H&M's competitive position in the global apparel retail industry

H&M

The industry and market environment

H&M, from Hennes & Mauritz AB, is one of the most known, successful, popular and globally recognized apparel retailers. The firm operates stores in over sixty countries, in virtually all corners of the globe, from the United States, to Europe, Africa and the Middle East (Website of H&M, 2016).

The company operates in a highly dynamic and competitive environment, which is influenced not only by fashion trends, buyer power and changing consumer demands, but also by geographic and regional disparities, and social, cultural and economic differences across the countries in which the retailer is present. The company seeks to respond to these challenges by devising a globally integrated business model, with local adaptation based on local market features.

Competitors and partners

The competition in the apparel and accessories industry is fierce and the players are generally divided into two categories. First, there are the large retailers, such as H&M, C&A, Tommy Hilfiger, Levi Strauss & Co., Gap, Ralph Lauren, Nike, Adidas, Next or Zara. These large size retailers have the competitive advantages of buying in bulk from their suppliers and being therefore able to negotiate lower prices and then to also offer their customers lower retail prices.

The second category of competitors is represented by the smaller size clothing retailers, who do not possess the advantage of bulk buying from suppliers and are, as such, forced to retail their merchandise at higher prices. The competitive advantage of these retailers -- many of which are locals -- is that they can offer personalized customer care and diversified clothing selections, which is different from the larger retailers, where the clothes are often similar as emphasis had been placed on production efficiency (Wagner).

In terms of strategic partnerships, H&M has sought to establish relationships with worldwide apparel manufacturers which create high quality products at cost effective rates. In mitigating the sweatshops debate which affects the industry, the company has set out a 25 points agenda to ensure the sustainability of its partnerships with worldwide suppliers. Some of the points on its agenda include:

Auditing the suppliers in terms of sustainability

Rewarding sustainability performances

Providing support to remedy causes of non-compliance

Implementing labor training and ethical training

Developing practices that ensure fair pay to the employee in supplier factories (Website of H&M).

Competitive advantages and disadvantages

H&M is characterized by two important disadvantages. For once, it has invested large capitals into the creation of high volume clothes, leading as such to high stocks. The company runs the risk of low revenues in case its product lines are not successful since it has little diversity to offer to its customers and its capital is blocked in stock. The second disadvantage is represented by the changes in its target consumer base. These individuals are young, fashionable and highly volatile consumers, who could easily buy their apparel and accessories from a different retail if this became more fashionable. The company must, as such, continually reinvent the products it sells to ensure ongoing fashion-ability.

The advantages the company reveals include its global presence, the provision of complementary products (such as clothes for men, women, babies and children, and also the retail of home decor products), the high fashion sense of their products and the affordable prices presented to their consumer base.

Business opportunities