H&M Supply Chain Case Study
The Main Objective:
Following the traceability of items through the Supply Chain and Item Map.
(H&M STUDIO HOLIDAY CAPSULE LOOK 4, 2023)
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Parent Company: H&M Group
CEO: Helena Helmersson
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Women's
Men's
Children's
Home
Beauty
Sport
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Stores in USA: Around 495 Stores
Globally: Around 3881 (Excluding the USA)
Total Stores: Estimated to be 4,375
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H&M is known for their trendy products in Fashion, Home, and Beauty while improving their sustainability practices without sacrificing their low prices. H&M is also known for collaborating with Designer brands to provide affordable luxury looks.
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H&M has policies placed to provide a safe and fair environment for all workers. Click to access the link to the Sustainability and Social Responsibility Research.
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H&M is highly transparent about their goals and progress around sustainability. Including being awarded recognition for their successful efforts. Click to access the link to the Sustainability and Social Responsibility Research.
Link to the H&M Sustainability and Social Reasonability Research.
Marketing, Social Media, & Assortments
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Marketing
The Four P's Place
-Store locations are in populated locations or well known locations to keep high levels of traffic. -Has a high level of social media activity with decent two way communication engagement.
-Collaborations are done deliberately and appropriate for the target audience. Price
-Competitive pricing to give H&M an advantage over their competitors. Including keeping the price low. -Price Variety, maintaining low pricing but appealing to a range of groups at different price points. Product
-H&M offers a range of products over multiple categories
-Trendy Products in their Product Design
-Balances low price with quality. -In the process of trying to achieve sustainability in their products lifecycle. Promotion
-Social media Marketing location in popular channels that are appropriate for the brand and actively post different content based on the platforms intended use.
-Advertisement are focused on being digital to appeal to the young target audience.
-Partnering with designer [Brands] such as Balmain, Alexander Wang, and Mugler for a limited time. To create fresh and interesting campaigns that are engaging to consumers.
-H&M has a loyalty program to great an incentive to return, corresponding with using email marketing to promote the program.
-Discounts and promotions are used to bring in returning and new consumers to the brand with small deals or major holiday sales.
Research was conducted using (H&M Marketing Mix, 2023) and (Driving Trends: H&M Marketing Strategies, 2023) as references.
Image: (RABANNE H&M, 2023)
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Social Media
Instagram [38.4M Followers] Posts visuals in a 3 post pattern containing photo and videos revolving around collections and influencers [or celebrities] collaborations.
YouTube [439K Subscribers] Lookbook videos in long form content for collections and collaborations.
Pinterest [1.4M Followers] Photographic content of individual looks in a collection and Advertisements for holiday sales or collection releases.
Twitter, also known as X [7.7M Followers] Twitter is used to post short form videos and posts about brand related content. These posts humanize the brand more.
Linkedin [2M followers] Used to post collaborations with other brands and reports from the parent company H&M Group.
Use of (Espinoza, 2023) for H&M's social media strategy research.
Image: (DIVIDED FALL, 2023)
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Assortments
As of recently H&M has entered a new part of their Assortment Strategy by working with third party brands to source new products. One example of this is having access to New Balance and Adidas from the H&M, this way of sourcing is also applied to the other brands under H&M Group.
Additions citations that were refenced: (Abdulla, 2023) (Anderson, 2023) (H&M, Shein Explore New Retail Model, 2023)
Image: (Discover H&M Innovation..., 2023)
Merchandising Properties & Positioning
H&M positions itself with a competitive advantage. They have established better trust with their consumers by being transparent with their business practices and supply chain management. The products now have a higher level of recognition for sustainability but have shown that these changes are not at the expense of their brand image and relatability to their target consumer. They established that H&M provides the right merchandise for the consumer that matches their values and aesthetics. They mass produce in larger quantities leaving no shortages of products, however, it is unknown what happens to the leftover stock when turnover occurs. H&M Studio also solves this issue with collections that are dedicated to a season for a limited time but at a higher price point.
Their launch timing for seasonal collections remains at the peak of popularity for season trends, landing them in the perfect position to market off of social media trend awareness. One way they remain relevant is by producing a selection of core products that are tried and true to reach their sales goal in that season.
