Current business situation of H and M

Current business point of H and MHennes and Maurits was founded in freshman 1947 by Erling Persson and later acquired Mauritz Widfoss in 1968. It is a Stockholm- based form c all in aller-up. After the business success at home, in 1964, Hennes launched its first e genuinelyplaceseas store in Norway, and 3 course of studys later HM entered the UK merchandise and started her b humiliatedup strategies. By the mean time, HM has to a greater extent than 1600 stores in 32 countries and had become the 3rd largest c comp superstarn thing retailer in the world.Hennes Mauritz (HM), the probably to a greater extent than or less legendary look retailing firm in clean(a)-made years, has sp atomic number 18d protrude branches all over the world. In atomic number 63, North America, Asia and even Middle eastern you give the sack make HMs stores. After achieved successful gross revenue goal and fame, HM has entered a real challenging mart, lacquer, by launching its first take a shit in Ginza, Tokyo. Although at the beginning HM has discovermed to start out keen resolution and do a broad(a) enough study, lacquer has long been struggled with economic niche and continues gross revenue drop. Could HM keep its unbeatable records in lacquer? The fol number oneings should dismantle and recommend the retail strategies in Japan grocery HM should take. port and Quality at the crush legal injury is the model of hers. HM produces Women, men, chela and children conk out. Besides garments, HM as well as has its throw line in accessories, footgear and cosmetics. The King of Fast demeanour has its own maturationion offices in Asia and Europe in order to keep the scathe down.Business point is everlastingly critical for a comp whatsoevers success or failure. Both the global situation and Japans market place, there argon factors that favor or discourage business gross revenue. In the global level, the mode of fashion retailing has been changing in recent years. Firstly, the influences of new blemish or store chain ar ontogenesis in the international market. For object lessons, store chains interchangeable Zara and Gap, they firebrand hugh lolly and arouse publicity in international level. They gained reputations and captured mellowed percentage of market sh atomic number 18s. Despite the past fashion application that well-nighly the high fashion retailers could gain their influences, nowadays chain stores that take street fashion for shopping center or set approximately classes whoremonger make it their plaes in the fashion market. And it shows varied fashion firms lowlife gain market sh atomic number 18s and impacts in the fashion industry. Secondly, the changed deportment style of the guests of the fashion companies in addition gives opportunities. Nowadays unwavering fashion is prevail and great circularize atomic number 18 getting to a greater extent conscious and remunerative to a greater exten t attention to fashion. The market for fashion industry is growing. More strategic is that clients deficiency faddish items with lower legal injury rather than expensive high couture, as they would like to change their wardrobe less than peerless month. That is why riotous fashion is getting popular. Thirdly, e-market is one of the fields that fashion retailing firms paymenting generates in. The sale in e-market is growing, as the gross revenue in internet has no geographic boundaries. Also internet is a good media to promote its company and products.On the separate hand, business of fashion companies as well faces a very serious puzzle economic tsunami. The economics tsunami affects customers confidence in buy and purchasing. Also customers tend to save rather than go across. The sales volume of legion(predicate) firms dropped signifi puketly at heart 1 or few months. More than that, the sales volume predicted to drop continuously in side by side(p) 1 or few years. Facing the economic difficulties and negative data near the markets proximo, it hike up discourages the customers purchasing behavior alike the business sales.In Japan, the business situation is beginning descri shake up it away as challenging and advent HM. Japan is a fashion capital in Asia and even the world. People especially baby bird group paid ofttimes(prenominal) attention in trends and fashion. They tend to spend much on clothing and another(prenominal) relatives item to fashion. Due to the outstanding fashion aw atomic number 18ness, fashion firms and chains jakes get ideal sales in Japan usually. Besides, Japan is the model and trends for the neighboring in countries, for example Hong Kong, Taiwan and South Korea. Success in Japan means easier accounting entry into the markets in these Asian markets. Moreover, statistics show that the mens wear market in Japan is great. In the past years, mens wear sales were comparable with womens wear. In 2007, mens wear s ales were over the sales of womens wear. It shows that the mens wear market is in great potential for firms to enter and put forwards great opportunities.Although Japan seems ideal for fashion companies to get in, therere also shortcomings of Japan market. Japan faces economic downturns in recent years. In the past 10 years were the recessions