BSBMKG501 – Identify and evaluate marketing opportunities

Assessment 1

Introduction

H&M, which stands for Hennes & Mauritz, was first establish ed by zeroing Persson in
Vasterras, Sweden in 1947 under the name “Hannes”which in Sweden means “hers” At
first Hannes sold by women clothing. Soon after, Persson bought out a hunting
equipment store, Mauritz Widforss, which had an inventory of men’s clothing influenced
Persson to include Hennes to Hannes and Mauritz and finally to H&M. Persson’s son
then became H&M’s CEO in 1990 and Chairman of the Board in 1998.

In 1964,H&M decided to expand further into Europe, which included

UK,Norway,Denmark,Switzerland and Germany. Overall, H&M has 1,552 stores in 28
difference countries and now H&M sells clothing, accessories and shoes for
men,women and children.

The Current situation

Fast-fashion has been gaining much popularity over the past few years. Major
international fashion retailers such as ZARA, Hennes & Mauritz (H&M), Uniqlo and
Forever 21 have been adapting the fast-fashion concept. In this research however, we
have chosen Hennes & Mauritz (H&M) to be the subject of our case study.
H&M is a Swedish multinational retail clothing company, known for its fast-fashion
clothing for men, women and children. H&M is currently ranked as the second largest
global fashion retailer, following closely behind ZARA and holding a small edge over
GAP. The corporate objective goal of H&M is to provide quality apparels at a
competitive price, together with a wide range of fashion apparels and accessories.
When it comes to fast-fashion retailing, consumers are generally concern about the
price and quality. However, there is another factor that plays a huge role as well, and
that is customer service. In this competitive “fast-fashion” industry, competitors tend to
compete on prices as well as focusing on increasing their clothing line. Therefore, it is
customer service that gives that value-add to either existing customers or new
customers. Studies have shown that better customer service tends to result in higher
customer loyalty, attraction of more new customers through positive word of mouth, thus
a better corporate image. Hence, service quality of “fast-fashion” retailers is increasingly
important and customer service is one of the strategic weapons for fashion retailers to
stay ahead of the competition. With regards to this, our team will be identifying the
service gap between customers’ perceived value of H&M’s service quality and the
expectations that customers have for H&M’s service quality. Identifying service gaps
would not only help H&M increase its sales and profits but help to develop better
operation and management strategy in the long run. Thus, this research aims to
determine and eliminate the service gaps of H&M.
Current Markets
● Global: Asia, Africa, Europe, North America Women’s Apparel
● Men’s Apparel
● Children’s Apparel & Footwear
● Accessories Footwear Cosmetics E-commerce
● U.S. Apparel Market

The online market is constantly growing and mobile shopping through the use ofsmart
phones and tablets has become increasingly common. 64% of consumers are
interested in scanning products with smart phones to get more information while 76% of
consumers are interested in instant offers via smart phones for things they were already
looking for. Additionally, popular mobile apps include mobile coupons, store information,
mobile self-checkout and digital receipts.
Market share
In order for the company its products to be made known to the market place; the
products will be distributed to its consumers. The main market of H&M is the
fashionable sector of the market, which still focuses on the quality and affordability of
the products they choose. Venturing with distinguished distributor of apparels,
cosmetics and clothes will help in the expansion of H&M internationally, thus with its
expansion in the Philippines. H&M will provide what the consumers want and prefer.
The products that H&M provides is directed at the interests of the consumers and what
will bring them comfort and satisfaction. There is a constant goal to produce and sell
products which satisfies the consumer wants demands, and needs.

Market trends and development

The multinational retail clothing market consists of thousands of retailers competing for
market share. Within the United States, hundreds of retailers are competing to produce
high quality, affordable clothing to meet the demands of consumers.
The industry determines the trends and fashions that will be available each season.
Every season the trends change and the industry leaders dictate what is fashionable,
which determines that the past season’s fashions are no longer trendy. As a whole, the
industry usually pushes consumers to purchase more clothes than are necessary for the
sake of fashion.
Additionally, the apparel retail industry is shifting towards a greater online presence to
become more efficient and timesaving for consumers. This online “store” is interactive
and can reach more consumers than a physical location. Also, some retailers are
beginning to incorporate with social media sites.
An industry trend for consumers is to be budget smart, discount searching and thrifty.
Consumers want to feel like they saved a bundle without compromising quality. They
also want to feel that they got the most out of their money and came away from a quality
shopping experience with clothing that they love