H&M's pricing has always been seen as affordable and accessible to the younger generations. With their new lunches of designer collaborations, they satisfy the group of people who can't afford luxury and those who are looking to enter the design world at a better gateway price.
Lastly is launching the right products in the right place. H&M successfully achieves this by providing different selections based on location. For example, the shirt offered in New York will not be the same shirt seen in Milan. This creates not only location-appropriate launches but also gives a consumer the feeling of exclusivity. Creating interest and traffic in global stores to experience an H&M that is different from their local store.
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Right Merchandise
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Right Time
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Right Quantities
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Right Price
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Right Place
Target Customer
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Customer is trendy and up to date on the latest styles. Has some interest in designer brands but at a lower price point.
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Values sustainability, individuality, and creativity.
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Has a social media presence on major platforms [Example: Facebook, Youtube, Twitter, and Instagram].
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The targeted age range is between 16 to 35 years old.
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Has a disposable income to spend on clothing, home, and lifestyle products.
Estimated range of $50,000 to $80,000 of income for working adults.
6.
Shops at competitor brands such as Zara, Gap, and Forever21.
H&M's Annual Sales 2021 - 2023 Q3
The first aspect of these reports is that the H&M Group does not report their individual-owned brand's profit and losses but only reports as a collective report statement.
As seen in the Excel spreadsheet and the provided graph of Gross Profits, the H&M Group has been growing every year in their profits since 2020. Looking at the gross profits in correlation to current events, the numbers properly correspond to the beginning of COVID-19 in 2020 to the start of recovery following in 2021.
The Q3 for 2023 in comparison to the Q3 of 2022 shows a higher profit difference, leading to a production that the Q4 of 2023 [the final full report of the year] will likely surpass the full-year report from 2022.
H&M Group overall is seeing positive profits in the comparisons of the 3 previous years. Showing that the H&M Group's collective efforts for marketing, product placement, and business strategy have been effective and created a positive impact.
Data for Profit Loss Statements: (Annual Reports, 2023)
The Product Focus
Lines Sheets
As an outcome of tracing H&M's Supply Chain, 2 Spreadsheets of Proposed Designs created by myself are used to demonstrate the lifecycle of products in the supply chain. These Spread Sheets will also correspond with the chart below, demonstrating the manufacturing process part of the supply chain timeline.
The styles proposed reflect H&M's values of new and trendy while supplying timeless pieces that can be used across different seasons. As a way to push more sustainable purchasing habits and slow the life span of products.
The color choices also reflect seasonal choices and color trend decisions for Spring / Summer 2024.
The Denim Category is geared towards removing plastic from production to reflect H&M's Sustainability efforts and also give more options for repairing, repurposing, or recycling.
While the Bags Category uses more transferable styles that can extend the life of the brag. However to add better sustainability practices the Polyester can be Re-used Polyester, as a way to improve the sustainable materials used in production.
Tracing the Supply Chain
Below is a timeline example of a product going through manufacturing. This specific chart is referencing the Oversized Tote Bag located in the above spreadsheets.
References
H&M Logo from the H&M brand.
