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H&M case study

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Anna Blesing

on 31 March 2015

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Transcript of H&M case study

Consultant Team
Anna Blesing
- Implementation & Action Plan
Emma Butterworth
- Strategic Options
Emma Kaminski
- Introduction & Strategic Issues
Emma Harland
- Strategic Options
Consultant Team
Emma Kaminski
Introduction & Strategic Issues
Emma Butterworth
Strategic Options
Ella Harland
Strategic Options
Anna Blesing
Implementation & Action Plan
Strategic Issues
Growing Global Competitors
Highest Urgency Issues
Lack of focus on growing E-commerce market
Inditex has overtaken H&M on market capitalisation
From late-mover to market leader
Key Issues
Maintenance of company culture & the spirit of H&M
Worldwide recession impacting economic environment
People & Team
Cost conscious
Entrepreneurial & Innovative
The cost conscious consumer vs. rising production costs and slowing growth of textiles industry
Growing Global Competitors
Option 1

Option 2

Cost Leader
Broad Differentiation
Reduce costs throughout the production chain
Ultimately resulting in lower prices for consumers, allowing for market penetration
Aim to reduce prices by 10%
Differentiate the product offering through collection collaborations with famous designers and charities
Focus and expansion of current strategy
Lack of focus on the growing E-commerce Market
Option 1

Option 2

Focused Differentiation
Best Cost
Best cost
Returns for lower risk
Addresses variety of issues
Incorporates company culture
Broad Differentiation
Strengthens Brand image
Capitalises on existing strengths
Supplier bargaining power & low consumer switching costs
Neutralises threat of new entrants
Acknowledges current economic conditions
Satisfies shareholders expectations by aggressively competing with competitors
Acceptable for cost-conscious customers
Risk that quality suffers
Risk that sustainability and social responsibility suffers, upsetting local communities, NGO’s & consumers
Weak supplier power, thus bettering H&M’s negotiation position.
Risk that increase in sales may not be enough to counteract reduced prices - reducing sales and market share.
USP and perceived value
Boosts brand reputation
Capitalises on sustainable approach
Satisfies shareholders interests
Encourages sustainability within the apparel industry
Small risk in increased consumer value
Market research shows a promising outlook
Capitalises on core strengths
Develops proven practices
Financial ability to invest
Narrower buyer segments
Push & promote SBUs online & in-store
Increased value for money: Service development in store & online including personal stylists, shapes, colouring and fit- advice.
International expansion of E-commerce from 22% of retail countries to 50%
Large target market including many niches
Exploit current industry E-commerce opportunities
Differentiation also tackles issue of growing global competitors
Threat to company culture

High risk - focus on high level of differentiation of SBUs does not guarantee a ROCE
High payback period for returns
Increased choice improves consumer utility
Shareholders likely to disapprove due to high risk
Short term:

Grow online presence through marketing & link SBUs online
Long term:

Grow SBUs or separate departments in H&M
Entry point and increased service for consumers
Increased value leads to loyalty and decreased rivalry
Reduced overheads
Implementation plan
Expand & improve
E-commerce offering

Medium-Long Term
Short Term
Long Term
Product development: Designer collaboration
Service development: In-store styling
Proven success
Expand & improve E-commerce offering

Service development: In-store styling
The style pod
Design and software
In-store & online
Staff training
Initial rollout over
flagship stores
Promotion through advertising & social media
£8,000 per store
≈ £500,000
advertising budget
≈ £500,000
Imitate current
E-commerce model
Utilise existing
distribution centres
Outsource delivery
E-commerce team
Connect with the
local customer
Analyse entry strategy
during initial phase
Staffing costs
Investment in
new stock
Delivery costs
Product development: Designer collaboration
Expand designer
Exclusive online
Designers &
Quality price
premium products
Work together to create a cohesive strategy
Cost designer dependent
Requires an integrated supply chain between H&M and SBUs
Imbalance between the performance of SBUs
Low risk
Capitalise on culture
Increased global revenue
Persson family goal: long term growth
Consumer value and accessibility
Staff training opportunities
Already present in E-commerce market
Advertising campaign to promote new services
Full transcript