Select Page

    Reading Time: 5 minutes 20 Seconds

    Originally named, “Hennes” the iconic fashion brand H&M was founded by Erling Persson in 1947 in Vasteras, Sweden. Right from its inception, H&M believed in making fashion affordable.

    With the acquisition of the hunting apparel brand Mauritz Widforss, Erling changed the name of the company to Hennes and Mauritz. This change reflected the change in strategy of the fashion brand to include menswear into their product range. To make the brand easier to remember and pronounce, an official rebranding exercise was conducted and the name was shortened to H&M.

    Soon after conducting this rebranding exercise, the company expanded its wings to two neighboring Nordic countries – Norway and Denmark. Switzerland and the United Kingdom were next on the list and by 1973 the company began selling intimate apparels all over Europe.

    Business model of H&M

    H&M follows a business model which is known as ‘fast fashion’. In fast fashion, the time taken for fashion design to travel from the ramp to stores is very less. The main crux of this business model is to provide affordable fashion to customers at a lightning speed. To achieve this, H&M follows a unique business model in which it does not manufacture any of its products in-house; instead, H&M outsources its production to many developing countries.

    Reduced burden of internal operations as a result of outsourcing allows H&M to focus on its core business model which is to make fashion merchandise quickly cover the distance from the designer tables and ramps to the storefronts. This strategy has played a major role in the expansion of H&M.

    According to Investopedia, more than 900 international suppliers are currently supplying to H&M. Another strategy that allows H&M to be effective in fast fashion is that it pre stocks a major chunk of its merchandise and lends itself space for last-minute improvisation with the remaining.

    Market Overview of H&M

    The top ten markets for H&M are Germany, the USA, the U.K., France, China, Sweden, Italy, Spain, Russia, and Poland with the total number of stores worldwide slightly shy of the 5K mark. Apart from these countries, via the eCommerce and/or franchise route, H&M has a presence in India, China, Israel, U.A.E, Kuwait, Qatar, Saudi Arabia, Egypt, Bahrain, Oman, Lebanon, Morocco, Jordan, Thailand, and Indonesia. H&M plans to add 290 new stores and close around 170 stores as a part of consolidation efforts by the group. Out of the planned 290 stores, 220 will be H&M stores and the remaining will be via other brands that H&M manages like COS, & Other Stories, Monki, ARKET, and H&M Home stores.

    Expansion strategies of H&M

    Entering the U.S. market

    H&M inaugurated its first store outside European shores in New York City. The company was bold enough to open a store on Fifth Avenue where it competed directly with renowned luxury labels that dominated the shopping district.

    In New York, the brand, instead of going head-on with the big labels, adopted a smart strategy of collaborating with its competitors. An example of this would be their first designer collaboration series with Karl Lagerfeld. The idea was to provide consumers with a limited edition collection which was easy on the pockets and allowed the consumers to wear the designs of their favorite designers affordably. This strategy proved wildly successful and H&M invited other major designers like Donatella Versace, Roberto Cavalli, Stella McCartney, and Alexander Wang in similar partnerships. This expansion strategy of collaborating with major designers helped H&M in getting a foothold in the fashion market of New York City. Associating with fashion designers/labels of high brand equity has helped H&M in expanding easily into new markets.

    Selective use of the franchise route

    H&M, currently, follows a direct expansion strategy by taking the route of having its stores. In many countries, however, such a direct approach is sometimes not very encouraging and in such cases, H&M adopted the franchise route. Regulatory hurdles have never stopped H&M from entering a new market. If the company thinks that the market is valuable for them, then it won’t hesitate in taking the franchise route.

    H&M entered the Middle East market with its franchise partner Alshaya. H&M understood the high growth potential of the Middle East region and hence took the franchise route to gain a foothold in the region.

    India expansion

    Given India’s promising retail sector and emerging eCommerce space, H&M launched its eCommerce wing in the country last year (2019) by associating with a leading e-commerce platform – Myntra.

