Strategies for Competitive Advantage: A Case Study of H&M in the UK Fashion Industry

Introduction:

The United Kingdom has always been renowned all over the world for its fashion statement. Fashion is very important having the power of portraying a person’s mind, background, legacy, culture, etc. Fashion is not only about clothes or accessories but also it can reflect a person’s lifestyle as well. The fashion industry has always been very complex, dynamic, and challenging as well because of the ever-changing and ever-evolving demands of the customer. This report deals with the approaches H&M, a key player in the UK fashion industry, adopt to outperform its competitors by delivering the best quality and fashion at the best price.

The UK has been considered as one of the most influential trendsetters in the fashion world. More than 500000 people in the UK are now employed and somehow associated with this fashion industry. More than £25 billion are revenue from this industry. Fashion industry holding major economic growth in our country. The UK gained worldwide recognition for its innovative clothing brands. Some of the clothing brands are Mark & Spencer, Asos, River Island, H & M, Next, Primark, Zara, etc. (Jiménez-Zarco, Moreno-Gavara, and Njomkap, 2019).

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Company overview:

H & M is a world-famous clothing brand which was originated from Stockholm, Sweden. Erling Persson opened the first women wear Hennes store in 1947 for making fashion available and affordable to common people. Over time it has spread its wings all over the world in more than 60 countries having more than 5000 global outlets and more than 100.000 direct employees. The name H&M is the abbreviated form of Hennes& Mauritz AB, which is the original Swedish name of this clothing company. In 2015 this company became the world’s second-largest retailed clothing company after the Spanish company Inditex (the owner of Zara) (Eliasson, 2018). The products of this company are also available are some famous online retail sites. Apart from this, they have an online shopping site. This site is available in more than 30 countries globally. At the year of 1968, Persson merged his company with Mauritz Widforss and launched a men’s clothing business apart from women. Over time many famous fashion designers were associated with this company. In the UK the H & M store is situated in Birmingham, at the Pavilions shopping center (Arrigo, 2018). Numerous fashion designers of the UK like Matthew Williamson, Stella Mc Cartney, etc. have launched their clothing collections collaborating with this company. According to, Arrigo, (2018) H&M is a customer-oriented, innovative, creative fashion company driven by its values. H&M, being a firm believer in people and teamwork, always strives for continuous improvement along with a cost-conscious business strategy.

Competitive advantage:

Introduction:

Competitive advantage helps a company to let them perform beyond the expectation compared to its competitors (Namada, 2018). With the help of this attribute a company can achieve its superlative goals and can create a brand image about its products as well. To achieve this goal there are some steps which a company needs to maintain:

• A company must need lots of natural and organic resources which must be very difficult to access by its competitors.
• The employees of that company must be skilled, efficient, and dedicated to their respective companies (Kumar and Pansari, 2016).
• The location of that particular company must be very unique and user friendly.
• The market price of their product must be cheap compared to its competitors.
• The brand reputation and brand recognition are the most important thing to sustain in the competitive market (Albrecht, 2015).

To sustain and to lead the ever-increasing competitive market a company needs to follow some strategies (Allahverdiyeva, 2016). Three different strategies are there which can be helpful for a company to sustain a competitive advantage, those are

Figure 1: Competitive Advantage strategies

Source:https://corporatefinanceinstitute.com/resources/knowledge/strategy/competitive-advantage/

1. Cost leadership

2. Differentiation

3. Focus

H & M need to imply differentiation and cost leadership strategies to upgrade its brand image and recognition (West, Ford, and Ibrahim, 2015).

Porter’s five forces:

Porter’s five forces are a business model that is implied in strategic business management. With the help of this business model, a company can easily identify and evaluates its competitive market (Madsen and Walker, 2015). This model is also helpful to understand the current marketing trends and which strategies are helpful for the growth of their company. With the help of this business model, we can identify the current competition and strategies of H & M Company.

Figure 2: Porter’s five forces analysis of H&M

(Source: https://www.slideshare.net/DishaNagi/finalpptindustryanalysis)

• The threat of new entrants:

By taking advantage of the industrial economy of scale, H&M outperforms new entrants through a cost-effective business strategy. By innovative product development and a unique marketing strategy, H&M focuses on customer retention (Tsougkou, 2019).

• Bargaining power of suppliers:

Multiple suppliers as per different geographic locations and purchase of raw materials at lower cost strengthen its supply chain management with cost-effective business (Lazzarini, 2015).

• Bargaining power of buyers:

By innovative, unique, and good quality products as well as with a well-established marketing strategy, H&M focuses on building the loyalty of the brand along with a large customer base. With low-cost production and less selling cost, it attracts low-income buyers too, attracting a large customer base (Jannesson, Nilsson and Rapp, 2016).

• The threat of substitute products:

H&M Company always focuses on providing good quality and a variety of products to its customers at the lowest selling price in the market. By cost-conscious and customer-centric business strategy H&M outperforms competitors (Davcik and Sharma, 2016).

• Rivalry among existing farm:

H&M now focuses on distinguishing itself from competitors through good quality products at an affordable price for everyone. With detailed market research and a well-established marketing strategy, they target new customers besides the existing customer base and understand the supply-demand situation in the market to prevent overproduction (Donvito, 2018).

SWOT analysis:

SWOT analysis is an important tool for evaluating the competitive position of a company and to determine its business strategy. In this ever-increasing competitive market, a world-famous company like H&M needs to identify all of the positive and negative marketing perspectives to not only sustain into this competition also holding a top position in the retail industry.

