Pricing and Retail Strategy of H&M
Hennes & Mauritz (H&M) is a Swedish clothing retail company. The company was founded by Erling Pesson in 1947. The first H&M store was opened in Vaesteras, Sweden in 1947. The mission of H&M is to offer fashion and quality at the best price where “quality includes ensuring that products are manufactured in a way that is environmentally and socially sustainable” (H&M, vision & policy, n.d., para. 1). This essay is to highlight the current market analysis, pricing strategy, retail strategy, and competitive advantage analysis of the company.
Current Market Analysis
H&M is the world’s second largest retailer, only behind its main rival Zara of Inditex (Petro, 2012). The company currently has 3006 stores in 53 countries. The company does not own any factories. H&M outsources production to network of 800 independent suppliers; 75% in Asia and 25% in Europe. In order to increase the efficiency and productivity of its supply chain, the company strategically locates its network of 20 to 30 production offices close to its suppliers. According to Stockholm Newsroom, the pretax profit of the company for the month of June to August of 2013 is $907 million, which indicates an 11 rise in turnover (Pollard, 2013). The company continuous development plan facilitates its goal for both brick and mortar, and online stores expansion worldwide. The target segments for H&M, a category specialist store, are trendsetters and fashion/money conscious males and females ranging from 16 to 40 years old with income ranging $15,000 to $60,000 annually.
• Strengths: Desirable fashionable trends at best prices
Strong supply chain management through procurement, communication, logistics, and IT infrastructures (Petro, 2012)
Collaboration with designers and celebrities
• Weaknesses: Products rejections
Perception of low quality
• Opportunities: Expansion in new and existing markets
Variety of products (from clothing to home decors and essentials)
• Threats: Retaliation from business’ rivals
New business entry
• Trends: Affordable luxury
Social responsible companies
H&M offers fashion apparels and accessories for entire family, including men, women, teenagers, and children. The range of H&M products include casual wears, dresses, swim wears, active wears shoes, accessories, formal wears, and etc. In addition, the company also carries home decors and products which mainly exclusive for online stores. The varied assortments are ranging from bath towels to vases to pillows to home decorative necessities. Since the business model of the company is to offer trendy fashions with decent quality at affordable prices, H&M has distinguished its brand from its competitors by collaborating with world-renowned designers such as Versace, Roberto Cavalli, Jimmy Choo, Marc Jacob, Karl Lagerfeld, and Comme des Garcons; just to name a few. Through these exclusive styles...