How are foreign retailers like Zara, Hennes and Mauritz (H&M), Mango, Uniqlo, Kira Plastinina and Topshop performing in the U.S.? What are their expansion plans and their entry year in the U.S.? Can they compete with The Gap, the U.S. local retail chain which has more than 3,000 stores and has been a preferred shopping destination for U.S. customers. Some of them have defied global recession and are faring well. Here’s a snapshot:

Keywords: Retailing, Zara, H&M, Hennes and Mauritz, Mango, Uniqlo, Kira Plastinina, Topshop

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This case study/article, titled Foreign Retailers in the U.S., was originally published at Casestudyinc.com.

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.
• Total Stores & Expansion: As of Aug. 31 2011, H&M had 2,325 stores. H&M plans to expand in China, the U.K., U.S. and Germany.
• H&M Top Management: In 2009, at the age of 34, Karl-Johan Persson took over as CEO from father. His father became the Chairman of the company.

This case study/article, titled H&M’s Low-Cost, High-Fashion Supply Chain, was originally published at Casestudyinc.com.

1. Introduction
2. Background Note
3. Exhibit I: H&M’s Growth (1974 – 2007)
4. Exhibit II: H&M’s International Expansion
5. H&M’s Supply Chain
6. Exhibit III: H&M’s Best Price Strategy
7. H&M’s Financial Performance Summary (Revenue and Net Income)
8. Exhibit IV: H&M’s Three Sales Channels – Stores, Internet and Catalogues
9. Exhibit V: Table showing some major retailers with # of stores in Japan
10. Exhibit VI: Comparison with major global specialty clothing retailers
11. H&M Quick Facts – Brief Company profile – Revenues, Industry, Employees, Operations, Total Stores, Sales Channels, Major Competitors, Major Brands/Labels, Business/Growth Strategy, Key Executives
12. H&M’s Entry Strategy into Japan
13. Hurdles when entering the Japanese market
14. Channel Issues – Will H&M’s strategy to go alone work in Japan?
15. Product Quality Issues — Will H&M’s fast fashion work in Japan?
16. Design Collaboration, Designer Brands
17. Understanding the Japanese consumer – group oriented culture, the price factor and the Japanese H&M fan club
18. In conclusion
19. Additional Reading and References

1. Introduction

"It has been H&M’s dream to open in Japan. I am very proud to say that we now have our very first store in Tokyo. Japan is a very strategic and exciting market with great fashion awareness. We hope that we can offer our Tokyo customers added value through fashion and quality at the best price. We’re not in a hurry in Japan but we see huge potential if we succeed. We’ll go step by step."
-Rolf Eriksen, CEO of Hennes and Mauritz at the ceremony to open the Japan flagship store.

"Our business concept is really what attracts the H&M customer: Fashion and quality at the best price. Because we do carry all these different lines in our stores, we allow our customer to address [his or her] personality, and that’s really important."
- Karen Belva, public relations manager and spokesperson of H&M in 2002.

"With H&M’s opening, everybody – the Gap and Zara – will have come to Japan"-
Tadashi Yanai, Chief Executive, Fast Retailing, referring to Inditex’s Zara apparel chain.

In April 2007, Stockholm-based Swedish fashion giant Hennes & Mauritz (H&M) opened its first flagship store in China. About a year later (in September 2008), this strategic move was followed by another first H&M outlet in Tokyo, Japan, the world’s second-largest economy. The H&M store – a four-storey shop was strategically located just a few buildings down from competitors Zara and Gap Inc stores. The new store with a floor space of more than 1,000 square meters was first in a series of stores that H&M planned to open in Japan. The world’s No. 3 clothing retailer had aggressive plans to open stores in Japan, as well as sites in regional shopping centers.

With the European markets saturating, H&M was pursuing a rapid international expansion strategy. But the timing of H&M’s entry strategy into Japan, especially when the economy was struggling with recession and customers were tightening their purse strings was open to discussion. Besides, Japan was regarded as one of the world’s most competitive fashion markets. Market reports also suggested a declining market for clothing and footwear. Some observers called it the toughest trading conditions in decades. However, H&M was confident of differentiating itself and competing with expensive brands like Christian Dior, Giorgio Armani and Chanel, as well as the more reasonably priced Gap and Japan’s hugely popular Uniqlo chain.

Background Note

H&M was founded in 1947 by Erling Persson, a salesman from Västerås – a small town in Sweden. He began his career working for his father delivering cheese to restaurants in Stockholm on a bicycle. He was attracted by the concept of clothes stores selling stylish garments at low prices when he once visited the U.S. He was amazed at the success of retailers like Macy’s in New York. He opened a similar store in Västerås selling clothes for women. He named the store ‘Hennes’ which stood for ‘hers’ in Swedish…

…Today, H&M is the world’s third-largest retailer by sales with around 1,600 stores in 32 countries with 68,000 employees. In the past two decades, H&M grew at an average rate of 20% annually. It managed to grow quickly into the world’s third largest clothing retailer by offering clothing that is seen as both fashionable and reasonably priced. It made its mark on the apparel industry, mixing the latest trends with fashion classics. H&M is popularly known as the king of “fast fashion” and the purveyor of quick-to-market trendy clothing. H&M’s business model is based on "Fashion and quality at the best price."

Will H&M be successful in Japan?

"I believe that the interest in a new change would be big in Japan. It’s one of the biggest countries we have entered. If we succeeded as we have done in all the other countries,[Japan] could be a huge market for H&M."- CEO, H&M

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Related Case Studies

• H&M’s Low-cost, High-fashion Supply Chain

Case Keywords: Hennes & Mauritz, H&M, Entry Strategy, Japan, Expansion into global markets, International Business, Competitive Strategies, local culture, Japanese apparel market, Fast Fashion, Best Price Strategy, H&M’s Three Sales Channels, Channel Issues, Product Quality Issues, Design Collaboration, Designer Brands, Japanese H&M fan club, Erling Persson, Zara, Uniqlo, Fast Retailing, Supply Chain

Case Updates/Snippets

• H&M in Asia- H&M has over 1,800 shops in more than 30 countries. H&M’s principal markets are in Germany, the United Kingdom and Sweden. In Asia (2009 figures), H&M has four stores in Japan, 15 stores in China and 6 stores in Hong Kong. It plans to set up its first store in Korea, sees potential in Taiwan and wants to up its store count in China by 30% in 2009. H&M’s top management considers Asia to be the newest and biggest market for H&M in future.
• H&M’s business model and focus on low-cost, fast-moving fashions, and geographic spread helped it to weather the economic downturn better than its competitors. During 2009, the Swedish fashion retailer H&M was the top-ranked global fashion retailer.
• In fiscal year 2009, H&M added a total of 250 new stores, 25 more than originally planned.
• H&M in China: In 2007, H&M entered China. By 2011 it had 64 stores in China out of a total of 2,410 world-wide. China has been more profitable to H&M than any other market and it expects to treble its store count by opening stores in smaller cities of China.

This case study/article, titled Hennes & Mauritz (H&M) in Japan – Hit or Mistake?, was originally published at Casestudyinc.com.