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Focused internal process innovation delivering the best
fast-fashion product mix for customers in all locations

FASHION RETAIL

Profile: H&M

H&M has been at the forefront of affordable chic for some time now. From its Swedish base, Hennes and Mauritz has grown into a major multinational clothes and cosmetics retailer. Just the place for fashionistas, it now has over 1500 outlets in 28 countries and a turnover in 2007 of over SEK92bn. H&M was one of the first to challenge the retail clothing sector by delivering fast fashion at low prices. The company offers different concepts for women, men, teenagers and children and includes everything from modern basics to high fashion. The collections are supplemented by matching accessories, nightwear, underwear and cosmetics. However H&M does not have factories of its own but has a multitude of designers and buyers and works with around 700 independent suppliers to produce clothing collections for almost everyone, all at affordable prices. H&M lives by its business concept, ‘fashion and quality at the best price‘.

Expansion at H&M is the name of the game with 168 new stores being opened last year. The availability of attractive business locations is the major deciding factor but most recently there has been specific focus on the US, Spain, Germany, France and Canada. That said, a weather eye is also being kept on emerging markets such as Eastern Europe, China and Japan. The company’s expansion has been entirely self-financed and with sales over the past 5 years increasing by 72% and earnings per share by 183%, the company can certainly afford it.

H&M is not solely reliant on new fashion store openings however: it also aims to expand its product range organically. Alongside launching H&M home, extending its ladies footwear range and growing its online shopping, it has recently launched a new chain called Collection of Style, or COS, which is an upscale version of its current H&M stores which merges high fashion with extremely competitive pricing. H&M mixes cool organised efficiency with zany fashion pizzazz. Or, to put it more practically, they have combined good basics with the hot-off-the-catwalk designs which keep people talking – all at a low prices. Store displays are designed to inspire but the essence of H&M is that it allows customers to find and experiment with their own style, irrespective of occasion and on a limited budget. Turnover is fast and stock is changed on a daily basis.

Although global in reach, H&M also recognises the power of local. Whereas other firms provide a ubiquitous retail experience with the same product range in San Francisco, Paris and Tokyo, H&M thrives on tailoring the ever-changing product mix to local tastes and buying preferences. This is attributed to the company’s fast feedback from each store into a central IT and logistics operation that pushes the right products out from its Hamburg distribution hub. In a world where product innovation is the apparent differentiator, H&M also gains from expertise in process innovation.

Collaboration has also worked well for H&M. Following on from the breakthrough Karl Largerfield range in 2004, subsequent celebrity endorsements have included Madonna, Viktor and Rolf, Stella McCartney and Roberto Cavalli. H&M have even won the support of the pop princess herself, Kylie Mingoue, whose clothing range was launched in Shanghai in 2007. Alongside this, H&M is also a big supporter of UN programmes, the Designers Against Aids initiative and campaigns to increase the use of organic cotton, reduce the use of chemicals and the implement more energy efficient transportation. H&M is the undeniable leader in global fashion retail and looks like maintaining this position for some time to come.

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