Introduction: Type and category of retail channel
Hennes and Mauritz (H&M) retail store deals with men, women, and children’s clothing. The company specializes in designing, manufacturing, and selling of all types of clothing across the world. It also distributes cosmetic products, footwear, home textiles, and accessories in more than 40 stores across the world. Other than selling its products in its branded stores, the company makes online and catalogue sales in various first-class nations (Hennes & Mauritz 15).
Norway, Denmark, Netherlands, United States, and Germany are some of the nations that the company targets when making online and catalogue sales. From one time to another, the company launches new online stores. It opened its online store in the United States in August 2013, and after that, the company launched its first store in Australia in April 2014. H&M has employed various strategies of ensuring that it attains profitability, it maintains competitive advantage, and it employs technological leadership.
The executives of the company ensure that they have more highs than lows following the recent rises and lows in sales tax and net profit. H&M’s core competency strategy is expansion through opening new stores in new locations. In the stores, customers are assured of obtaining quality garments at attractive prices. Lastly, the company insists on technological leadership, which helps in maintaining a good relationship with the suppliers, and it helps in lowering manufacturing costs.
Reason for choosing the channel
H&M is an interesting company that anyone would wish to investigate. Other than offering the latest fashion, the place has the most affordable prices. In the contemporary world, one would expect a fashion retail store to sell its products at very high prices; however, H&M challenges other dealers of retail clothing because of its low prices. Indeed, if any clothing dealer tried to compete with H&M in terms of prices, it would receive a big blow. There is a very high probability the executives of the company are very particular about the manufacturing costs.
Moreover, they only aim at generating little profits for every product that they manufacture. Due to its low prices, the company achieves the economies of scale competitive advantage. The most interesting thing about the company is its ability to meet the diverse needs of women, men, teenagers, and children in the contemporary world. Probably, the company executives have invested in research about fashion and the desires of people in the evolving world. Interestingly, with its low prices, H&M still achieves to make massive profits and its employees and customers’ level of satisfaction is beyond expectation.
Background of the chosen channel
In 1946, Persson founded the famous H&M Company, and he opened a women’s clothing shop in Sweden. The shop was named Hennes, but before long, he acquired Mauritz Widforss, and the company’s name changed from Hennes to Hennes & Mauritz (H&M). Mauritz was an apparel retailer that specialized in menswear collections.
Thus, its acquisition enabled Persson’s business to include menswear in its stores. Since then, the company has expanded and opened new stores in major nations across the world. The company has opened more than 2500 stores across the world, and it has more than 116,000 employees. The company operates in 54 different countries, and its garments are made in Asia and Europe. It aims at increasing its growth by 10-15% per annum, and by 2015, the company aims at increasing its sales revenue and earnings per share by 20% and 30% respectively.
H&M is very particular when it comes to identifying the location of their retail store in any new country. The marketers of the company make a stringent analysis of the demographic structure, economic growth, political risks, and environmental sustainability levels of the area that they intend to open a new retail store. H&M stores are always located in the best settings in major towns in a country. Interestingly, the company leases its retail premises.
Thus, it is capable of relocating if the current location becomes unfeasible. In Asia, Europe, America, Oceania, and all continents in which H&M operates, its retail stores lie in the most attractive streets and shopping centers.
The company’s mission statement is to provide fashionable and quality products at low prices. The company has a highly valued design department that is in charge of monitoring fashion trends. The department is keen on developing unique clothing that captures the eyes of the customers at first sight. The design department is obligated to have a wide range of designs and materials, where the designers ought to order quality materials in large volumes.
The finance department is very particular with the manufacturing costs at every stage of production. H&M emphasizes on good working conditions of the machinery to cut on the overhead costs. It is noteworthy that human labor is significantly cheap in Asia, where the company has its biggest manufacturing firm. Overall, the well-organized company can carry out its operations in an ordered manner that enables it to achieve its mission of providing fashionable products at low prices.
It is noteworthy that H&M does not have any interest in franchising in spite of its aim of increasing its number of stores annually. Probably, the company has little trust in other people, who would have an interest in operating their businesses using the firms’ royal name. H&M runs all its stores apart from some few stores that are managed by franchising companies.
Customer services, philosophies, and programs
The driving force of offering fashionable products at the best price is the guiding principle towards offering quality customer care services. The company ensures that customers can obtain products that exceed customers’ expectations.
The philosophy guiding H&M inclines towards ensuring customer satisfaction. The company has an excellent online customer service site that answers all the queries of the customers. Customers who have difficulties in placing orders, tracking orders, making payments, or returning unwanted products can always obtain the services online (“International Accord at H&M” 3). A customer can reach the H&M staff through a contact phone number and email address.
