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Hennes & Mauritz (H&M) SWOT & PESTLE Analysis

ID : 52398253| May 2018

COMPANY PROFILE -Hennes & Mauritz (H&M)

Business Sector :Fashion retail, Clothing and accessories

Operating Geography :Sweden, Global

About Hennes & Mauritz (H&M) :

Hennes and Mauritz, better known as H&M is a multinational company which was started in 1947 in Swedish city Vasteras. It serves as a fast- fashion house for men, women and children. It has been in operations for past 70 years and ever since it has grown tremendously. It is second largest global clothing retailer and has expanded its market across the globe and is a very popular name for quality clothing. It provides a wide range of selection to the consumers. It has more than 4000 stores worldwide with another 390 new stores planned to open in 2018, with a primary focus on growth markets.
Hennes and Mauritz’s (H&M’s) vision is to “use its size and scale to lead the change towards a circular and renewable fashion industry, all while being a fair and equal company”.
The H&M's purpose is to “offer their customers fashion and quality at the best price.”

Hennes & Mauritz (H&M) Revenue :


SEK 231,771 million (including VAT) (FY ending 30 November 2017) – y-o-y growth of 4%
SEK 222,865million (including VAT) (FY ending 30 November 2016)

Competitive Analysis of Hennes & Mauritz (H&M)

SWOT
PESTLE
The SWOT Analysis of Hennes & Mauritz (H&M) is presented below:
Strengths
Weaknesses
1. Global presence with strong brand value
2. High customer satisfaction
3. Continuously stable financials
4. Affordability and value for price
1. Easy to replicate design
2. Massive increase in unsold inventory
3. Slow response to changing consumer trends
4. Failing mall strategy in United States
5. Backlash over insensitive promotions
Opportunities
Threats
1. Increasing popularity of online stores
2. Global market presence
3. Increasing purchasing power of consumer
1. Changing global dynamics
2. Threats from competitors and local artisans
3. Continuous need for innovation in line with latest trends
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Detailed SWOT Analysis of Hennes & Mauritz (H&M)

 

Strength

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Weakness

1. Easy to replicate designs: H&M can be in competition with other brands as they can easily replicate designs and styles and market them at still lower prices. It is not difficult to create replicas in the fashion industry and thus, it becomes utmost important for the company to keep a close eye on their competitors. They have to be wary of replicas and fake labels that can eat their market very easily.

2. Massive increase in unsold inventory: With the fast changing world of fashion retailing, customers are increasingly moving online and physical stores need to keep inventories in check. H&M has been facing the major problem on increasing unsold inventory over the last two years with the company reporting a massive $4.3 billion of unsold stock as of end FY17. This was an increase of 7% over FY16. Analysts and industry experts blame H&M’s poor inventory management and bland product offerings for the same.

3. Slow response to changing consumer trends: With the change in styles and designs, the products need to continuously move to bring in fresh stock. This could cause tremendous pressure and operations along with need a very efficient supply chain. With a slower supply chain, H&M has not been quick to respond to rapid shifts in fashion and consumer tastes resulting in more markdowns and promotions and low-inspiration collections. H&M’s heavy reliance on its Asian suppliers has resulted in it having its supply chain lead-time 100% longer than of its rival Inditex. While the Asian supplier model has resulted in cost advantage, it has led to lower trend sensibility and higher lead times.H&M needs to adjust as per the market requirements before formulating its strategy ahead.

4. Failing mall strategy in United States: For a fashion retail brand, the real-estate strategy is critical and should be set with a long-term perspective in mind. H&M since opening up of its first store in US, NYC Fifth Avenue store in 2000 has opened up around 536 stores in the country as of 2018, with locations heavily weighted toward malls, being over 80%. This worked for the brand when it was cool and in popular demand. However with increased competition from both physical and online players, mall-based fashion retailers are feeling the cost pinch and this is becoming a major problem for H&M.

5. Backlash over insensitive promotions: Organizations tend to go with quirky and innovative promotions but at times they ignore checking that the promotions should not be socially or racially insensitive. H&M was caught on the wrong side when in January 2018, it came out that the company’s UK site used a black child to sell a hoodie that says “coolest monkey in the jungle.” Though in the UK, naughty children are often called “cheeky monkeys”, in the United States this has major racial implications. This caused a major backlash against the brand globally, with even H&M stores being targeted in attacks in South Africa. The company later apologised for the above incident, however the incident dealt a blow to its reputation.

Opportunity

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Threat

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TABLE OF CONTENTS
DELIVERY AND FORMAT
WHY CHOOSE US?
References used in Hennes & Mauritz (H&M) Analysis Report

1. H&M Buyout Speculation Triggered by Chairman's Growing Purchases: https://www.bloomberg.com/news/articles/2018-05-18/h-m-buyout-speculation-triggered-by-chairman-s-growing-purchases

2. H&M group | History:https://about.hm.com/en/about-us/history.html

3. H&M group Annual Report 2017: https://about.hm.com/content/dam/hmgroup/groupsite/documents/en/cision/2018/01/2110334_en.pdf

4. H&M group - Five year summary: https://about.hm.com/en/investors/five-year-summary.html

Copyrights and Disclaimer

Hennes and Mauritz (H & M) SWOT and PESTLE analysis has been conducted by Nida Ashar and reviewed by senior analysts from Barakaat Consulting.

Copyright of Hennes and Mauritz(H & M) SWOT and PESTLE Analysis is the property of Barakaat Consulting. Please refer to the Terms and Conditions and Disclaimer for usage guidelines.

Hennes & Mauritz (H&M) SWOT & PESTLE Analysis
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