H&M Marketing Metrics Module

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Introduction

Fast fashion manufacturers low-cost clothing for purchasers who wish to keep up with changing fashion trends. Companies may be the first to publicize such emerging styles to clients, profiting from their ever-changing demand (Chipo, Walter, and Rufaro, 2017). The robust business approach is critical to H&M’s and its opponents’ success, such as Zara and Forever 21. H&M’s revenue model is also founded on a solid marketing organization capable of quickly determining what the targeting market wants and incorporating it into the transmission networks. H&M’s business model is also founded on a solid marketing division capable of quickly determining what the targeted market wants and incorporating it into the distributed generation.

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About the Chosen Industry

Fast fashion is an idiom that refers to the growing prevalence of swiftly manufactured and devoured apparel that is designed to fit rapidly shifting trends. The rapidity of this sales strategy gives a competitive edge to the firms who use it (Garcia-Torres, Rey-Garcia and Albareda-Vivo, 2017). This is due to the fact that fast fashion may take things from the concept stage to the final product in a concise amount of time. Fast fashion creates lower-cost apparel for buyers who want to keep up with shifting fashion trends (Neumann, Martinez and Martinez, 2020). Corporations may thus be among the first to advertise such new trends to customers, capitalizing on their ever-changing desire. To be at the forefront of a trend is very unusual because many new goods are to be produced several weeks in advance, if not just a few times each week. Nevertheless, it also has significant adverse environmental consequences, prompting many environmental organizations and giant firms to abandon rapid clothing.

Conventional shops are embracing new techniques to stay up with the rapidly changing shopping trip in the age of see-now, buy-now fashion. The traditional paradigm of four fashion seasons each year is being phased out (Backs, Jahnke, Lüpke, Stücken, and Stummer, 2021). Cheap clothing shops are replicating luxury fashions from the catwalk months before they will be available to the general public, inflicting damage in fashion brands by the period their clothing is offered to customers.

Customers are always looking for the most fantastic bargain on their apparel shopping. However, this includes buying previous season’s styles at a deal in the past. Modern consumers dictate the fashionable lifespan, thanks to improvements in technology and accessibility, as well as poor impulse control and buyers’ need for speed in everything (Arrigo, 2018). Buyers no longer purchase in preparation for the season; instead, they buy to meet a particular desire.

While a supply chain reform is unlikely to be practical, fashion businesses may compete by leveraging customer trend data and analytics. As consumer buying behaviour changes, it is critical to understand who their top consumers are. Connecting private customer information with third-party consumer behavioural data might gain a better understanding of the customer and their interests (Purwar, 2019). These findings might allow you to determine whether implementing a cheap clothing strategy would increase sales or if their target clients would be made better by another option.

Fast fashion has also resulted in a significant rise in waste linked with the fashion market. Many people feel that significant changes must be made in how many significant businesses operate in order to counteract the negative consequences of rapid fashion (Shen, Choi, and Chow, 2017). Clothing can transit several times across the world before reaching the end-user, culminating in carbon emissions, clothing waste, and other particulate pollution.

Customers have the option of reducing the negative consequences of quick fashion. Buying fewer clothes and prolonging the life of the present apparel are two examples. Another option is to go thrift purchasing, which reduces the number of things that end up in the trash and maybe done for very inexpensive rates. Finally, before purchasing a product, customers may conduct research to guarantee that it was obtained and created in a sustainable manner. At the end of the next day, it all basically boils down to customers caring about the negative impacts of fashion products and making a concerted effort to alter that.

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About the Chosen Company

The fast-fashion business strategy is the crucial factor in the success of H&M and its competitors such as Zara and Forever 21. The fashion industry is based on transporting a high number of items from the designers’ worktop to the show floor in the shortest period of time and at the lowest feasible price (Bojonca, 2019). Their items are stylish and inexpensive, verging on throwaway, and are aimed at youthful, fashion-conscious metropolitan consumers. As a result, they have attracted criticism from proponents of sustainable and ethical shopping. Fast fashion stores generate money by having a rapid inventory turnover and regularly replenishing the line of products with the newest trends (Garg, 2020). H&M’s business strategy is also based on a solid marketing division that can swiftly establish what the targeted market wants and get it into the distribution network.

