Case Study Contents
- Background Note
- Exhibit I: H&M’s Growth (1974 – 2007)
- Exhibit II: H&M’s International Expansion
- H&M’s Supply Chain
- Exhibit III: H&M’s Best Price Strategy
- H&M’s Financial Performance Summary (Revenue and Net Income)
- Exhibit IV: H&M’s Three Sales Channels – Stores, Internet and Catalogues
- Exhibit V: Table showing some major retailers with # of stores in Japan
- Exhibit VI: Comparison with major global specialty clothing retailers
- H&M Quick Facts – Brief Company profile – Revenues, Industry, Employees, Operations, Total Stores, Sales Channels, Major Competitors, Major Brands/Labels, Business/Growth Strategy, Key Executives
- H&M’s Entry Strategy into Japan
- Hurdles when entering the Japanese market
- Channel Issues – Will H&M’s strategy to go alone work in Japan?
- Product Quality Issues — Will H&M’s fast fashion work in Japan?
- Design Collaboration, Designer Brands
- Understanding the Japanese consumer – group oriented culture, the price factor and the Japanese H&M fan club
- In conclusion
- Additional Reading and References
"It has been H&M’s dream to open in Japan. I am very proud to say that we now have our very first store in Tokyo. Japan is a very strategic and exciting market with great fashion awareness. We hope that we can offer our Tokyo customers added value through fashion and quality at the best price. We’re not in a hurry in Japan but we see huge potential if we succeed. We’ll go step by step."
–Rolf Eriksen, CEO of Hennes and Mauritz at the ceremony to open the Japan flagship store.
"Our business concept is really what attracts the H&M customer: Fashion and quality at the best price. Because we do carry all these different lines in our stores, we allow our customer to address [his or her] personality, and that’s really important."
– Karen Belva, public relations manager and spokesperson of H&M in 2002.
"With H&M’s opening, everybody – the Gap and Zara – will have come to Japan"-
Tadashi Yanai, Chief Executive, Fast Retailing, referring to Inditex’s Zara apparel chain.
In April 2007, Stockholm-based Swedish fashion giant Hennes & Mauritz (H&M) opened its first flagship store in China. About a year later (in September 2008), this strategic move was followed by another first H&M outlet in Tokyo, Japan, the world’s second-largest economy. The H&M store – a four-storey shop was strategically located just a few buildings down from competitors Zara and Gap Inc stores. The new store with a floor space of more than 1,000 square meters was first in a series of stores that H&M planned to open in Japan. The world’s No. 3 clothing retailer had aggressive plans to open stores in Japan, as well as sites in regional shopping centers.
With the European markets saturating, H&M was pursuing a rapid international expansion strategy. But the timing of H&M’s entry strategy into Japan, especially when the economy was struggling with recession and customers were tightening their purse strings was open to discussion. Besides, Japan was regarded as one of the world’s most competitive fashion markets. Market reports also suggested a declining market for clothing and footwear. Some observers called it the toughest trading conditions in decades. However, H&M was confident of differentiating itself and competing with expensive brands like Christian Dior, Giorgio Armani and Chanel, as well as the more reasonably priced Gap and Japan’s hugely popular Uniqlo chain.
H&M was founded in 1947 by Erling Persson, a salesman from Västerås – a small town in Sweden. He began his career working for his father delivering cheese to restaurants in Stockholm on a bicycle. He was attracted by the concept of clothes stores selling stylish garments at low prices when he once visited the U.S. He was amazed at the success of retailers like Macy’s in New York. He opened a similar store in Västerås selling clothes for women. He named the store ‘Hennes’ which stood for ‘hers’ in Swedish…
…Today, H&M is the world’s third-largest retailer by sales with around 1,600 stores in 32 countries with 68,000 employees. In the past two decades, H&M grew at an average rate of 20% annually. It managed to grow quickly into the world’s third largest clothing retailer by offering clothing that is seen as both fashionable and reasonably priced. It made its mark on the apparel industry, mixing the latest trends with fashion classics. H&M is popularly known as the king of “fast fashion” and the purveyor of quick-to-market trendy clothing. H&M’s business model is based on "Fashion and quality at the best price."
