be more suited towards what meets the needs of the main shareholders of the brand, as opposed to the stakeholders.
- Botter, L. (2017) ‘H&M Moving to Quarterly Updates After Reporting A Solid Rise in June Sales.’ The Street. [Online] [Accessed on 18 July 2017] https://www.thestreet.com/story/14230312/1/h-amp-m-moving-to-quarterly-updates-after-reporting-a-solid-rise-in-june-sales.html
- Dowsett, S. and Ringstrom, A. (2017) ‘Emerging markets, online growth help Zara-owner Inditex outpace H&M.’ Reuters. [Online] [Accessed on 21 July 2017] http://uk.reuters.com/article/uk-inditex-results-idUKKBN16M0YR
- Amatulli, C., Guido, G., Mileti, A., Tomacelli, C., Prete, M. I. and Longo, A. E. (2016) ‘”Mix-and-Match” Fashion Trend and Luxury Brand Recognition: An Empirical Test Using Eye-tracking.’ Fashion Theory, 20(3), pp. 341-362.
- Gowans-Eglinton, C. (2017) ‘H&M announces its next collaboration will be with Erdem.’ The Telegraph. [Online] [Accessed on 20 July 2017] http://www.telegraph.co.uk/fashion/brands/erdem-hm-collaboration-november-2017/
- Howland, D. (2017) ‘H&M Reverses store expansion plans to focus on omnichannel.’ Retail Dive. [Online] [Accessed on 17 July 2017] http://www.retaildive.com/news/hm-reverses-store-expansion-plans-to-focus-on-omnichannel/435251/
- H&M. (2017a) ‘About Us.’ [Online] [Accessed on 20 July 2017] https://about.hm.com/en/about-us/markets-and-expansion.html
- H&M. (2017b) ‘Market Overview.’ [Online] [Accessed on 31 July 2017] https://about.hm.com/en/about-us/markets-and-expansion/market-overview.html
- H&M. (2017c) ‘Risk Management.’ [Online] [Accessed on 20 July 2017] https://about.hm.com/en/about-us/corporate-governance/risk-management.html
- Malviya, S. (2017) ‘H&M strikes a chord with Indians, turns profitable in just 6 months.’ Economic Times. [Online] [Accessed on 17 July 2017] http://economictimes.indiatimes.com/industry/services.phpretail/hm-strikes-a-chord-with-indians-turns-profitable-in-just-6-months/articleshow/59327360.cms
- Pergrankvist. (2017) ‘H&M’s new strategy is sparking an economic revolution.’ [Online] [Accessed on 22 July 2017] http://pergrankvist.se/2017/04/05/hms-new-strategy-is-sparking-an-economic-revolution/?lang=en
- Reuters. (2017) ‘H&M supply factory in Myanmar damaged in violent labour protest.’ The Guardian. [Online] [Accessed on 24 July 2017] https://www.theguardian.com/global-development/2017/mar/07/hm-hennes-mauritz-supply-factory-in-myanmar-damaged-in-violent-labour-protest
- Solicitors Journal. (2015) ”Bra technology’ sees H&M lose multi-million pound patent dispute’. [Online] [Accessed on 27 July 2017] https://www.solicitorsjournal.com/news/legal-profession/courts/24715/%E2%80%98bra-technology%E2%80%99-sees-hm-lose-multi-million-pound-patent-dispute
- Spary, S. (2017) ‘Here’s Why Thousands Of People Are Calling On Zara And H&M To Drop Some Of Their Suppliers.’ Buzz Feed News. [Online] [Accessed on 17 July 2017] https://www.buzzfeed.com/saraspary/zara-and-hm-petitioned-by-129000-people-after-report-claims?utm_term=.rf270DrldM#.tb4jxKVPQ3
- Vandevelde, M. (2016) ‘H&M profits disappoint due to markdowns and currency.’ Financial Times. [Online] [Accessed on 15 July 2017] https://www.ft.com/content/d0d2bc04-c59e-11e5-b3b1-7b2481276e45
- Van Looveren, Y. (2017) ‘H&M Chairman acquires even more shares.’ Retail Detail. [Online] [Accessed on 19 July 2017] https://www.retaildetail.eu/en/news/fashion/hm-chairman-acquires-even-more-shares