While H&M is not the only quick fashion retailer, the Swedish retailer has a particular business approach. Unlike Zara, H&M does not produce its items in-house but instead outsources them to external vendors all over the globe, mainly in Europe and Asia, who are controlled by determines the specific monitoring offices. H&M developed a test scheme for its Bangladesh and Cambodian manufacturers to promote fair working conditions, in which the business purchased all of the manufacturing’ production over five years. H&M thought that by being the lone client, it would be better able to assure good working conditions while organically improving production, rather than seeking regulation through frequent compliance checks.

Since its establishment, H&M has evolved, becoming the world’s second-largest clothing brand, trailing only Inditex, the parent company of Zara shops. H&M touts its blend of in-store and digital shopping as a competitive advantage (Ullah, 2021). Both businesses’ sustained success is dependent on their use of fast fashion, which is based on detecting fashion trends as they emerge and getting low-cost replicas of them into their shops as quickly and efficiently as possible.

List of the Industry-Specific Metrics

Conversion Rate (The ratio of shopping activities to the number of customers that buy the product): H&M: (27/100) X 100= 27% (H&M Group, 2020).

Sell-out Rate (Number of sold units regarding every 400 units): H&M: (60/400) X 100=15% (H&M Group, 2020).

Turnover (Turnover figures can be viewed as the first indicator for appraising fast fashion brands performance): H&M Turnover = £968 million (H&M Group, 2020, p.16).

Profitability (The profit per second shown in the third column of the following figure): H&M Profit every second = £281.24 (Fenton, 2020).

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Brand Value (Estimated brand value can be recognized as a meta-indicator reflecting the overall effectiveness of company marketing activities): H&M Brand Value = 12,400 million USD (Statista, 2021).

Analysis of the Company’s Marketing Performance

H&M’s strategic plan aims to provide high-quality apparel in the newest fashion at the lowest feasible price. The corporation has four different phases: presentation, development, maturity, and declining (Delirium, 2017). The marketing director examines the buyers and sellers of H&M goods and operates on these four phases of product life to bring an effective marketing strategy on the current design to stay competitive (Xuejie, Chang, and GuangHao, 2019). Some H&M items are substantially more expensive than typical to purchase since they deliver high-end fashion. At the same time, H&M focuses on meeting buyers’ requirements for high-quality apparel at a low price by keeping transportation and labour costs as low as possible.

H&M created a multi-channel advertising strategy that included advertisement, product promotion, and online marketing, allowing the brand to be exposed globally. Furthermore, the corporation entices clients by increasing brand recognition by selling items at inexpensive costs (Mrad, Majdalani, Cui, and El Khansa, 2020). H&M distributes attractive garments at affordable prices to a wide range of markets, with the price defined by the market price of a particular speciality (Giertz-Mårtenson, 2020). The competitive pricing approach focuses on operating efficiently to increase market share rather than charging a high price to make a sizeable operating margin (Zhang, Onal, and Das, 2017). H&M consistently prioritizes the demands of its customers and offers them beautiful things that are in style at the moment.

H&M is always coming out with new goods that boost the customer’s need for apparel, all at an accessible price. Their whole focus is on fashion and quality at the lowest possible price. They have everything a person may want, from casual clothes to work suits, sports to boudoir sets, all at a fair price. They partner with other prominent companies to create a new look.

H&M’s ads constantly leave people in amazement of their visions, concepts, and trendy clothing at a low price. Given the danger of doing an outdoors ad, H&M took a bold decision and is now running campaigns only on digital media (Nguyen, 2018). The COVID-19 pandemic had a significant influence on personal minds. Due to an unforeseen, the exchanges were closed, causing a significant disparity in company income and resulting in redundancy, a GDP shortfall, and slower economic growth.

Recommendations

As marketplaces evolve, H&M should fully redesign their supply chain model in order to get better management over inventories. In commercial terms, storage equates to locked-up capital, and if the supply chain is lax, H&M may find itself in a worse condition than they were in the previous quarter. H&M is considering creating collaborations in Turkey, but it believes that controlling manufacturing within Europe would give them more extraordinary adaptability in the future years as the market becomes more competitive.

H&M should build on their present strengths, such as their in-house design ability, and make product designs that are as modular as possible. Through the risk pooling strategy, they will be able to lower the risk linked to the performance of lines due to design accuracy and modularity. They should locate the majority of their industrial partners in Europe. The partners should be small-scale producers, allowing H&M to maintain greater control and reap the benefits of full capacity availability. They can also investigate competitive advantages and set up manufacturing operations, which would provide an improved resource ratio given the volumes produced.