    Throwback to 2015; H&M entered the Indian market with its first store in New Delhi. Since then, H&M has expanded its store count to 39, and it reported a phenomenal sales figure of over USD 154 million for the year 2018.

    The success of H&M in India can be attributed to factors such as a focus on tier 2 and tier 3 cities, competitive pricing and a well-managed backend along with tight control on ad spending and other expenditures.

    China Expansion

    H&M entered mainland China by opening up two stores in Shanghai in the year 2007.

    H&M’s opened its first online store in China in 2014 amidst stiff competition from established Chinese eCommerce players like Alibaba’s Tmall and Taobao. Turning adversity into an opportunity, H&M joined hands with Tmall in 2018. Keeping in line with its aggressive strategy, H&M has decided not to tinker much with the prices and product offerings on Tmall.

    HRM learned from its mistakes in China and instead of trying to build an online website from scratch in India, H&M launched its products on Myntra, a popular eCommerce platform in India later in 2019.

    As of 2019, H&M will be testing fashion on rent by partnering with China’s YCloset (a fashion rental platform). This will be the first instance for the brand to indulge in the idea of fashion on rent. YCloset is China’s largest clothing rental platform and has around 15 million users who pay a monthly subscription fee for renting expensive fashionable clothes indicating the strong currents with ‘fashion on rent’.

    Going Green

    Addressing climate change concerns in its ways, H&M has taken concrete steps in the direction of sustainable sourcing. The company, in its 2018 annual report, has clearly stated that its vision is to meet 100% of its cotton requirements from sustainable sources by 2020. The company has made considerable progress and has achieved 95 percent of its goals in 2018 regarding sustainable sourcing of cotton. According to the Textile Exchange’s Preferred Fiber and Materials Market Report 2018, the H&M group was the largest user of preferred cotton and second-largest for recycled and organic cotton.

    The growth of H&M as an ecologically-sustainable brand can be ascertained from the fact that H&M was ranked 11th in the Green Ranking Global Top 100 List in 2017.

    Having an environmentally-friendly policy assigns goodwill to H&M especially when it approaches foreign markets for expansion. Addressing environmental concerns is an appreciated initiative whether you are an H&M customer or not.

    Employee-Sensitive

    Apart from being an environmentally responsible company, H&M has also put special emphasis on being a sensitive employer. Forexample, H&M introduced a program for its factories in Cambodia and Bangladesh under which the company will purchase 100% of the factories’ output over five years. This gave a significant bargaining edge to H&M in ensuring towards maintaining safe working conditions in these factories as against focusing only on output.

    Focus on economic production

    Apart from opening retail stores, H&M has also opened manufacturing centers at strategic locations like Ethiopia in the backdrop of strategic business requirements and comparative economies of production in traditional manufacturing powerhouses like China and Bangladesh.

    Advertising Campaigns

    H&M also spends heavily on advertising. The brand spent $100 million on various advertising media like TV, print and digital. Having high brand visibility helps H&M in entrenching new markets easily.

    About YRC

    Your Retail Coach (YRC) is a retail consulting and outsourcing company in India offering a wide range of services in retail offline,retail eCommerce and retail omnichannel catering to a multitude of industries.

    Your Retail Coach (YRC) helps retail businesses with their web store and online marketplace sales management strategies and practices with a focus on developing brand awareness. Our experience and expertise in both offline and online retail channels will help businesses quickly establish their retail operations and set their brands in motion.

    YRC assists retail businesses in managing their supply chain via services and support in warehouse management, procurement, inventory management, dispatch and team management riding on proven models of logistics and use of technology.

    YRC provides the necessary assistance to businesses in setting up and maintaining a robust distribution network across the country.With its domain experience and expertise in the retail sector, YRC not only helps retail players in managing online sales channels but also assists in setting up brick and mortar stores and provide a range of operational assistance services.