Figure 3: SWOT analysis of H&M

• Strength:

• Weakness:

• Opportunities:

• Threats:

Competitor analysis:

The main competitors of this H&M industry are Zara, Next, Mark & Spencer, etc.

• Zara:

It is a famous Spanish accessory and clothing brand. This company was established in 1975. It has now become one of the most reputed fashion brands worldwide. They are actually a part of a large fashion group named Inditex. Zara products are famous for their uncommon and rare designs. Various famous designers are associated with and designed clothes for this brand. Every year this brand launching some unique styles, variety of designs not only on their clothes but also on their accessories like shoes, watches, pieces of jewelry, etc. to their fame and their brand image Zara is considered as topmost competitors of H&M (Mo, 2015).

• Next:

It is one of the most famous multinational footwear, clothing, and home products retail Companies founded in 1864. It is previously known as Joseph Hepworth and Sons. This UK-originated company has more than 550 stores in UK and more than 250 stores in Europe, Asia, and Africa and it is rapidly expanding its business in Britain with a well-established strong marketing strategy and innovative good quality products.

• Marks and Spencer:

This is also a Britain originated company dealing with clothes & accessories and food products. This company launched a very famous and widely accepted Kellogg’s corn flakes brand. This company has nearly 1000storese inside the country.

Marketing Mix:

To achieve the goal H&M Company needs to follow the strategies of marketing mix analyzing 7p’s.

• Product:

H&M is enriched with a variety of products according to the demands of their customers. They provide high-quality products to their customers at a very minimal price compared to their competitors. The design and the quality of their products are very unique and highly assured by H&M. H&M also offers to their customers some designer clothes as well designed by some world-famous fashion designers. They are selling not so famous street fashioned clothing brands under their e brand name, which helped those company a powerful brand image (Ohlsson and Riihimäki, 2015).

Figure 4: Marketing mix 7p’s analysis of H&M

(Source:http://marketingmixholly.blogspot.com/ )

• Price:

The price of their products is still a bit higher than regular clothing brands. In online portals, the price of their products is a bit higher than normal (Abril and Rodriguez-Cánovas, 2016). H&M uses some innovative product pricing strategies for some specific products. It offers a certain price for that original base product and a different price for the accessories which are part of that closet.

• Place:

The company sells its products in two different ways i.e., directly to the customers as well as to the whole sellers or different retailers.

H&M is a very famous brand and this company is now associated with more than 500 retailers all over the world.

Their personal online delivery system has not been launched in every corner of this world thus they merge with various online business portal and delivery services to expand their business (Comm and Mathaisel, 2018).

• Promotion:

Many famous fashion designers have been associated with H&M. A lot of celebrities use their products which in turn promotes the products of the company.

They also use various existing Media and Channels, social media, digital marketing platforms, television advertisements, YouTube, etc. to promote the products.

They are organizing various fashion shows to advertise their products and this will become helpful for them to attract a large number of people (Arrigo, 2018).

• People:

According to, Nguyen, (2018), People who are working on their marketing and sales team, quality assurance and quality control team, etc. are real assets of their company. H&M focuses on people & team building, nurture talents, and employee welfare along with corporate social responsibilities.

• Process:

H&M always makes sure that its products must be always available in the market. To satisfy the customers this company always comes up with new designs and trends. H&M make sure their online delivery system must be fast and user friendly (Abril and Rodriguez-Cánovas, 2016).

• Physical evidence:

H&M stores have polite staff along with a great ambiance. Well decorated stores, latest trends products, etc. attract customers. Association with celebrates, user stories, and suggestions from users being welcomed always lead to more customer engagement

Recommendation:

Although being a popular brand, this company has been facing various new challenges in the ever-changing fashion industry (Szymanski, Fitzsimmons, and Danis, 2019). To gain a competitive advantage over competitors they should look upon the following things:

1. H&M should introduce innovative, creative products as per the latest fashion trends along with testing of new products before fully commercializing those.
2. H&M should provide customers attractive services like a larger warranty period, after-sales service, 24*7 customer care service, etc. along with the improvement of product packaging to make products more convenient to transport and use.
3. H&M needs to imply discounts, offers, allowances, etc. sometimes to attract more customers by reducing the price of products (Eloranta and Turunen, 2015).
4. While introducing new products to the market they should initially lower the price than the competitors for gaining market share.
5. Selling products on social media will enable the company to achieve more sales because social media has become a part and parcel of daily life all over the world. Online shop and social media pages should be linked to provide users with an easy navigation (Comm and Mathaisel, 2018).
6. H&M should sell its products to large retailers with a large customer base to increase the sale of its products (Arrigo, 2018).
7. Various digital marketing techniques, social media advertisements, promotional events, etc. should be done continuously for spreading brand awareness among people(Alon et al., 2016).
8. H&M should continuously train the marketing and sales team, customer care team as they play an important role in customer attraction (Nguyen, 2018).

Conclusion:

H&M is one of the largest fashion companies in the world. They are constantly evolving with time and spreading their business all over the world. They are committed to providing sustainable design and fashion to common people at a low cost. Although over time they have created a larger customer base and achieved to build brand loyalty among customers still they need to work on their marketing strategy to reach more customers, to take full control in product development instead of outsourcing for minimizing production cost and advertise & expand their market outside Europe for minimizing business risks.

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Herman Bailey

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