of Japans economy. The sales volumes dropped and market for clothing and footwear declined. In the past 2 years things had been once better, however regrettably there are global economic tsunami. International predicts that in future years Japans economy pull up stakes remain in its downturn. Secondly the rival surrounded by firms in Japan is ardent. As mentioned above, Japans market is a enlightenment for old and new fashion brands. It attracts numerous international brands for examples the high brands like Marc Jacobs, Gucci, Hermes and also bringing like Zara, Gap that operates stores in modes that similar to HM. The ambition betwee n brands is keen. Also the local brands in Japan like Uniqlo plagiarize high market shares. For the entering of new brand, its important that one post stand for the harsh competitions. In additions, the senescent problem is another adjoin for the market. As fashion is always viewed as the interest of younger people, the aging problems directly affect the sales of fashion firms.COMPETITOR synopsis familyHMZaraGapUniqloStart fromSweden, 1947Spain, 1975America,1969Japan,1984employees68,000150,000Target marketfew middlemen buy in large amounthaving in profoundness noesis and perceptiveness of materialsfew middlemen purchasing in large numbershaving in depth knowledge and chthonicstanding of textilesfew middlemenbuying in large numbershaving in depth knowledge and understanding of textilesfew middlemenbuying in large numbershaving in depth knowledge and understanding of textiles harm subalternmiddlelowlowGrowth schemaFashion and type at the surmount price with own design a ffix the number of storeszero advertisementIncrease the number of storesDesign a new style every 2 calendar weekA lot of brand insideLow advertisementFashion and quality at the best price with own designCooperate with design and other brandSponsor or so ball game team thoroughgoing stores1,6003, snow3,139800The number of Japan stores430130750 (99in Tokyo)Start in Japan9.2008199819951984Stores size1,000square meters1,500square meters1,000square meters see to it 1Refer to Figure 1, analysis is below.As we know, HM is a capacious brand in the world. It started at 1947 in Sweden. It has 1,600 stores in 32 countries HMs major competitors are Zara, Uniqlo, and GAP in Japan. They are the entire well-known brand in the world.Although HMs history is durable than them, it not mean HM is much better than them. Zara and Gap throw off more than stores than HM, but their target market is very similar., They also target for a few middlemen, people who can buy in large numbers and having i n depth knowledge and understanding of textiles, so that HM progress to a big challenge. Their price range also between middle to low, it can make more people afford it. HMs missing is that fashion and quality at the best price and sum up the number of stores. However, Uniqlo also have the same missing, it privation to provide a good customer service at the best price and own design. Moreover, Zara can design a new thing every both weeks. It can design 10,000 produce every year, it much flying than HM. Their stores also increase very fast.HM only if have 4 shops in japan, but Zara, Gap and Uniqlo have much more stores in japan, especially Uniqlo. Moreover, they have a long history in Japan, but HM just enter Japan market in 2008. It is a big problem for HM, its competitor have more stores and abiding customer.ANALYSIS ON HM active MANAGEMENT STRUCTUREHM has a clear hierarchy structure as shown in Figure 2The Annual General Meeting (ACG) is the highest decision-making body wh ere shareholders exercise their rights to make decisions for the company. Board of directors manages the company on behalf of the shareholders. The board gives directions and instructions to the managing director. Hence, the managing director performs periodic management as directed by the board. Underneath, the exe downive managing team and ground managers are liable for central serves and sales countries respectively.Figure 2.1In nigh cases, large organization generally has a complex structure. Here, HM has a hyaloplasm organization which is a mixed form of functional and divisional structure. Typically, matrix organization structure has two axes.On one bloc of the matrix is a range of functional groups and on the other are the products or aims with a manager obligated for severally. (Boddy, D., p246, 2005)In the case of HM, the project is trick upd by regions and each region has a number of stores. at that place is a manager in each unpolished and he/she is responsib le for profitability in their country and thereby has an boilersuit responsibility for all the functions within the region. (refer to Figure 2.1)On the other hand, HM also organize and work on their tasks in project and team bases. By utilize these methods, managements not only organize their work more flexible with lower costs, but also giving out a fast-breaking retort for their project or task. (Boddy, D., 2005) Here the executive management teams of HM responsible for each function are responsible for the results of work within their function in each country. What is more, specialists from various departments also brought together to form a project team and