     

     

    PROCESS AUTOMATION

    The idea of having Ecommerce Consultants on-board from the beginning itself points towards reducing the involvement of the promoters in daily operations. Ecommerce Businesses willing to be a brand reaping profits & sustaining the competition must ensure that most of their processes should be automated. The more the manual intervention, the more would be the errors.

    In Ecommerce business, you get only 1 chance to impress the customer & if you mess up there, you lose the customer for long.

    Process automation in respect to all the activities pertaining to customers from order receiving to order fulfilment is a must for a seamless experience for the customers.

    Task Management is another grey area where most deadlines fail as 90% of the tasks are assigned manually & are forgotten, unheard, misunderstood or mistaken.

    YRC Team of Ecommerce Management Consultants helps to make maximum of the processes system-driven to ensure minimalistic manual intervention.

    VIDEOGRAPHY & PHOTOGRAPHY

    No matter how good your product is, the customer would know only if it looks good.

    Photography includes the following steps:

    • Cataloguing your products
    • Cataloguing your images
    • Backup your images (A few cloud storage solutions include Dropbox, Google Drive, Bitcasa, Apple’s Cloud Storage etc.)
    • Choose the right camera & lens (You may also outsource the photography to a third party agency)

    DIGITAL MARKETING

    Digital Marketing includes SEO & SMM. SEO i.e. Search Engine Optimization includes activities like back-linking, meta tags, blog-writing etc. to ensure your website ranks on the 1st page on Google Search.

    Next comes SMM i.e. “Social Media Marketing” which as the name suggests including promoting your products on all the social media sites, email marketing, influencer marketing & several other BTL activities.

    These activities are going to be recurring & would decide the traffic on the website, the conversions, whether the right target market is tapped, the likes, the views, the orders, the reviews & much more. YRCs Ecommerce Consultants create a budget for digital marketing right from pre-launch to launch & for each month thereafter.

    Building digital marketing strategies in coordination with the agency, selecting them to signing them off would be the role of YRC.

    This ensures seamless coordination, detailed interactions & desired execution as it is always advisable to work with a single agency than multiple of them.

    IT INTEGRATION

    Selection of the right software for smooth functioning of back-end operations right from production to webstore display would be suggested and integrated by YRC Team.

    YRC’s Team defines SOPs of Product Movement, maps it with the locations & people. They then create a blueprint of all the features required in the software & help in shortlisting & selection.

    IT Integration involves connecting your offline inventories with real-time online webstore so when a sale occurs, inventories get deducted real time across offline as well as online platforms.

    This helps in accurate inventory management, maintaining the MOQs, re-order levels & achieving the optimum inventory levels.

    Some popular software include unicommerce, viniculum for your front-end website management & Genisys for your entire back-end Purchase, Production, Accounting, Invoicing etc. management.

    WAREHOUSE & LOGISTICS PLANNING

    • How many cities or countries you wish to sell in?
    • Where should your Warehouse be located?
    • Should you have one warehouse in each country or city?
    • Should you be having your own delivery team in your base city?
    • Would the 3rd party vendors be reliable? What happens when they lose or misplace your product during delivery?
    • How should I manage the logistics if my goods are coming from different countries?
    • How should the goods be stored and barcoded?
    • How much space do I require for warehouse?
    • I am sure several such questions must be haunting you while you think of starting your own fashion ecommerce brand.

     

    At YRC, our warehousing and logistics experts can help you devise a strategy for all of the above mentioned queries and much more.

    We design the layout of the Warehouse considering the inward, goods processing, software entry, barcoding, outward, goods return, scrap storage, goods stacking & much more.

    Logistics route plan is devised considering the manufacturer to your warehouse and from there to last mile delivery locations.

    UI & UX DESIGNING

    This Step involves 03 distinct parts:

    Part 1: Choosing the right Platform:

    From several platforms available in the market right from Shopify to magento, woocommerce, prestoshop, wordpress etc. you must choose the one that fits best for your business

    Part 2: UX Designing:

    “UX” denotes User Experience, which if put in simple language is building the functional requirements of the website.

