H&m target market pdf

H&M IN FAST FASHION: CONTINUED SUCCESS?

africa and India. Despite these aggressive expansion

)lars, analysts had some doubts=

'There are fears that the product is not good enough, brand appeal is fading or that prices have been undercut by an even cheaper competitor. These are big

Including Inditex (Zara), Gap and H&M, continued to be the market leaders (see Table 1). An example of the new and vibrant smaller players was the Japanese company, Uniqlo, which had started to expand aggressively. Moreover, fashion is, by its very nature, unpredictable and fickle trends are prone to sudden changes, which makes competition uncertain. End consumers have an enormous selection of garments to choose from and will quickly adopt new trends. In the 'fast-f ashion ' category they are also extremely cost conscious and will seek out bargains.

Some of the players in the industry are both produc- ers and retailers. For example, Gap Corporation and Indi- tex both manufacture their own products and sell them in their own stores. Other retailers have a multitude of suppliers to choose from. As international trade liberal- ises, the number of suppliers increases and competition

CASE H&M in fast fashion: continued success? STUDY Patrick Regn6r and H. Emre Yildiz

questions- Adam Cochrane, analyst at UBS3

This case examines the role of resources and capabilities in building competitive advantage and the ke. issues to consider while evaluating the sustainability of competitiveness. H&M has enjoyed a leading pog ' bon in the global fashion and apparel market thanks to its unique concept, business model and ability to combine elegant designs with affordable prices. Key competitors, however, have challenged that position and H&M needs to evaluate the sustainability of competitive advantage derived from its resources anil capabilities. The case explores the areas and functions in which H&M has enjoyed advantage vis-a-vis competitors and how, if at all, this advantage can be sustained in the long term.

The apparel industry

The total market size of the global apparel retail industry in 2014 was $1,317bn (£856bn, €1,014bn),' but with an annual growth rate of just 3.8 per cent for the period 2010-14.s This slow growth increased competition. which was further intensified by a large number of small players, although the large international incumbents,Introduction retailer by market capitalisation, based on Zara's rapid

expansion, particularly in emerging markets The increased competition, and the fact that margins had started to erode due to increased cotton prices and rising production costs in Asia, put the H&M high- fashion/low-price formula and aggressive expansion under scrutiny. Investors had come to trust H&M's

model that relied on a set of unique resources and capabilities, but Zara's success questioned the sustain- ability of the formula.

The increased competition for consumer spending in the fast-f ashion business was further intensified by the poor economic situation. With 70 per cent of shareholder voting rights controlled by the company's founding

Persson family, H&M's chief executive Karl-Johan Persson tried to calm investors and emphasised the long- term view:

The apparel retailer H&M has made an incredible journey, from a single store established by the founder Erling Persson in Sweden in 1947 to a pioneering 'fast fashion ' business with 3700 stores in 61 countries and more than 132,000 employees worldwide. 'Fast fashion ' refers to a quick response to new trends and fashion items that are made available in stores immediately thereafter. By the time Persson's 34-year-old grandson Karl-Johan Persson took over as CEO in 2009, H&M had become global leader in the 'fast-fashion ' segment with a distinctive business approach that challenged most competitors. The business model, commonly referred to as 'cheap-and- chic', emphasised high fashion at prices significantly below those of competitors, with the fundamental prin ciple being 'Fashion and quality at the best price '.