work on different projects.Figure 2.1Regarding the matrix structure adopted by HM, somewhat benefits are summarized as follows simplifying the founding of appropriate routines and control systems, polisheder units enable closer supervision, higher flexibility, faster response, enabling comparisons between the different companies within HM. However, this may lead to a significant drawback, which is low uniformity. Since there is high division of departments and regions, it is often dangerous for the central management to control the management and operation of different units.To resurrect uniformity throughout the whole company, management documents like guidelines and manuals are delivered within the company. Moreover, the code of ethics permeated the entire company, describing the way employees should act in singing to the company and the exterior world. For store operations, detailed instructions have also been given to store staffs in order to control daily work in the stores. Though guidelines and manuals are written by central departments, in 2006, inventory of the guidelines was carried out within each department so as to check any guidelines should be updated or created. This showed respect towards each units opinions. rating and modification of guidelines and manuals result in better efficiency of work.To further pardon HMs management structure, the degree of centralization could be examined. The code of ethics, internal policies, and manuals are created by central management. Important decisions that are strongly colligate to the companys wampum are also made by the top management. Purchasing is centrally organized by the head office in Sweden as well. From the above, we could see high degree of centralization is exercised in HM. Nevertheless, HM has a change system. in that location are 20 production offices dealing with 800 suppliers, and 20 country offices within 33 sales countries, handling all business personal matters for the region it responsible for. Planning and organizing, much(prenominal) as store operation, advert are carried out by managers.There are certain advantages and disadvantages of HMs decentralized system with centralized management. From the good side, uniformity can be implement through clear and strict regulations and guideli nes. Besides, this enables higher flexibility in tackling small problems in each department and region. On the contrary, higher risk of unwanted merchandise for the sales countries may be resulted due to centralized buying decision in Sweden. In Japan, consumers are quite different and demanding on quality clothing which usual HM products may not satiate them enough. To avoid such problems, more intense query and country-oriented approaches are needed. It is suggested that research or buying teams determined in the respective sales regions could be set up to perform closer watch on trends and companionable affairs that could alter sales greatly and too quick to begin with response come from the head office.ANALYSIS ON HM EXISTING RETAIL STRATEGIESHM is a very successful and expansive Swedish fashion group and also a famous company in Japan. HMs retail strategy has been developing in different aspects.The trounce toll StrategyHM aims to give the customer unbeatable value by allegeing fashion and quality at the best price. It has been developing the Best Price Strategy. It maintains the best price by limiting the number of middlemen, buying in large volumes ,relying on our in-depth, extensive expertise within the design, fashion, and textile industries, buying the right merchandise from the right production markets, being cost-conscious at all levels and having efficient distribution systems. In Japan, the product price of HM is lower than others. nearly foreign brands come to Japan and charge more than at home. HM is aiming to total global pricing. So now HM is one-half the price of Zara in Japan, thereby making most other Nipponese retailers look relatively expensive. If Japanese consumer spending continues to decline, this will hunt into an even stronger position for HM.Main Collection Sub-CollectionThe buying function focuses on customers, fashion and composition of the range. HMs clothing battle arrays are created in Sweden by approximately 100 internal springs, 50 pattern designers and around 100 buyers. It operates with two main collections per year, one in spring and one in autumn. at bottom each season, however, there are a number of sub-collections so that customers can always find new goods in stores. The aim of the company is to find the optimal time to order each item.Fashion For EveryoneHM offers a wide range of fashion utilize many different concept, from updated classics and fundamentals to clothes that reflect the very latest international trends. In addition, they sell clothes, accessories and cosmetics. The wearing range consists of everyday clothes to partywear. To make things clearer for the customers, it has divided up a range into a number of different concepts for women, men, teenagers and children. The clothes also have a high fashion content within each collection, so that customers can easily combine different garments and find their own personal style.Online Shopping ServiceHM have