Weekly Business Saga

The A,B,C of Business of Fashion Leaders- H&M

By Prerana Singh

H&M – An Overview

Hennes & Mauritz AB is a Swedish multinational clothing-retail company known for its fast-fashion clothing for men, women, teenagers and children. H&M has diffused its operations across 74 countries with over 5000 stores all around the world and it employs around 148,000 people as of 2016. It is the second-largest global clothing retailer, just behind Spain-based Inditex (parent company of Zara). The company has a significant on-line presence, with on-line shopping available in 33 countries.

This clothing company was founded by Erling Persson in 1947 and presently run by his son Stefan Persson and Helena Helmersson.

H & M Business Model

H&M has a business model that focuses on outsourcing non-core operations so they can focus on the core business model. To do this, H&M buys clothing and accessories from a large selection of suppliers and does not own a single factory. Their core business is to have “fashion and quality at the best price”.

This High fashion store makes revenue worth $25.191 Billion as of 2017. It has deeply rooted its presence by disseminating its stores all around the world and also has started many concept stores.

Business Model Patterns:

Direct Selling

How they do it: H&M’s products are exclusively distributed through its chain of retail stores, catalogues and online store. This allows the company to have full control over their value chain and profit from earning the full retail margin.

E-commerce

How they do it: Next to its physical stores, the company offers a holistic variety of its products in its online store allowing customers to directly order from and to their homes. As the offering in its physical stores and its online store is the same, customers can also use the online store to shop products in sizes that are sold out in the physical store. It also has a special web page dedicated to addressing supplier factory condition.

No trimmings

How they do it: H&M’s store design is simple and standardised across all stores. Clothes are placed on simple racks and shelves. Staff are present, however not meant to assist the customers in their purchasing experience but rather to refill racks and shelves.

Target the Poor

How they do it: H&M offers all its products at reasonable prices. This includes formal and business wear, making it affordable to a large group of consumers with low purchasing power.

Erling Persson opened his first shop in Västerås, Sweden. The shop, was called Hennes, which referred to “Her” in swedish exclusively sold women’s apparel. In 1968, Persson acquired the hunting apparel retailer Mauritz Widforss, which led to the inclusion of a menswear collection in the product range and the name was revamp to Hennes & Mauritz.

The company was listed on the Stockholm Stock Exchange in 1974. H&M continued to enlarge in Europe and began to retail online. In 1998 it bought the domain hm.com from a company called A1. It started its first store in the United States on 31 March 2000, on Fifth Avenue in New York City marked the commencement of the expansion outside of Europe.

Following expansion in Asia and the Middle East and the launch of concept stores including COS, Weekday, Monki, and Cheap Monday, in 2009 and 2010, branding consultancy Inter-brand ranked the company as the twenty-first most-valuable global brand, making it the highest-ranked retailer in the survey.

It is ranked as one of the oldest and Best quality brand with its worth estimated at $12–16 billion.

H&M operated 2,325 stores at the end of 2011, and 2,629 stores at the end of August 2012. Its 3,000th store opened in September 2013 in Chengdu, China. In October 2020, H&M announced that they are planning to close 5% of their worldwide stores in 2021, as a result of the COVID-19 pandemic.

Marketing and collaboration

In November 2004, select stores offered an exclusive collection by fashion designer Karl Lagerfeld. In November 2006, the company launched a collection by Stella McCartney and, avant-garde Dutch designers Viktor & Rolf. In March 2007, it launched another collaboration designed by the pop star Madonna.

In November 2007, the company launched a collection by Italian designer Roberto Cavalli. It was reported that the clothing sold out quickly. Also in 2007, another design with Kylie Minogue was launched in Shanghai, China. 

In 2008, H&M used the song “Hang On” by British singer-songwriter Lettie as background music to its UK website.

For spring and summer 2009, the British designer Matthew Williamson created two exclusive ranges for the company – the first being a collection of women’s clothes and  second collection saw Williamson branch into menswear for the first time, only in select stores.

On 14 November 2009, the company released a limited-edition diffusion collection by Jimmy Choo featuring shoes and handbags, ranging from £30 to £170 including a range of men’s shoes. The collection also included clothing designed by Choo for the first time, many garments made of suede and leather, and was available in 200 stores worldwide.

For fall 2010, the company collaborated with French fashion house Lanvin. In March 2011, the brand’s clothing was featured in an interactive fashion art film by Imagine Fashion called “Decadent Control”, starring Roberto CavalliKirsty HumeEva Herzigová and Brad Kroenig.

