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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)

The SWOT Analysis of Hennes & Mauritz (H&M) is presented below:
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
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)



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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.


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The PESTLE/PESTEL Analysis of Hennes & Mauritz (H&M) is presented below:
1. De-globalization surge across the globe
2. Economic instability due to trade restrictions in North America
3. Changing leaders in USA, Europe, Asia
1. Changed tax systems in Asian markets
2. Changing economies of scale
3. Changing labor laws
4. Increasing disposable income in emerging markets
1. Changing choices of customer
2. Social Media emerging as a storefront for fashion retailers
1. Innovative technologies such as data analytics and AI to improve efficiency
2. Increasing importance of online channels
1. Stricter norms and regulations for foreign companies in some countries1. Demand for eco-friendly products
2. Climatic conditions influencing apparel choices
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Detailed PESTLE Analysis of Hennes & Mauritz (H&M)



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1. Changed tax systems in Asian markets: With the introduction of new tax systems in countries like India (GST), the market could become a little unstable for international companies as there will be shift in tax regime. Also, there is an overall a shift in the geo-political dynamics across the world. Value added tax or VAT is going to be introduced in the UAE and Kingdom of Saudi Arabia in 2018. Namibia and Serbia are working on improvements in digital technology and trying to convert their economy into a digital one. China is not far behind when changes are considered and is working not only on converting its tax procedure into digital but is also working on changing the culture of tax authority and way it interacts with the taxpayers.

2. Changing economies of scale: The economies of scale are also shifting back from once developing counties to other regions. The cost of labour, production, operations along with marketing and sales pose several challenges to the company. Many services which were earlier highly tradable due to exclusivity are now becoming obsolete. Also, economies are becoming much more volatile in the present scenario. There is a worldwide movement against sweatshops and thus, a lot of dynamics have changed in the current world system.

3. Changing labour laws: The international labour organisation works for ensuring uniform labour standards across the world. The world is very well connecting with technologies such as IOT and AI, as much as it is disconnecting in wake of the de-globalisation wave. Thus it is a very crucial time for companies to make decisions. The global ease of doing a business ranking of many countries including India is becoming better for the good. But, with that, there is also increase in competition level. Thus, keep all these in mind H&M will have to explore its potential investments and understand the market conditions before it launches itself into new markets or explores different market segment/service in current markets.

4. Increasing disposable income in emerging markets: The average income level of a country governs its purchasing power. The pricing strategy has to be in sync with the buying capacity of the consumers. Emerging markets such as China, India and countries in South East Asia have seen a rise in disposable income over the last decade. This has spurred a spending in areas such as fashion and travel retail. The level of income determines what kind of expenses an average family can incur in their lifestyle. Thus, the income factors play a major role in consumer purchase intention and hence, these factors have to be accessed and analysed properly before H&M could take any decision with respect to its current or new markets.


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1. Stricter norms and regulation for foreign companies in some countries: With changing geo-political scenario in terms of immigration and emigration, H&M has to pay utmost attention to the underlying dynamics. Also, it has to check the favourable markets to sustain its business and profits. It should thoroughly access and weigh its options before taking a decision. It should make informed decision rather than uncalculated risks. H&M has to also take care about the change in various laws that happen across the countries with changing the political and social system. It should consider the various FDI rules and regulation that are specific to location and geography. Also, it should abide by local laws and regulation pertaining to various aspects. They should also maintain an ethical and healthy work place environment and abide by international laws and guidelines that are to be followed by all companies. Labour laws and labour unions should be dealt carefully. It should always seek legal advice before venturing into any unknown territory. It should follow ILO guidelines and take into consideration interest of its stakeholders before any crucial decision is implemented.


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Check out analysis of other relevant companies

References used in Hennes & Mauritz (H&M) Analysis Report

1. H&M Buyout Speculation Triggered by Chairman's Growing Purchases:

2. H&M group | History:

3. H&M group Annual Report 2017:

4. H&M group - Five year summary:

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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.