Market Growth
H&M target market growth is to increase the number of stores by 10-15 percent a year.
This is why H&M holds the greatest market share Germany and UK. H&M aims to
continually expand, and by expanding their market the market share will increase
continuously. At the same time, consciously aware of sales at existing stores. The
attractiveness of the store is the crucial factor in the rate of expansion.
H&M opened 193 new stores in 2007 but 16 of them were closed. Yet this maintains
H&M as a financial strong company. The company has a goal to expand their company
but still maintain profitability. H&M·s market size is quite large because H&M covers and
handles 1700 stores around the world diverse into different regions. The four big ones
are Europe, Asia, North America and Middle East which all has their own different
fashion identity. The growth of market of H&M pave way to expansion which means that
the company will grow in size because of the growth in number of stores around the
world

Analysis primary competitors

Zara
● Fast-fashion
● Multinational retailer, part of Inditex - Flagship in Spain
● Human rights concerns: sweatshops, slave labor, shop staff abuse Sell apparel
through brand website & has smart phone application Equal price range to H&M
Forever21
● American chain, globally located
● Low quality, fast-fashion clothing
● Merchandise does not have uniform size specifications
● Sell apparel through brand website & has smart phone application Equal price
range to H&M
Topshop
● British multinational retailer, part of Arcadia Group
● Moderate quality for fashionable clothing
● Sell apparel through brand website & has smart phone application Equal price
range to H&M
Urban Outfitters
● American Chain, global locations
● More hipster fashions
● Includes luxury brands and designer collaborations
● Sell apparel through brand website & has smart phone application Slightly higher
in price than H&M, same target marke

Customer requirements
The targeted consumers are fashionable females who are highly concerned with their
personal style. They are between the ages of 17 and 26 and typically shop at four or
more stores. These females consider themselves fashionable/trendy and are looking to
update their wardrobes with current trends. They want their style to be unique and
consistent with their own personal self- expression, but still adhere to current-season
trends. The target audience wants quality clothing that lasts seasons beyond its
purchase date and demands fast-fashion in order to keep up with current trends

New and emerging markets

Expand in emerging markets: The emerging markets in the world possess a great
potential as far as the apparel industry is concerned. H&M needs to explore the
emerging markets like Asia and Africa in order to capitalize on the new demand created

Profitability

Sales figures
Gross sales of theH&M group worldwide 2007- 2018
 Market Opportunities
1. Focus on expansion to improve profitability: H&M has been focusing constantly
on expanding its store base across the globe. The company added 400 new stores in
FY 2016. Such expansion plans can help H&M improve its bottom-line as well as the
top-line.One of H&M’s goals is to expand by 10 to 15% each year while increasing
sales; there are many new markets that H&M can enter including Chile, Estonia,
Lithuania, Serbia, and Indonesia.
2. E-commerce as a platform: H&M is also present on E-commerce in various
countries. H&M needs to expand in the E-Commerce platform as well to serve to a
larger market. E-commerce can be the future of the apparel industry and H&M needs to
make use of the platform to its potential.The rise in the online market provides a great
opportunity for H&M, which has yet to launch an online shopping market to customers in
the United States. This past year, Cyber Monday generated 30% more sales than the
previous year[11] and current trends show that more customers prefer to shop online
and avoid the hassles of shopping in stores and billing queues. The annual user growth
rate of online shopping is 297.8% and is expected to continue to grow. Previously tested
in 2010, H&M made online shopping available to several of its European “virtual”
markets and the average sales made online per year per person was €952 and are
expected to grow. In addition, it is estimated that “online and Web-influenced offline
sales combined accounted for 42 percent of total retail sales and that percentage will
grow to 53 percent