In June 2011, H&M announced collaboration with Versace that was released on 19 November. On 4 October 2012, Japanese Vogue editor Anna Dello Russo launched an accessories collection at H&M as Paris Fashion Week. The collection was stocked in 140 H&M stores worldwide and sold through the website. On 12 June 2012,  Beyoncé was the face of H&M in summer 2013. Her campaign, began on May 2013 was entitled “Mrs. Carter in H&M”, and drew heavily on Knowles’ personal style.  

In February 2017, Zara Larsson designed a “playful, young, empowering and little glamorous” collection with H&M. After 20 years, Naomi Campbell came back to collaborate for a global female empowerment commercial spot with the company.

In September 2019, H&M halted its leather purchases from Brazil in response to 2019 Amazon rainforest wildfires. The company issued an email statement: “The ban will be active until there are credible assurance systems in place to verify that the leather does not contribute to environmental harm in the Amazon”. The company imports only a small fraction of its leather needs from the country.

In August 2020, H&M collaborated with Lebanese designer Sandra Mansour for the Fleur du Soleil collection. It was the first time H&M had partnered with an Arab designer.

In April 2021, H&M announced that actress Maisie Williams would be joining the brand as a global sustainability ambassador to help front the company’s campaign to use only recycled or sustainably sourced materials by 2030.

Other Sources of Revenue

Concept Stores

H&M brand, the company consists of five individual brands with separate concepts. Q4 2016 saw the hoarding of a new H&M concept in the Dubai Mall come up, labelled ‘H&M Details’.

& Other Stories

& Other Stories launched in Spring 2013, with seven stores opening throughout Europe. Its Regent Street store opened on 8 March 2013, with other locations in Barcelona, Berlin, Copenhagen, Dublin, Milan, Paris and Stockholm. & Other Stories offers women’s clothing, shoes, bags, accessories, and beauty products, with a focus on high quality throughout a wide price range. 

The High-end Brand COS

COS launched its flagship store on London’s Regent Street in March 2007 with a catwalk show at the Royal Academy. Its concept is encompassed by minimalist style inspired by architecture, graphics, and design. It specialises in modern clothing pieces for men and women that are less trend-oriented than other similarly priced labels. COS makes clothing that can be worn beyond the season. COS has 197 stores in 34 countries in Europe, Asia, North America, Australia and the Middle East and currently retails online to 19 markets via cosstores.com.

ARKET

The first ARKET store was opened in Regent Street in August 2017.  The brand is labeled “a modern-day market and houses a line known as the “archive”, in which each item is known by a nine-digit code organised into department, category, product, and material. ARKET also sells children’s clothing and homewares.”

FaBric Scandinavien AB

In 2008, H&M purchased 60 percent of shares in the Swedish fashion company FaBric Scandinavien AB and bought the remaining shares in 2010 with a price totaling SEK552 million ($62.3 million).

Cheap Monday

Cheap Monday, known for its distinctive skull logo, is a full fashion brand launched in 2004. The brand is available from many retailers worldwide as well as its own stores and e-commerce site cheapmonday.com.

Monki

The brand sells fashion for young women in stores in 13 markets and is available online in 18 markets at monki.com. It recently launched its new online app featuring fashion inspiration, community interaction and wash and repair services.

Weekday

Weekday, styled as WEEKDAY, ‘carries in-house brands such as MTWTFSS WEEKDAY and Weekday Collection as well as external brands. The brand has stores in 9 markets and is available online in 18 markets at weekday.com and in 140 markets at ASOS.com.

Major Investors & Shareholders:

Hand M has remarkable number of investors and share holders.

SHARE CAPITAL:

The share capital consists of 194,400,000 class ‘A’ shares (ten votes per share) and 1,460,672,000 class ‘B* shares (1 vote per share). There are no other differences between the rights of the shares. The list of 20 Largest shareholders as of 31st March, 2021 can be accessed.

The Board aims for the H&M group to have sustainable and profitable growth, thereby allowing a good return to the shareholders. The company’s financial position remains strong and the board’s assessment is that there will be good prospects of a cash dividend in autumn 2021. However, since it is not currently possible to get a full overview of the consequences of the ongoing pandemic, and since the company received government support in the first quarter, the board will not be able to propose a dividend to the annual general meeting in May. The board will come back later in the year with a proposed date and level for resuming the dividend.

Conclusion

H & M is a family of multiple brands, driven by values and determined by the desire to make grand design accessible to everyone in a sustainable way. They strongly believe in diversity and work ethics.

They offer fashion, design and services that facilitate people to be stirred and to express their own personal style, making it easier to live in a more global way.

 

 

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