Interestingly, customers can even make split payments for the products that they intend to purchase if they do not have sufficient money. The company website informs customers of the latest fashion, and customers have 28 days to decide if the item is right for them. Customers who are dissatisfied with a garment, for example, can return the unworn garments within 28 days from the date of purchase. They can opt to exchange the product or obtain a merchandise credit.
The society comprises of the largest number of customers that are likely to purchase a company’s products. H&M has invested in various programs that ensure that the company’s operations have positive effects on the people and the entire environment in which it operates. The Corporate Social Responsibility (CSR) programs that the company engages in play a great role in winning the trust of the customers.
The donations to charitable organizations and health organizations help in popularizing the company and its products. H&M invests in advertising programs that inform the customers of the latest fashions and the discounts that the company has to offer. Although H&M has not fully explored the customer loyalty programs, it has an opportunity to launch such programs to enhance the loyalty of the customers.
Employee relations, philosophies, and programs
Employees are very important stakeholders of any company, and H&M has a good conscience in caring for its employees. H&M employees receive fair wages for their human power, and the human resource department ensures that the employee relations are admirable. The number of working hours is controlled, and the value-driven workplace enables the employees to strive to offer their best.
The equality philosophy and high ethical standards play a great role in motivating employees and strengthening their relationships. Essentially, all employees have equal opportunities to grow and develop their careers within the company. The enduring values of the company can attract skilled people to join the company and offer their esteemed services.
Further, the company has a way of appreciating and satisfying its employees. Straightforwardness and teamwork spirit is another approach that the company employs to avoid unnecessary bureaucracy. Therefore, the ability to retain the right employees enables the company to succeed and outshine other companies operating in the clothing industry. H&M invests in training programs that play a great role in educating the workers. Through the workshops, the employees can obtain a clear understanding of the company’s values. Moreover, the programs enable the workers to air their views regarding the operations of the company.
H&M aims to provide fashionable and quality products at low prices. This is the main factor that drives customers crazy about H&M’s trendy fashions at considerably low prices. Teenagers are fond of visiting the retail shop to purchase fashionable outfits for $30 or less. Essentially, the average price of any item in H&M is $18. Everything in the mall is attractive, and the customers always find stuff in H&M to be cheaper than any other retail shop. The retail store gives discounts from one time to another.
A customer can purchase a woven top for $20 and a bikini top for $8.95 after obtaining a 50% discount. Ladies enjoy the summer season as H&M has a variety of light outfits for them. H&M categorizes its products according to the wearer. The prices for the women’s outfit lie between $1.66 and $251.67. The cheapest male outfit is about $1.68, while the most expensive item for the males is $251.67 (EDITD 3). The outfits for the children are relatively cheap as they range from $1.68 to $67.1. A pair of leather leggings is somewhat expensive for the female outfits while the men have to part with quite some amount to have a leather jacket.
Further, the company categorizes the prices according to the nature of the item. The prices of tops, bottoms, dresses, nightwears, and accessories go for less than $50, whereas outwears and foot wares are highly-priced. Generally, the price of an item depends on the type of material, the size, and the nature of the item, among other factors. The company can maintain the best prices by having few intermediaries, purchasing fashionable input materials in bulk, being cost-conscious in the production process, and having efficient distribution channels.
From the discussions, it is evident that H&M is doing a great role in meeting the customers’ needs. The company gains its strength out of its ability to produce fashionable and quality products at a low cost. Consequently, it can sell its products at low prices and make profits. Moreover, the retail channel enjoys the cost leadership strategy that achieves the economies of scale competitive advantage. However, the fact the company does not have a firm loyalty program is depressing. It is a high time that H&M introduced a customer loyalty program to reward loyal customers.
Moreover, the fact that the company does not employ the franchising expansion strategy fully is illogical. It is noteworthy that most multinational companies sell the rights to use their firms’ name to other entrepreneurs who desire to open businesses in unexplored localities. H&M has not explored the developing nations, and franchising would enable the business to distribute goods without having the liability of the chain stores.
The approach would play a great role in enabling the company to expand and have its name known globally. Moreover, franchising will bring diversity, and it will create new job opportunities. In the future, H&M should consider embracing the franchising expansion strategy fully, as long as the franchisees agree to adhere to the franchising agreements.
EDITD 2014, Australian Market Report April 2014. PDF file.
Hennes & Mauritz. ” Annual Report 2013.” Business Wire 4.2 (2014): 1-18. Print.
“International Accord at H&M.” European Industrial Relations Review 360.1 (2004): 2-3. Print.