H&M's History
(n.d.). The H&M group – the first 70 years. About H&M. Published 2017. Retrieved December 1, 2023, from https://about.hm.com/content/dam/hmgroup/groupsite/documents/en/Digital%20Annual%20Report/2017/Annual%20Report%202017%20Our%20history.pdf
(n.d.). About Us. H&M Group. Retrieved December 2, 2023, from https://hmgroup.com/about-us/history/#y20
(2023). H&M STUDIO HOLIDAY CAPSULE LOOK 4 [Photograph]. H&M Image Gallery. https://about.hm.com/media/asset-detail.html/content/dam/hmabout/gallery/fashion/2023/hm-studio-holiday-capsule/1-lookbook-images/2028-Studio-A4-PR-Portrait-Image-72ppi12.jpg.html
Marketing
(2023, July 22). Driving Trends: H&M Marketing Strategies And Marketing Mix. The Brand Hopper. Retrieved December 2, 2023, from https://thebrandhopper.com/2023/07/22/driving-trends-hm-marketing-strategies-and-marketing-mix/
(n.d.). H&M Marketing Mix 4ps. The Strategy Story. Retrieved December 2, 2023, from https://thestrategystory.com/blog/hm-marketing-mix-4ps/
Marketing Image
(2023). RABANNE H&M [Photograph]. H&M Image Gallery. https://about.hm.com/media/asset-detail.html/content/dam/hmabout/gallery/fashion/2023/rabanne-h%26m/2--look-book-images/2008-Look%20Book_300ppi_11.jpg.html
Social Media
Espinoza, A. (2023, February 15). H&M Marketing Mix 4ps. Blu Cactus. Retrieved December 2, 2023, from https://blucactus.blue/how-effective-is-h-and-m-social-media-strategy/
Social Media Image
(2023). DIVIDED FALL [Photograph]. H&M Image Gallery. https://about.hm.com/media/asset-detail.html/content/dam/hmabout/gallery/fashion/2023/divided-fall/1-campaign-images/5088c/5088C-Fall%20Divided-A4-Campaign-Portrait-Image-300ppi_15.jpg.html
Assortments
Abdulla, H. (2023, January 27). H&M vows to improve assortment on weaker performance – but is it too little, too late? Just Style. Retrieved December 2, 2023, from https://www.just-style.com/news/hm-vows-steps-to-improve-assortment-on-weaker-performance/?cf-view&cf-closed
Anderson, G. (2023, June 29). H&M adding third-party brands to attract shoppers. Retail Wire. Retrieved December 2, 2023, from https://retailwire.com/hm-adding-third-party-brands-to-attract-shoppers/
(2023, July 3). H&M, Shein Explore New Retail Model With Third-Party Brands. PYMNTS. Retrieved December 2, 2023, from https://www.pymnts.com/news/retail/2023/hm-shein-embrace-a-new-retail-landscape-through-third-party-partnerships/
Assortments Image
(2023). Discover H&M Innovation Re-Enchantment Design Story Collection [Photograph]. Design Scene. https://www.designscene.net/2023/04/hm-innovation-ss23.html
Merchandising Properties & Positioning
(2021, September 21). H&M Marketing Strategy | How H&M Became the Second-Largest Clothing Retailer. Start Up Talky. Retrieved December 2, 2023, from https://startuptalky.com/h-m-marketing-strategy/
(2023, July 22). Driving Trends: H&M Marketing Strategies And Marketing Mix. The Brand Hopper. Retrieved December 2, 2023, from https://thebrandhopper.com/2023/07/22/driving-trends-hm-marketing-strategies-and-marketing-mix/
Target Customer
Research References
(n.d.). Annual Report 2017 Our brands. HM Group. Retrieved December 2, 2023, from https://about.hm.com/content/dam/hmgroup/groupsite/documents/en/Digital%20Annual%20Report/2017/Annual%20Report%202017%20Our%20brands.pdf
(2023, October 29). H&M Target Market Analysis – Case Study. Ivy Panda. Retrieved December 2, 2023, from https://ivypanda.com/essays/hm-company-target-market-analysis/#:~:text=Demographic%20profiles&text=Based%20on%20this%20analysis%2C%20H%26M,off%20the%20fashion%20apparel%20market.
Image
(2023). Mugler x H&M’s Collaboration Campaign Photos [Photograph]. WWD. https://wwd.com/pop-culture/new-fashion-releases/gallery/mugler-x-hm-collaboration-photos-1235648588/2007-henrick-a4-pr-campaign-landscape-image-300ppi_07/
Annual Reports
(n.d.). Annual Reports. H&M Group. Retrieved December 2, 2023, from https://hmgroup.com/investors/reports/
Tracing The Supply Chain
(n.d.). Supply Chain Transparency. H&M. Retrieved November 21, 2023, from https://hmgroup.com/sustainability/leading-the-change/transparency/supply-chain/
(n.d.). Supply Chain Excel List. H&M. Retrieved November 21, 2023, from https://hmgroup.com/sustainability/leading-the-change/transparency/supply-chain/
(n.d.). Open Supply Hub. Open Supply Hub. Retrieved November 21, 2023, from https://opensupplyhub.org/facilities/CN2022075KEE43S?q=Suzhou&contributors=5975&sort_by=name