Methodology
PESTEL
Political: Indian government has taken measurements that may facilitate global fast
fashion retailers to enter the market, such as 100% direct investment for foreign
countries that leads many international com panies to de cide to invest in India
Economic: the global economic recession has not influenced Indian apparel and
footwear industry
Social-cultural: Indian population is impacted by the western lifestyle and particularly
by clothing style. This trend was noted in urban and rural regions but also in small cities.
Moreover, casual clothes gain the highest popularity and acceptance by Indian young
buyers that seem to be affected by the increasing penetration of the western wears'
preferences in the film industry Furthermore, both young women and men are focused
on fashion trends, however they are price cautious and they have a sign ificant awaren
ess of eco-friendly products. India is also evaluated as the country with the highest
score in terms of gender inequality which is depicted in employees' incomes.
Specificaly, men's disposable income approaches US$ 1,723, whereas women's
income is almost half (US$ 697). Besides, Indian young and mid-lifers' consume rs are
familiar in purchasing via online channels. Fina lly, when it comes to late-lifers
consumers, a category that is expected to hold the 8.6% of Indian population by 2015, it
has less spending power and prefers to spend a notable proportion of their income in
satisfying the needs of their children
Technological: India is classified globally as the third largest online user base after
China and the U. S
Environmental: Many small enterprises have adopted the usage of refurbished
products. India has announced its contribution on an important investment of $ 1. 3
trillion, in developing a sustainable technology in terms of the potential threats on
Scarcity resources Fashion futures 2025, n. d.)
Legal: India has adopted a strong legislation for the protection of designers and
companies during the designing and marketing process
Benchmarking Analysis
Online market The closest rival of the organization counts almost the one-second of H &
M 'stores, has expanded its operations in 27 markets meeting the needs and
expectations of the Pomnichanner customers
Manufacturing process H & M' s core competitor produces the 60% of its products, by
owing in-house manufacturing and has the ability to be flexible in the amount, frequency
and variety of the offered lines

Market trends and development

The multinational retail clothing market consists of thousands of retailers competing for
market share. Within the United States, hundreds of retailers are competing to produce
high quality, affordable clothing to meet the demands of consumers.
The industry determines the trends and fashions that will be available each season.
Every season the trends change and the industry leaders dictate what is fashionable to
determine that the past season’s fashions are no longer trendy. As a whole, the industry
usually pushes consumers to purchase more clothes than are necessary for the sake of
fashion.
Additionally, the apparel retail industry is shifting towards a greater online presence to
become more efficient and timesaving for consumers. This online “store” is interactive
and can reach more consumers than a physical location. Also, some retailers are
beginning to incorporate with social media sites.
An industry trend for consumers is to be budget smart, discount searching and thrifty.
Consumers want to feel like they saved a bundle without compromising quality. They
also want to feel that they got the most out of their money and came away from a quality
shopping experience with clothing that they love
Sales figures
Gross sales of the H&M group worldwide 2007- 2018

Potential new markets and assess opportunities to enter

Domestic markets
The H&M store is now a well-established presence in most prominent shopping streets
with considerable customer flows around Europe. In London, for example, they are
located on Oxford Street. H&M opened the store in Japan in Ginza, Shibuya and
Harajuku. Before establishing stores in a new market they conduct a thorough analysis
of demographics and purchasing behaviour. They also carry out a local survey of the
shopping areas and shopping centres, document their size and where their competitors’
stores are located

Export markets
H&M provides online shopping in a few European countries, but still hasn’t announced
plans to do so in Asia, North America and Middle East. It is a large market for H&M.
There is an opportunity to set up online store in those countries.The designer
cooperation is the most significant for H&M. The crossover series with the famous
designer have made a stir in fashion industry. Many designers are willing to cooperate
with H&M, see it as a stage for showing their new design. It brings the new concept to
the H&M product and enhances their product competitive. H&M crossover with Matthew
Williamson do a spring collection for 2009

Segments of the market

H&M is a retailer that is looking to provide consumers with fashionable, high-quality
clothing at the best price possible. They offer “fast-fashion” clothing, in other words from
runway to racks in record time, and sell European influenced clothing in the American
market. Additionally, H&M carries clothing in a variety of categories including women’s
casual, men’s business, children’s wear, footwear and accessories. The company is the
second largest clothing retailer in the world, the largest in Europe and actively engages
in E-retailing. H&M is also economically, socially, and environmentally sustainable.

The effects of opportunities on the business

E-Commerce allows new entrants: E-commerce is an advantage as well as a threat for
the popular brands as E-commerce allows newer brands to be present on the same
platform as the popular brands and hence such new entrants could affect the business
of brands like H&M.
Intense competition: The apparel industry is subject to intense competition from local as
well as global brands. Each company has to be aware of the competition in order to be
on par with the new trends and fashion.
Rising labour costs in developed countries: Rising labour costs affect the cost of
production for the industry. Such increasing costs affect profitability for the company
References

https://simconblog.wordpress.com/2015/12/19/h-n-m-brand-analysis/

http://gabrielajohnsons.blogspot.com/2015/11/chapter-8-segment-and-target-markets.html

https://www.marketing91.com/swot-analysis-hm/

https://www.mbaskool.com/brandguide/lifestyle-and-retail/2934-h-and-m.html

https://www.investopedia.com/articles/investing/041216/hm-secret-its-success.asp