    UX Designing includes designing the features required in the website, customer journey map, website features, the browsing features, navigation features, ecommerce order management process flow, checkout cart features, catalogue management, ecommerce payment system, cross selling features & much more.

    “As per statistics, 68% of the customers abandon the carts before payment”

    An interesting UX ensures the customer sticks on to the website for a longer time.

    Part 3: UI Designing:

    UI stands for User Interface, which means designing the look and feel of the website. UI includes using the right colours, elements and the entire aesthetics of the website.

    A good User Interface ensures the user completes the task that he has come for. It navigates the user through the journey of the brand in the simplest but most effective way.

    The UX designer maps out the bare bones of the user journey; the UI designer then fills it in with visual and interactive elements.

    If User experience is the bare bone, user interface wraps it up with an attractive cape.

    At YRC, our team if experts can help you develop the entire User Journey to ensure it is engaging!

    SAMPLING & PRODUCTION

    This step follows the “Designing” Phase, whether you have an in-house design team, freelance designers or an outsourced design company. It is one of the most exciting phases, as here you see your designs turning into products & your ideas turning into reality.

    In most start-up cases, production is outsourced i.e. brands tie-up with the established manufacturers/ job-workers to get their products manufactured.

    Sampling involves multiple 04 Stages, Fit-Sample, Prototype Sample, Pre-Production Sample & the Production Sample.

    Prototype Sample is the first sample provided to the buyer. It can be in any fabric/ colour. This sample is just to understand whether the product design looks equally great in reality.

    Fit Sample, as the name suggests is prepared to check the fit of the garment i.e. the various sizes, length, width etc.

    Pre-production is made by the actual production line. Here the stitching quality and other aspects related to manufacturing are checked. This is the last stage where rejection can be accepted.

    Production Sample is made before the production which is the replica of what is going to be finally produced.

    Once you are through with all this, you are good to go ahead & get your goods manufactured.

    PRODUCT DESIGNING / SOURCING

    Product Designing or Sourcing is the heart of the Ecommerce Fashion Brand.

    Product Designing / Sourcing can be done in several ways, as follows:

    • In-house Design Team
    • Freelance Designers
    • Outsourced Design Team
    • Ready Product Sourcing (From Manufacturer or Wholesaler)

    At YRC, we evaluate your business strategy & business model to arrive at the decision, which of the above ways would be best-fit for your business. In certain cases, product sourcing may be a combination of the above.

    These are the people who are going to build your brand! Whether they are the designers or merchandiser, your brand look is going to be in their hands.

    If you are designing each garment from the scratch, the sourcing would play crucial role in developing design identity of your brand.

    Sourcing includes fabric, trims, lining & all the raw material required to build the garment.

    BRANDING

    Branding is the “Look of the Brand”, right from logo to tagline, the colours used, the brand story, the brand communications on social media, the packaging & all the other aspects which speak directly or indirectly to the customers. Branding constitutes the look & feel of the brand & hence must be thoughtfully planned to match with the product that we are selling.

    Branding must appeal to our target audience. Example : A golden colour logo depicting finesse, art, richness, premium, however beautiful it may be individually cannot go with a brand selling affordable kids wear products. So, your logo must be in-line with your brand positioning, whether you are an expensive brand or a luxury brand or a value for money brand, it must be depicted from your “Branding”.

    It is an integral part to attract the target audience.

    ORGANOGRAMS & SOP’s

    Organogram is the “HR Blueprint” of the business which is created at the onset, to map out the team required across each function at various stages of the business. At the launch, only key people need to be got on board to ensure the project gets started & at this stage, all of them need to multi-task. Similarly, certain financial as well as operational goals are set for addition of the further team. Example, for the operations team, we hire 1 operations manager during the pre-launch phase & we add 1 more only when the business kicks-off & we reach a volume of selling more than 1000 pcs/ month or a turnover of more than 0.1 million USD.

