Clotthing Sector Analysis

Topics: Retailing, H&M, Market Pages: 10 (2652 words) Published: May 8, 2013
Jasmina Chen 301101070
Yeana Jin 301114551
Clement Kour 301118992
Mengyue (Maggie) Li 301125512
Yimeng (Lisa) Liu 301137092
Hennes & Mauritz AB (H&M) is a multinational company based in Sweden. It went public on the Stockholm Stock Exchange in 1974. Founded by Erling Persson in 1947, it was initially called Hennes, the Swedish word for “hers”, and sold only women's clothing. In 1968, the company was renamed to Hennes & Mauritz and, since then, has diversified over the years and expanded its product portfolio to include womenswear, menswear, childrenswear, footwear, accessories, cosmetics and home furnishings. With years of development and acquisitions, the company is now comprised of five independent brands: H&M, COS, Monki, Cheap Monday, and Weekday (Hennes & Mauritz AB, n.d.). In the 1950s, H&M began global expansion by entering neighboring countries throughout Europe. During the 1980s, while continuing their European expansion, H&M bought Rowells, a mail order company to begin catalogue sales. Their first U.S. store was opened in 2000 on Fifth Avenue in New York marking the start of their expansion outside Europe. In 2006, a major expansion of online and catalogue sales began. However online sales were limited to European countries. In 2007, H&M entered the Asian market by opening its first stores in Hong Kong and Shanghai (Hennes & Mauritz AB, n.d.). In 1998, H&M started to use famous models in their advertising campaigns. In 2004, H&M launched its first designer collaboration, partnering with Karl Lagerfeld, creative director for Chanel. The success of the Lagerfeld collection lead H&M to collaborate with other designers and celebrities including Stella McCartney, Madonna, Jimmy Choo, Versace and David Beckham among others to create collections that go on sale in a limited number of stores and with a limited number of products. Designer collaboration has become part of H&M’s yearly merchandise development cycle (Hennes & Mauritz AB, n.d.). Current

As of 2011, H&M has around 2,500 stores in over 40 countries and employed around 94,000 people. Its sales including VAT totalled 129 billion (SEK) for the fiscal year 2011. In 2012, H&M was ranked 58th in Deloitte’s Global Powers of Retailing and third in the apparel/footwear specialty category 2

as measured by retail sales. Production is outsourced to around 700 independent manufacturers through its local production offices in Asia and Europe. H&M plans to continue its expansion by opening stores in Bulgaria, Latvia, Malaysia, Mexico and franchising in Thailand. It also plans to introduce e-commerce in the U.S. Additionally, a new chain, “& Other Stories”, is planned to be launched to target the luxury highend market (Hennes & Mauritz AB, 2011).

On November 15th, 2002, the highly-anticipated Maison Martin Margiela for H&M collection was launched. “Unlike H&M’s previous designer collaborations, the Maison Martin Margiela collection is unique in that it features solely re-editions of the house’s most iconic and best-selling pieces. These items cover more than 23 years of fashion, from the early beginnings of the label to the present” (Carreon, 2012, para. 1).

The major political factors affecting H&M are restrictions on imports and exports and relocation of production facilities. Restrictions on shipment of goods is not a major concern. Relocation of manufacturing and outsourcing continues to be a contentious issue as companies seek to maintain profit margins and reduce costs as well as receive incentives to locate production in specific areas. There is also pressure for companies to show social responsibility.

In 2011, retail spending on clothing or apparel reached approximately € 1.18 trillion worldwide. Western Europe, Asia Pacific and North America accounted for 34%, 30%, and 22% of the global market respectively...
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