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The second suggestion concerns H&M’s digital transition and retail developments. They should think about decreasing the size of the storefronts they open in the future and working to make it an engagement centre where consumers can come to sample the product, scan it, and make an order so that it can be transported to their residences. Instead of investing in massive high-end residential properties, they can have modest shop spaces with display stocks and set up a chain of micro warehousing on the outskirts of a city to fulfil client orders made in the store. Creating such an environment will provide them with a comparative advantage against pure-play shops.

The third suggestion is to implement a new diversification strategy to support and enhance H&M’s present operations. Look around: as Millennial customers become more concerned with sustainability and receptive to a shared economy, the industry is shifting toward clothing rental services such as rent and go. H&M should also explore entering this emerging niche, which will undoubtedly become popular in the following years. H&M must recognize that the market is changing and that relying on their antiquated supply network will not suffice. They should rapidly adjust their distribution network and leverage the expertise of their internal designer as well as their immense network of physical shops to build a slick environment to start competing with the new generation of E-commerce competing companies who are transforming the game of fast fashion into superfast clothing.

Reference List

Arrigo, E. (2018) “Customer relationships and supply chain management in the fast fashion industry”. In Diverse methods in customer relationship marketing and management. IGI Global. pp. 1-16.

Backs, S., Jahnke, H., Lüpke, L., Stücken, M., & Stummer, C. (2021) “Traditional versus fast fashion supply chains in the apparel industry: an agent-based simulation approach”. Annals of Operations Research, 305(1), pp. 487-512.

Bojonca, D. (2019) “Corporate sustainability in the fast fashion industry: the case of H&M”.

Chipo, C., Walter, C., & Rufaro, K. (2018) “Staying Competitive in the Fast-Fashion Era in a Developing Economy”. International Journal of Costume and Fashion, 18(2), pp. 1-12.

Delirium, P. (2017). Marketing Strategy H&M.

Fenton, A. (2020) “How much money fashion and retail brands make every second in the UK”, [online] Web.

Garcia-Torres, S., Rey-Garcia, M., & Albareda-Vivo, L. (2017) “Effective disclosure in the fast-fashion industry: from sustainability reporting to action”. Sustainability, 9(12), 2256.

Garg, P. (2020) “Introduction to fast fashion: environmental concerns and sustainability measurements”. In Environmental Concerns and Sustainable Development. Springer, Singapore. pp. 409-427

Giertz-Mårtenson, I. (2020) “H&M: How Swedish entrepreneurial culture and social values created fashion for everyone”. In European fashion. Manchester University Press.

H&M Group (2020). Annual report.

Mrad, M., Majdalani, J., Cui, C. C., & El Khansa, Z. (2020) “Brand addiction in the contexts of luxury and fast-fashion brands”. Journal of Retailing and Consumer Services, 55, 102089.

Neumann, H. L., Martinez, L. M., & Martinez, L. F. (2020) “Sustainability efforts in the fast fashion industry: consumer perception, trust and purchase intention”. Sustainability Accounting, Management and Policy Journal.

Nguyen, D. (2018). Social media marketing strategy-Case study H&M Hennes & Mauritz.

Shen, B., Choi, T. M., & Chow, P. S. (2017) “Brand loyalties in designer luxury and fast fashion co-branding alliances”. Journal of Business Research, 81, pp. 173-180.

Purwar, S. (2019) “Digital Marketing: An Effective Tool of Fashion Marketing”. In Proceedings of 10th International Conference on Digital Strategies for Organizational Success.

Statista (2021) “Fast fashion: brand value comparison of H&M and Zara worldwide from 2010 to 2020”.

Ullah, N. (2021) “Fast-Fashion Labels Industry: Strategy Evaluation of H&M”.

Xuejie, C., Chang, Q., & GuangHao, Z. (2019) “Research on innovation supply chain management in the fast fashion industry—A comparative analysis of ZARA and H&M”. In Proceedings of the 3rd International Conference on Education, Culture and Social Development (ICECSD 2019), Guangxi, China. pp. 29-30.

Zhang, J., Onal, S., & Das, S. (2017) “Price differentiated channel switching in a fixed period fast fashion supply chain”. International Journal of Production Economics, 193, pp. 31-39.

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