2. Company Background
4. Supply Chain Structure
6. Supply Chain Flowchart
7. Conclusions and Recommendations
This report provides an analysis of the supply chain of H&M and management of that supply chain. A brief company background will be established to better understand the analyses that follow. These analyses will include the structure of the supply chain; key challenges within the supply chain; competitive strategies used to differentiate H&M’s supply chain; value adding activities in the supply chain; and concluding recommendations based on the aforementioned analyses to sustain and strengthen their position in the market place.
H&M is a Swedish brand, founded in 1947 in Västerås, Sweden by Erling Persson, which over the years has brought into its product range own-brand clothes, accessories, footwear and cosmetics and caters to women, men, teenagers and children. H&M currently operates as the predominant part of Hennes and Mauritz H&M AB. The H&M Group also owns COS (Collection of Style) targeting an older, more discerning affluent customer and as well as recently acquired FaBric Scandinavien, which includes the chains Weekday, and Monki in addition to the Cheap Monday brand. (H&M Hennes and Mauritz AB 2009)
At the end of the 2008 financial year the H&M group had 1,738 stores in 33 countries including 18 franchise stores, 13 COS stores, 17 Monki stores and 8 Weekday stores (H&M Hennes and Mauritz AB 2009). Since then the Group has increased its fascia to over 1800 stores in 34 countries, most recently expanding into the Russian market.
(Hm.com (b) 2009)
Alongside its stores it has also operated an e-tail website since 1998 in addition to a catalogue service, both currently limited to Sweden, Norway, Denmark, Finland, the Netherlands, Germany and Austria, although plans are in place to increase coverage in the near future. (Hm.com (a) 2009)
H&M operates on the premise of offering “fashion and quality at the best price” (H&M Hennes and Mauritz AB 2009). The primary target consumer is aged 15-34, although H&M offers products aimed at and appealing to either side of this age bracket, with their youth and baby ranges and less fashion forward tailored pieces and its designer collaborations (Mintel Group 2008). Chief competitor to the H&M brand is Zara, which whilst vending higher priced merchandise is H&M’s top competitor in terms of lead-time reactions to new trends, vital in the fast fashion environment of the high street. Other competitors include USA’s GAP, Japanese brand Uniqlo, and Britain’s high street behemoth Topshop.
Group sales for fiscal 2008 totaled SEK 104,041 m, up 13% from fiscal 2007. Although the operating profit margin for fiscal 2008 fell to 22.7%, down from 23.5% from fiscal 2007, the net profit margin remained the same, 17.3%. Taking into consideration the global recession these figures were “regarded as satisfying” (Hennes & Mauritz H&M AB 2008). Interim figures released for the first half of fiscal 2009 indicated that sales amounted to SEK 49,837 m, an increase of 21% (Hennes & Mauritz H&M AB (b) 2009).
(H&M Hennes and Mauritz AB 2008)
H&M’s biggest market is Germany, which accounted for approximately one quarter of sales revenue in fiscal 2008. The declining domestic market in Sweden was overtaken in fiscal 2008 by France as the second largest market in terms of sales including VAT; the UK is the fourth, although the British market is predicted to also surpass Sweden in fiscal 2009 if current growth rates are maintained. (Mintel Group 2008) (H&M Hennes and Mauritz AB 2009).
(H&M Hennes and Mauritz AB 2008)
Supply Chain Structure
Jackson and Shaw (2002) define the supply chain as being an...