H&m - the Retail Clothing Giant

IBU 641 Final Exam

H&M: The Retail Clothing Giant

By Ariful Shovon

1. Does it surprise you that the second largest clothing retailer is selling in stores in only 54 countries plus an additional 10 countries online? Why do you think it is not covering more of the world’s countries?

The largest clothing retailer Zara, owned by Inditex operates over 88 countries Worldwide. The second largest being H&M, operates in 54 countries. After identifying their countries of operation, it seems that their brands are of high demand and popularity in developed economies, such as South Africa in the Africa continent, in Asia Pacific countries like India, Australia and China. The point is, their stores are located in economies which are developed mostly. Even though their goods are affordable, but only for those people who live a high standard lifestyle compared to third World countries. Thus, I suppose the countries they have online stores for, must have a special demand for their fashion, which can be met without the burden of opening a store and selling them through online. It is surprising to many, but with statistics, the answer is self explanatory. H&M  is a success because of its effective strategy and decision making to locate its business in the right places after all.

H&M are expanding around the world, but their steps in doing so are cautious, they are moving where their products would be demanded. Fashion varies from border to border; just opening stores in any location isn’t going to guarantee its success. Take IKEA the furniture retail as an example, the reason behind its success is because of its extensive research before it enters a border for business. Being of Swedish origin, H&M follows similar strategies. It’s not about entering just any market, but entering a market where they can expect to be successful following their global business culture and strategies. I have been to H&M stores in France, United Kingdom and United States, one thing I do enjoy is their unique and uniformity of their fashion they have been able to maintain and uphold in their designs, which makes me their regular go to when it comes to purchasing trendy clothes and accessories.  

1. H&M does not own any of the factories that produce its clothes. Instead, it relies on some 1,900 factories and 900 suppliers to create what its team designed. These factories and suppliers are mostly in Europe and Asia. How can H&M ensure that its customers receive the quality expected in the clothing?

The key to H&M’s success is their commitment to quality in their garments. Such is not an easy task when you do not own the 1900 factories and 900 suppliers who supply them. A lot of their products are originated from my country Bangladesh, which doesn’t have skilled labor, but cheap labor which fashion industries take advantages from. Now, to ensure quality, H&M has a special process to make sure that the right garments are entering their stores and online around the World. They carry out various types of quality tests before every order is received. These quality tests involve making sure that the clothes are safe, and up to standards for meeting their quality requirements. It is said that H&M carries out more than 500,000 tests every year not only by H&M as well as other testing institutes. Meeting the customer needs through isn’t limited to just supply chain management; quality tests and effectiveness are a key part of what makes H&M successful in making sure customer needs are being met in terms of trend preference, quality and safety.