    SOPs are Standard Operating Procedures, a bible to run the entire organization right from Sales, Purchase, HR, Order receiving to Order fulfilment, Inventory Management, Accounts, Warehouse, Logistics, Supply Chain, Production & all the other relevant functions for the business. Business must be organized from its first day of operations; only then the tasks can be delegated.

    At YRC, we design the organization structure, the processes, and approximate time taken to execute each process, job profile of every member within the organization, their KRAs, KPIs & the Reporting Structure.

    CRITICAL PATHWAY

    Critical Pathway Analysis (CPA), is a project management technique which cannot be overlooked while launching an ecommerce fashion brand. Brand launch process is cumbersome with multiple inter-dependent & time-bound tasks involved, which need to be tracked to ensure the project remains on track.

    CPA outlines key tasks across the project, their turnaround time (TAT) & the dependencies of tasks upon each other. It identifies the sequence of tasks, their interdependent steps from inception to completion, their criticalities, and their dates of onset, target dates of completion along with the key responsible person for the respective activities. Critical Pathway helps in understanding the unimportant & not urgent tasks which may jeopardize the execution of the project because of an unexpected snag! It also maps out the potential bottlenecks which might be posed because of the dependencies of tasks upon each other & cases where the next task cannot be commenced before the completion of the previous one.

    CPA detects the minimum & the maximum time involvement of a particular individual or team to execute the task, thereby arriving at the overall deadlines associated with the project.

    At Your Retail Coach, we design the Critical Pathway & review it periodically to ensure the project is on track & the progress is measurable.

    BUSINESS STRATEGY & BUSINESS PLAN

    Business Strategy includes the vision, mission, goals, business model, business plan & strategy for all the functions within the organization.

    Business Strategy is a well-defined plan that outlines who, what, where, why, how & when for the company; for example, who would be the target market, how to attract the target audience, when to launch new products, where to operate from, how to handle competitors, what would be the USP, what would be long term goal of the organization & several other answers to the 5Ws of Strategy.

    Business Strategy aligns the organization towards a common goal. Business SWOT helps company to identify & overcome their weaknesses & focus to sharpen the strengths. Business strategy forecasts future risks and helps business in building skillsets to overcome the potential threats.

    YRC’s Business Plan focuses on creating a “Blueprint” of the business, thereby deriving the feasibility of the concept & gauge whether the opportunity is lucrative to invest time, energy & effort. Business Plan creates cash flow understanding i.e. building inflow & outflow cash projections from Week zero to week 60 i.e. 05 year projection. Business Plan calculates the capital investment, operating costs, one-time costs, recurring costs & all the other numbers relevant to obtain the breakeven sales, return on investment, return on capital, internal rate of return & several other ratios. Business Plan is also one of the important requirements if you are targeting the “Investor Route”. Fund raising becomes extremely transparent & channelized. With business plan panned out clearly, the business will know until what point must it be stretched & where to stop, which reduces the probability of unplanned investments.

    MARKET RESEARCH

    Starting the concept of Ecommerce Fashion brand with Market Research ensures we get detailed understanding of the industry & this research report also acts as a social confirmation for your concept. Market Research helps in understanding the target locations, their population, potential online buyers for your product, competitors for each category, and top selling products of the competitors, competitors’ price range, offers & their responses & much more. Market Research helps in thorough understanding of your brand position as compared to our competitors. It helps in identifying gaps in the market, in your category along with the scope of the said product in the desired market. This will help in validation of your concept & prevents you from making the same mistakes as your fellow brands, eventually saving your time, energy & efforts. This phase is also a make or a break phase, as the market research study may at-times come up with some eye-popping numbers & statistics which might compel you to re-think on your product or category that you are planning to sell or alter your entire concept itself!! Market Research Reports analyse the competitors’ webstore for their traffic, conversion & sales. This is extremely valuable information to derive our inventory budgets & projections, which takes us to our next phase.