Will H&M be successful in Japan?
"I believe that the interest in a new change would be big in Japan. It’s one of the biggest countries we have entered. If we succeeded as we have done in all the other countries,[Japan] could be a huge market for H&M."- CEO, H&M
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Case Keywords: Hennes & Mauritz, H&M, Entry Strategy, Japan, Expansion into global markets, International Business, Competitive Strategies, local culture, Japanese apparel market, Fast Fashion, Best Price Strategy, H&M’s Three Sales Channels, Channel Issues, Product Quality Issues, Design Collaboration, Designer Brands, Japanese H&M fan club, Erling Persson, Zara, Uniqlo, Fast Retailing, Supply Chain
- H&M in Asia– H&M has over 1,800 shops in more than 30 countries. H&M’s principal markets are in Germany, the United Kingdom and Sweden. In Asia (2009 figures), H&M has four stores in Japan, 15 stores in China and 6 stores in Hong Kong. It plans to set up its first store in Korea, sees potential in Taiwan and wants to up its store count in China by 30% in 2009. H&M’s top management considers Asia to be the newest and biggest market for H&M in future.
- H&M’s business model and focus on low-cost, fast-moving fashions, and geographic spread helped it to weather the economic downturn better than its competitors. During 2009, the Swedish fashion retailer H&M was the top-ranked global fashion retailer.
- In fiscal year 2009, H&M added a total of 250 new stores, 25 more than originally planned.
- H&M in China: In 2007, H&M entered China. By 2011 it had 64 stores in China out of a total of 2,410 world-wide. China has been more profitable to H&M than any other market and it expects to treble its store count by opening stores in smaller cities of China.
- In January 2012, Japan declared its first annual trade deficit in 2011, in 31 years since 1979.
Home » Case Studies » Strategy » Competitive Strategies
Competitive Strategies Case Study
H&M vs Zara: Competitive Growth Strategies
Publication Year : 2007
Authors: Mridu Verma
Case Code: COM0196P
Teaching Note: Not Available
Structured Assignment: Not Available
The case compares the competitive growth strategies of two �fast fashion� retailers � H&M and Zara. Swedish retailer H&M has been growing at an average rate of 20% annually in the past two decades. No other European retailer has expanded so quickly and so successfully beyond its own borders. At the heart of Zara's success is a vertically integrated business model spanning design, just-in-time production, marketing and sales. Inditex and its flagship store Zara have been growing at a furious pace.
The two European retailers are known for their �fast fashion� had unique business models and growth strategies which have enabled them to expand quickly and successfully beyond their own borders. With the European markets becoming saturated, the two companies are looking for ways to expand outside Europe and establish their hegemony in the U.S., in many ways the world�s most important market.
The case outlines the growth strategy of the two companies in the US, emphasizing the similarities and the differences in their approach. H&M has tailored its product strategy to fit the US market. It has headed for more upscale malls and busy downtown centers and decided to open smaller stores. Zara has decided against developing a manufacturing base in the US. However, it has followed the same business model and product strategy that it followed in Europe. Its clothes are however priced higher in the US than in Europe to take case of supply costs.
- To compare the growth strategies and business models of fashion retailers � H&M and Zara
- To understand how these European companies are trying to expand beyond their borders.
H&M; Zara; Inditex; fast fashion; Competitive Strategies Case Study; business model; supply chain; management; retail strategy; pricing; marketing strategy; concept store; shelf life; Spain; Sweden; store chain; expansion strategy
H&M�s Business Model
Zara�s Business Model
H&M in the US
Zara in US
Zara�s SWOT Analysis
Inditex concept wise sales