H&M Swot

8 August 2016

Strengths: Weaknesses: Sales in January 2014 increase 15% in local currencies, compared to the same month in the previous year. Clever Care labelling Strong celebrity endorsements Designer Collaborations Clothing recycling scheme Largest consumer of organic cotton Benefits from economies of scale Improved online experience Heavy reliance on EU markets Quality concerns Store experience, sometimes lacking Lack of click and collect Gross Margin Decreasing Does not own any factories Only has transactional website in 9 countries Opportunities: Threats: First store in India in 2013/14

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Company opened 356 net stores globally in the year with plans to open a further 375 stores by the end of the coming year. US and China biggest expansion plans in 2014-15 Australia early 2014, Philipines late 2014 South Africa new sourcing hub could be new retail destination also New online markets Sportswear – dresses the Swedish Olympics team in. Winter & Summer Olympics Rising concern for environmental issues and H&M look to be at forefront H&M Home Expansion Independent Mens stores? Flat like-for-likes for the year to 30 November 2013 Rapid expansion causing cash flow issues

Supermarket fashion Target market struggling with finances Increasing labour costs in manufacturing countries Fluctuating raw material costs Continued economic uncertainty in European markets Transparency of suppliers 90% of products transported through Ocean more than 20 country offices responsible for the various departments in each sales country. Outsourced its product manufacturing to approximately 700 independent suppliers across the word for higher efficiency and synergies to cater its customer requirements Political AGAO duty free regulations in Ethiopia

Bangladesh political instability (80% of H&M products manufactured here) Economical Recession & economic uncertainty in Europe Young people having less disposable income Rising labour costs in sourcing countries Youth unemployment rates China apparel sales growth slowing down? Social Rising interest in sustainability, traceability and ethics Worker ethics in foreign countries Consumer reliance on discounting Is ‘Fast Fashion’ becoming boring for consumers Consumers becoming interested in quality Technological Rising popularity of online shopping Multi/Omni channel Environmental

Consumers growing interest in sustainability Waste Reduction Zero Discharge of Hazardous Chemicals Diverse weather conditions Increasing concern over resource availability (e. g. Cotton) Legal Labour laws in foreign countries such as Bangladesh (Bangladesh Accord) Minimum wage increase in Bangladesh THINK ABOUT COMPARED TO FOREVER 21… especially in store experience! Zara is present in all of the BRICS with 46 stores in Brazil, 149 in China, 13 in India, 3 in South Africa and South Africa: New sourcing destination Good tax environments In China, apparel sales through internet retailing more than doubled in share from 3. 4% in 2011 to 7. 4% in 2012. H&M’s affordable positioning is particularly suited for Chinese online retailing, as consumers are attracted to the channel due to its value proposition. It will also provide a more cost-effective means of reaching consumers in lower-tier cities. the global apparel and footwear market grew by 5% in value, according to the latest estimates from Euromonitor International. New Apparel and Footwear Research: What is it Telling Us? Part 1: A Focus on Geographies The Middle East and Africa region has also become a new frontier for growth.

The region’s apparel and footwear sales are set to rise by US$17. 9 billion over 2013-2018. The importance of the Middle East as a travel destination and shopping paradise will continue to sustain the influx of multinational brands into the market. Sub-Saharan Africa’s demographic dividend presents a sizeable opportunity for international apparel brands, but one which remains latent due to a weak retail infrastructure outside of South Africa. At the other end of the spectrum, conditions continued to deteriorate in the region’s largest markets, Germany, France and Italy.

The German market is forecast to contract by US$2. 2 billion over 2013-2018. A key issue in this region has been breaking the cycle of discounting, which has been placing downward pressure on margins. Consumer perceptions of prices have strongly changed following ongoing bleak economic conditions. Latest Research: Apparel and Footwear 2014ed Now LIVE In 2014, one of the main difficulties will be breaking the cycle of discounting and increasing margins. Since the recession, apparel unit prices have decreased 5% globally, having a negative impact on profitability.

Consumer attitudes and perceptions of value will need to shift as people have been trained to expect discounts. Alternatively, “fast fashion fatigue” means more consumers are now paying increased attention to quality and longevity. Key Trends for the Apparel Industry in 2014 Magdalena Kondej Head of Apparel and Footwea Acceleration in m-commerce In particular, 2014 is expected to see an acceleration in m-commerce sales, especially in emerging markets such as India and South Africa, which already generate a higher proportion of sales through mobile devices than some more developed online markets.

As the number of ways and touch points in which to engage with the consumer has increased radically, the challenge for retailers is to create a fully-integrated customer experience which works across multiple channels – in-store, traditional websites, mobile apps and social media. This will be the major focus for brands in 2014. The UK and Germany will be two of the few markets to post positive growth as consumer confidence remains relatively strong. Retail Mix through different channels: Online: Ladies, Kids, Home, Men App: Same as online Store: Most stores stock women, only 2/3 stock home!

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