H&M

(Hennes & Mauritz). Swedish company of young, trendy clothing. In 2002 its turnover amounted to 6 billion Euros (5.037 Euros in 2001) with a profit before taxation of 840 million Euros. It employs 34,000 people with 850 stores in 14 countries worldwide. The President and majority shareholder is Stefan Persson, son of the company’s founder. The general manager is Rolf Eriksen. The entrepreneurial rationale of the group is based on selling products at affordable prices with a high fashion content and an extremely high rotation of sales in dedicated brand stores. The company has focused on two different segmentation strategies. For the American market, where there are 45 sales points (20 more added in 2003), its target is young and trendy females. In Europe, it targets the whole family with both trendy and traditional products. The average prize of a garment is very competitive, around 17 Euros. Consequently, H&M’s business is characterized by continual attention to costs, which carries through into the corporate side. The use of taxis is forbidden, cell phone use is limited, and the managers travel in economy class. It is also important for a company that sells 550 millions Euros of products to minimize stock in warehouses. The excellent performance of the Swedish company with its high market quota and elevated profitability is guaranteed by the designers’ ability to detect trends in advance. The style department, located in Stockholm, is comprised of 95 people who are not allowed to copy from other designers. Speed is a fundamental requisite of the group’s strategy; it only takes 20 days from the product’s conception to its arrival in the store. Manufacturing has been decentralized overseas due to cheaper costs with about 900 mini-factories in Bangladesh, China, and Turkey. The company is careful with communications, investing 4% of its proceedings in its image. (The model Imam was the face of H&M in 2003.) The chain arrived in New York with the opening of a three-floor space on Fifth Avenue. In Autumn 2003, it made its debut in Milan in a strategic position (where Fiorucci’s store used to be), just a few meters away from its competitors, Zara and Benetton. The first quarter of 2003 registered a turnover of 1.22 billion Euros, proceedings of 183.3 million Euros with a growth of 43% compared with the same period for 2002. In 2003 H&M opened 110 more stores in Germany, USA, France, Spain, and England. As well as entry into the Italian market, 2003 saw H&M become the main player in three new markets: Czech Republic, Poland, and Portugal.
The new line Karl Lagerfeld for H&M was launched. The German designer designed clothes and accessories for men and women as well as a unisex perfume, which were on sale in all 20 of H&M’s markets. The collaboration stopped after just one season due to misunderstandings between the designer and the company.
Elio Fiorucci returned to his store in Piazza San Babila with a beachwear line called H&M Poolside. Highly colored and designed for the Summer season, it was distributed in all stores from June onwards.
There was another excellent collaboration for autumn 2005-2006. Stella McCartney designed a women’s Collection of 40 pieces, produced and distributed with the brand Stella McCartney for H&M from November onwards.