Business Model Analysis Report

Background

In 1947, the journey to creating the global fashion store, H&M, began with its first store in  In 2006 and 2007, H&M continued its global march as it entered the Middle Eastern and Asian markets.
Vasteras, Sweden. At that time, it sold primarily women’s clothing under the name, Hennes. After years of expansion into bordering countries in Scandinavia, founder Erling Persson bought Mauritz Widforss in 1968. The purchase broadened the breadth of offering to include men and children’s clothing, and soon after, the store renamed into Hennes & Mauritz (H&M). By the year 2000, H&M finally made its first impression outside the European scope and built upon U.S. soil by building its first store in New York City.

Ever since, H&M has expanded to become a global sensation positioning itself worldwide with about 3,000 stores in 53 markets. It is constantly opening new stores in untapped markets to continue to spread awareness of its brand internationally. H&M prides itself in the vast number of partners, collaborations, and affiliates that it has amassed over the years, including Madonna, Versace, and David Beckham. The company’s progression, just as its clothing line, remains on the forefront of customer needs and values. In 2013, H&M introduced online shopping in the U.S., as well as a global collecting initiative to increase clothing donation. With H&M firmly believing that it “should be the more sustainable choice,” the actions that it has taken has definitively supported this assertion.

Industry Category

H&M, as aforementioned, is a popularized fashion-clothing store that also sells accessories, makeups, and other necessary pieces in an outfit. Women and men (primarily ages 18-45) and children come to shop here to pick up on the latest trends in fashion. H&M focuses its products on cheaper, more affordable pricing for quality goods. Its apparel is not manufactured all directly the company; rather, H&M invests in affiliate brands to sell in stores, including 800 independent suppliers across Europe and Asia. These affiliates all reflect the company’s core values and commitments to providing a top-notch service and relation to the consumers.

Furthermore, H&M proudly sells more than just up-to-date apparel, but the company itself is noteworthy. H&M maintains seven commitments to its brand in order to provide a sustainable relationship with its customers and the environment. These commitments include (1) Provide fashion for conscious customers, (2) Choose and reward responsible partners, (3) Be ethical, (4) Be climate smart, (5) Reduce, Reuse, Recycle, (6) Use natural resources responsibly, and (7) Strengthen communities.

Competition

With a strong devotion to quality of its products and how it carries out its business to the
public, H&M remains a dominant retail store in the clothing industry with (American) competitors, such as Forever 21, Urban Outfitters, Charlotte Russe, and Gap. However, H&M’s devotion to combining the two (reasonable pricing and high quality) positions the company above many competitors, especially in its targeted shopper (18-45 year olds). Competition in the fashion industry always remains a constant battle as the fight to win over younger generations (most times with limited capital) thrives as the central theme. H&M does differentiate from cheaper competitors by offering higher quality apparel (specifically in its organic and recycled cotton choices).

H&M has only been open in America since 2000, and online shopping here has only been accessible since this year (2013). With this slow start in America, H&M is behind many of its established competitors, especially Forever 21, but in the other sense, there is much room for expansion and increased sales. The company has used this potential growth and has been expanding exponentially with multiple large cities with a retail store somewhere nearby. Therefore, with its European-style influence, affordable pricing, and exclusivity, H&M continues to be a brand sought after by the many up-and-coming “fashionistas.”

Personal Connection

            Ever since high school, I have truly dedicated myself in refining my “look.” I believe that every person’s first impression is not who you are but what you come off to be. Therefore, over the past three to four years, I have been piecing together small items here and there building a closet to reflect the man I want to be, but it never came out the way I wanted. I followed and created fashion blogs (my own - Gentlemen Suits - has nearly 5,000 followers currently), and still something was always missing. Personally, I enjoy the bold, yet subtle looks and colors of suits and blazers and ties, and there were no stores that provided me with what I needed. Unlike my father, I cannot afford the higher-end stores that sell suits. Retailers like Banana Republic and department stores like Macy's all offered high quality apparel, yet the style and pricing were not for me. I needed something that brought all my value propositions together bundled into one location, but the search felt endlessly impossible.

            That was until H&M entered Texas. My brother first introduced me into this brand less than five years ago when he lived in Las Vegas for college. He constantly commuted between there and Los Angeles and raved about this store that was modern, fashionable, and most importantly, affordable. When H&M opened up in Texas, it boomed with multiple stores in Dallas, then Houston, and now just this year, in Austin. I have proudly devoted my shopping to almost exclusively H&M products. Suits, tee shirts, pants, socks – you name it – I have found a home in shopping there. H&M has become the gateway bridge unifying my envisioned appearance with the reality of affordable style.

Customer Segments

H&M carries a number of brands in stores that it sells to its younger, more fashionable consumers. As a devoted male consumer of its products, I primarily want to focus on the products that I have encountered most frequently: H&M Men, Divided, and &denim.

H&M Men

            When I first walk into the men’s section, the first section I H&M Men’s suits and blazers are its more expensive pieces ranging from $49.99 up to $199.99 as to appeal to the younger market’s price range and to still avoid the cheap look. I believe the customer’s value proposition for this specific section of H&M Men is a fashion forward, clean-cut style for a higher but still affordable price. In terms of the style, H&M offers ranges broadly for several types of occasional wear, including “work and festive occasions.” This line of clothing provides the latest trends and tailored trims and cuts for the “everyday man” who wants to look well dressed in any setting.
search for is the suits, blazers, and khakis area. This area is organized neatly and in a very “fancy” manner.

Divided

            On the other hand, some men may not prefer the “over dressed” style of suits and blazers and Divided. This line of clothing, according to the H&M site, appeals to the “fashion-conscious young men (who) flock to H&M for up-to-the minute, functional clothing and accessories.” Divided offers a wide range of colored and printed wear in a relaxed fit style. Tee shirts, V-necks, tank tops, pants, jackets, hoodies, and sweaters are all included generally priced under $40. H&M’s selections of affordable apparel derive mainly within this brand while still maintaining the company’s high quality standards.
may also be more frugal in spending. Thus enters

&denim

            Fashion is an ever-changing idea of appropriate and stylish wear, &denim has expanded into the men’s section. The denim jeans line focuses on the trendy, young look, with all types of cuts (slim, bootcut, loose, straight and skinny) and offered in a number of different colors. I believe that male customers who come to H&M for  purchase their denim from here because they enjoy the comfort, style, and competitive pricing.
but one piece remains constant throughout the decades of change: denim. Whether denim be worn as pants or as a jacket, this texture of apparel has become a stable brand within H&M. Popularized more from women apparel,

Sources

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About/Sustainability/HMConscious/Aboutconscious.html.

Collections (n.d.). Retrieved October 6, 2013 from http://about.hm.com/AboutSection/en/About/facts-

about-hm/fashion-for-all/collections.html.

Facts about H&M (n.d.) Retrieved October 7, 2013 from http://about.hm.com/AboutSection/en/About/

facts-about-hm.html.

Goldfingle, G. (2012, April 13). H&M’s brand new approach. RetailWeek. Retrieved October 8, 2013 from

http://www.retail-week.com/sectors/fashion/hms-brand-new-approach/5035594.article.

H&M Hennes and Mauritz AB competition (n.d.). Hoovers: A D&B company. Retrieved October 8, 2013

from http://www.hoovers.com/companyinformation/cs/competition.HM_Hennes__Mauritz_AB.

1bdef5deeef07f57.html.

Our History (n.d.) Retrieved October 6, 2013 from http://about.hm.com/AboutSection/en/About/facts-

about-hm/people-and-history/history.html.