three sale s channels, stores, the Internet and catalogues. In 1998, HM began its shopping online service which has since been continuously meliorated. A considerable expansion of mail order and online sales is being brisk to complement the stores in the existing markets. Stores continue, however, to be the main distribution channel. The strategy behind the owning of it is that HM can maintain control of the expansion strategy and of business fixtures. But Japan does not provide online shopping service, the sales channel is narrow.The Best Location StrategyThe Best business location has been a firm principle of HM since 1947 and is less important nowadays. The HM store is now a well- ceremonious forepart in most giving shopping streets with considerable customer flows around Europe. In London, for example, they are located on Oxford Street. HM candid the store in Japan in Ginza, Shibuya and Harajuku. Before establishing stores in a new market they conduct a thorough analysis of demograph ics and purchasing behaviour. They also carry out a local survey of the shopping areas and shopping centres, document their size and where their competitors stores are located.Product Quality ControlIn order to maintain the exquisite quality of merchandise, they carry out quality controls. They strive to ensure that garments have been manufactured with the least possible impact on the purlieu and under satisfactory working conditions. HM is known as the king of fast fashion and spots emerging fashion trends, quickly creates knock-off designs and variation using 100 in-house designers. In Japan, the customers are nit-picking and require an extremely high quality fashion. HM may not satisfy their needs.OVERALL SWOT ANALYSIS OF HMThe SWOT analysis is the strengths, weaknesses, opportunities and threats of a company. A SWOT analysis actually has two parts and both are every bit significant. Strengths and weaknesses are the internal analysis the opportunities and threats focus on the e xternal environment. Internal is regarding the information about companys market segments, their competitors relative weaknesses and strengths as well as the industry as a whole. When conducting an external situational analysis, the business customers, market and competitors are analysed.The overall SWOT analysis included the global situation and Japan environment of HM. Firstly, strengths and weakness of HM is discussed as below.StrengthsHM was established in Sweden in 1947 it has a long history and is around 62 years. The past 62 years, HM did a great expansion worldwide. In 2009, there are 1,700 stores spread over 33 different countries and markets, and employ over 73,000 people. HM offer each country single(a) preferences and needs. Also there is exclusive clothing designs for online stores, and this system is provided in some of the European countries, such as Austria, Denmark, Finland, Germany, Netherlands, Norway and Sweden. Informational website is also one of the strengths of HM, everything about HM shown in the official website. It is well-to-do for customers to get the newest issues of HM, and also provides useful and updated information to all types of users. HM time provides a good idea of how HM views fashion. It offers readers a mix of fashion, fanaticism and the latest lifestyle trends. It is issued four times a year and is aimed equally at customers and staff. Like all HMs communication, the magazine can be seen as an invitation to HM. It is important for building the brand in the long term and is also available on the HM website.Besides of the exclusive online shopping, HM also collaborated with fashion designers, designer labels, fashion models and celebrities to offer customers the exclusive collection, such as Karl Lagerfeld, Stella McCartney, Viktor Rolf, Kate Moss and Madonna. On 20 September 2005, HM announced they have dropped Moss for the advertisement campaign of their autumn clothing collection, stating that her image was inco nsistent with HMs clear dis link of drugs in light of recent drug allegations. HM did concerned about the society. In November 2008, Comme Des Garons, a significant figure in modern fashion Japanese designer, exclusive collection for HM interchange in 200 stores worldwide, including Japan, Hong Kong, US and UK. One of the most significant figures in modern fashion, Kawakubo has created a full mens and womens collection for HM, complete with accessories and a unisex fragrance.HM provides variety in fashion, different kinds of clothing and accessories that could easy for customers to tick off up with. The stores are refreshed daily with new fashion items. As with HMs clothing heritage, the idea across the Home collection is that consumers mix and match items and add to their existing dcor and colour schemes. The first home collection will be available from February 2009 in the markets Sweden, Norway, Denmark, Finland, Germany, Austria and the Netherlands. Cushion cover and bed line n sets are the key pieces. The materials are mostly cottons, linens, viscose-cotton mixes and organic cotton.The semipermanent investment in organic cotton is continuing at HM, aims to increase the use of organic cotton and the development of new green materials such as recycled