H&M’s Low-Cost, High-Fashion Supply Chain

Case Study Abstract

The focus of this case study is the supply chain of fast-fashion giant, H&M. H&M – the world’s third-largest retailer by sales – has grown into a profitable force in the global apparel market by offering clothing that is seen as both fashionable and reasonably priced. This case discusses the supply chain management practices of H&M and how it responds quickly to changing fashion trends by renewing its lines. H&M’s logistics, inventory management process, design collaborations, sales channels, online branding and best price strategy are briefly covered.

Table of Contents

1. Introduction – Fast Fashion and Supply Chain Management
2. Background Note
3. H&M Quick Facts
4. Elements of H&M’s Innovative Supply Chain
5. Double Supply Chain
6. H&M’s Three Sales Channels
7. Logistics
8. Efficient Central Distribution Center
9. H&M’s Best Price Strategy
10. H&M’s rapid reaction supply chain – Flexible Purchasing and the ICT platform
11. Branding online and the Virtual retail experience
12. Design Collaborations
13. ‘The shock of the new’ every day – Building a continuous consumer supply chain
14. Exhibit I: H&M’s Growth (1974 – 2007)
15. Exhibit II: H&M’s Global Expansion
16. H&M Timeline
17. H&M’s Financial Performance Summary (Revenue and Net Income)
18. Exhibit VI: Comparison with major global specialty clothing retailers
19. H&M: Sales Graph by country, 2007
20. H&M: Store Locations, 2007
21. H&M: Sales by Country, 2007
22. Questions for Discussion

Case Study Keywords: Hennes and Mauritz, H&M, Supply Chain Management, SCM, Erling Persson, rapid-reaction, Madonna and Kylie Minogue, Rei Kawakubo, founder of the Comme des Garcons fashion chain, Zara, Gap, Apparel Retailing Case Study, Logistics and Distribution, IT enabled supply chain, supply chain integration, information sharing, inventory management, fast fashion, continuous consumer supply chain, best price strategy, major global specialty clothing retailers, Design Collaborations, sales channels

Case Questions for Discussion

1. In the past, apparel pipelines in the fashion industry have infamously been long, complex and inflexible. How did H&M improve its buying cycle and responsiveness of its supply chain?
2. “In modern retailing it is the supply chains that compete rather than companies.” Support this statement using examples from H&M’s supply chain and business model.
3. Which of the following do you think is the driver of fast fashion that has a distinct impact on the supply chain – the Manufacturer, the Retailer or Consumer Demand?

Case Updates/Snippets

• Reduced time to market – Photos of fashion shows are available online immediately after a show. This has enabled fast-fashion retailers like Topshop and H&M to cut the time span between catwalk and store. Designs of luxury brands can be interpreted to the general public quicker than before. Earlier, it took months for retailers to interpret designs by luxury labels for the general public. Many designers feel that this has led to shoppers desiring for frequent refreshing of stock.