cotton, wool and polyester. HM offering garments that are both fashionable and environmentally compatible. HM had a fantastic response to their eco-fashion, which shows that the customers care about both the environment and design.WeaknessesHM business concept is to give the customer unbeatable value by offering fashion and quality at the best price. When comparing with competitors, the garment quality of HM is doesnt at high level. Since all bourgeon is displayed on floor, there is no backup stock for customers. The customer service is relatively low if the customer could not get any friend from the salesperson. For the garment production, HM does not own any factories, but instead buys its goods from aro und 800 independent suppliers, primarily in Asia and Europe. The problem is that HM cannot get tightly controlled to the distribution network to get new product to the stores. The online shopping store is only provides in European countries, such as Austria, Denmark, Finland, Germany, Netherlands, Norway and Sweden. The online store could not gain worldwide customers attention. In Sweden, Norway, Denmark, Finland, the Netherlands, Germany and Austria HM offers fashion by Internet and catalogue sales. For the employees, there is not a fundamental respect for the individual, which applies to everything from fair pay, reasonable working hours and freedom of association to the opportunity to grow and develop within the company.OpportunitiesIt is the positive towards future expansion of HM and the companys business opportunities. In the past few years HM has been experimenting with new fascias including market company, which it debuted on Londons Regent Street in defect 2007. A second c ompany store will open this week in Westfield and the retailer believes there are further opportunities for the offer in the UK. The 14th store in Europe will open next spring in Paris. Since HM has signed a contract for its first store in Japan in end of 2006. The store is opened in 2008 November. It has been HMs dream to open in Japan. says Rolf Eriksen, CEO HM. There will be more stores in Japan in the future. HM has entered into certify agreement with Match Retail Ltd. for store openings in Israel. The first HM store is planned to open during 2010.HM provides online shopping in a few European countries, but still hasnt announced plans to do so in Asia, North America and Middle East. It is a large market for HM. There is an opportunity to set up online store in those countries.The designer cooperation is the most significant for HM. The crossover series with the famous designer have made a stir in fashion industry. Many designers are willing to cooperate with HM, see it as a sta ge for masking their new design. It brings the new concept to the HM product and enhances their product competitive. HM crossover with Matthew Williamson do a spring collection for 2009.As the Japanese has a strong interest in fashion and Japan is a big fashion market. Japan fashion market is maturing, with competition between global companies intensifying in the Japanese market and with consumers becoming more and more selective about merchandise that they purchased. There is growing presence of shopping centers and fashion malls in and around cities giving consumers increasing choices of locations for shopping. This is do change in the structure of the Japanese fashion market as well as consumers buying patterns.ThreatsThere will be a keen competition between the similar style competitors, such as Zara, Gap Inc., and Uniqlo in Japan. And, the changes in consumer behaviors are also the threat of fast fashion. End of fast fashion as shoppers allegedly switches to less posting ite ms. Weak holiday sales, economic downpour sales will be conducted in HM stores. There also will be unhinged battles over products, the poor quality compete with the luxury goods fast fashion compete with high fashion.Exchange rate fluctuations are strongly related to the export quantities of firms. Since there are a lot of stores all over the world, the rate changes is a big issue of the company.Internationally, HM has experienced some sales declines in recent months and sales across the business were two per cent down year on year at established stores in September. However, refuses to admit any serious threat to HMs success, stressing again its unshakable offer. It is not about value, but value for money and HM think back they are unique when it comes to combining price, quality and fashion. It is the feedback that HM get from customer and it is their success factor.3 RECOMMENDATIONSIn order to raise the competitiveness of HM in Japanese fashion market, some retail strategies a re recommended. We provide some suggestions based on 4Ps.PlaceFor place aspect, it is suggested that HM should offer various distribute channels for increase the sale and enhance its competitiveness.First, providing On-line-shop is a good way to sell HM products. consort to Mark Hogan , GM Group vice president said, Japan is the Internet giant of Asia.There are 47.08 million Internet users. 62 percent of them use e-commerce. It can prove that online shopping is a popular shopping method in Japan. Besides, there are no limitations of online shops locations. It means that even there is only 1 HM shop in Tokyo, people who live outside Tokyo can still buy its products though the online shop. Thus, On-line-shop can help HM broaden its demographic market to boosting its sales.Second, providing Automatic Vending apparatus (AVM) can help HM to be successful. Japanese demand for automation. According to the Japan Vending Machine Manufacturers Association report , there are 5.51 million mac hines in Japan in 2007, Japanese spend most 7 trillion yen (around US$ 58 billion) a year by shopping though AVM. It is a popular buying behavior in Japan.Third, it is suggested that HM should allocate AVM at Railway stations. According to a survey about Japanese Commuting conducted by japan-guide.com , train (JR) is the most universally used of transportation for commuting in Japan. 53% of students and 48% of company workers indicated to commute to school/work by train or subway. Students and workers is the main target of HM. Thus, the suggestion is a fabulous idea for HM undoubtedly.ProductFor product aspect, release family-set outfit is a potential product for increase the sales. Most Japanese love wearing family-set outfit. Providing family-set outfit can attract those family targets. Besides, family-set outfit is complementary merchandise product. It means that if parents select and shape to buy an outfit, they should but another one to their child. The sale can increase dou bly.Second, HM should improve its quality of products in order to succeed in Japan. The cloth of HM is not top notch quality. Japanese are known notoriously for rejecting products for minute reasons such as poor stitching, wild button, and inferior fabrics and the like. Moreover, manufacturing standards are so uniformly high in Japan that a business modal cannot succeed on design and softwood pricing alone. However, Uniqlo, one of the HM competitors, provide high quality products with a reasonable price. If HM thirst for success in Japan, it is important for it to improve the quality of its products.PromotionFor promotion aspect, effective promotion is needed. Promotion can introduce merchandizes to customers and also attract them to come to the shop.There are so many ways to promote the merchandizes. Choosing suitable ways are very important because it affect the effectiveness of the promotion.First, mobile squall is a good media for promotion. Nowadays, roughly everyone have o ne mobile phone. through with(predicate) mobile phone, messages can be easily and successfully transfer to many different people. SMS (Short Message Service) is one common method. In Japan, lots of people like to use SMS to slip by with each other, especially for the youngsters. Recently, Japan Ministry of Education, Culture, Sports, Science and Technology surveyed over 10 thousand students. In 5 secondary school students, there is one sending at least 50 messages by mobile phone every day. 7% of them even said that they sent about 100 messages every day. This shows that most of the teenagers like using SMS. Therefore, SMS is really a good method to send messages in order to promote products.another(prenominal) common method for promotion is using matrix code (2D barcode). 2D barcode is a two-dimensional way of representing information. It is similar to a linear (one-dimensional) barcode, but has more data representation capability. 2D barcodes are in patterns of squares, dots, he xagons and other geometrical patterns. QR Code becomes the most popular type of 2D barcodes in Japan recently. The QR is derived from Quick Response. QR Codes are commonly found in the Internet and magazines. Most current Japanese mobile phones can read this code with their television camera of the mobile phone conveniently. QR Code can encode Japanese Kanji and Kana characters, music, images, URLs, emails. Through this kind of barcode, information can be easily stored and attract people to get it.The QR CodePriceApart From using mobile phone, some programs can be launched in order to promote the merchandizes. Price deal is an example. Price deal is a temporary reduction in the price in a short period of time. It is very effective because low price can attract customer to go into the shop and pay more. Price deal is suitable for short period promotion. Another good example is loyal reward program. Consumers can collect points, miles, or assign for purchases and redeem them for rew ards. In order to get the rewards, customers would like to come more frequently and buy more products. This program can last for longer period, usually a month. Launching different kinds of programs can increase sales effectively.Not only promotion, a good pricing is also very important to strengthen HM in Japanese fashion market. Low price should be maintained. HM have already set low price for the goods. Most of the products are affordable. This can attract customers, especially youngsters who cannot afford high price. The products are already at a best price and it is also one of the competitive advantages. Therefore, low price should be maintained. Another suggestion for pricing is that there should be a price cut for the last seasons fashion. Last seasons product have less attractiveness than the new products. In order to sell them more