In-Depth SWOT Analysis of H&M | Strengths Weaknesses Opportunities & Threats
Hennes and Mauritz, or H&M, is a multinational corporation established in 1947 in the Swedish town of Vasteras.
It is a Swedish business, and its fast-fashion strategy is its most significant competitive advantage. The company’s headquarters are in Stockholm, Sweden. The business began with a single store and has since expanded to six continents and over 5,000 stores in more than 70 countries. It is a great source of inspiration for small fashion retailers and shops.
It is a fast-fashion store for men, women, and children. It has been in service for the past 70 years and has expanded tremendously since then. It is the world’s second-largest apparel retailer, with a global market presence and a well-known brand for high-quality clothing. It offers customers a diverse range of options.
SWOT Analysis of H&M
H&M Strengths Analysis
#1 A wide range of Products: H&M has a wide range of product lines, including apparel, cosmetics, shoes, and accessories for a wide range of customers. Blankets, vases and pots, candles, and candle holders are also available from the H&M group.
#2 Competitive Pricing: The group offers a wide range of clothing at competitive prices. However, some of their own-labeled products are priced higher than branded products.
#3 Rapid Growth potential: H&M has shown a good growth rate in terms of sales figures due to the huge amount of growth in the group’s store network. The group currently has opened around 5,000 stores as of 2021.
#4 Low-cost suppliers: H&M has many low-cost suppliers who help them to offer competitive prices.
#5 Ability to sell new products at lower prices: H&M can stop spending money on advertising and promotional activities and offer the products at lower prices. This helps them to compete in the market.
#6 Good marketing strategies: H&M has introduced many online marketing strategies, including social media, online shopping, etc. These help them to reach out to the customers even faster.
H&M Weaknesses Analysis
#1 Low profitability: The profits of H&M can be affected by the competition, low inflation, decreasing demand, etc.
#2 Reliance on third-party suppliers: The group’s business strategy involves sourcing products from other companies at more competitive prices. However, this strategy could prove to be disadvantageous if H&M’s strategic partners decide to refuse to trade with the group.
#3 A threat of currency fluctuations: While the H&M group’s reporting currency is the Swedish Krona, most of its revenues are made in developed economies such as Europe and the United States. Foreign exchange rate risk in relation to powerful currencies may have an effect on profitability.
#4 Competition from other retailers: A large assortment of products with competitive prices are available from other retailers such as Gap, Wal-Mart, and Target. Besides, consumers may not be willing to pay more than the cost price for an item when similar items are available at prices lower than the price of a branded product.
#5 Lack of marketing management: The group has not invested a lot in marketing research to develop the complex strategies that are required to manage a large company. Therefore, the group may not be able to implement policies efficiently.
#6 A lack of ingenuity: H&M’s fast-fashion model necessitates a heavy reliance on emerging trends and designs from other brands for its products. As a result of this situation, critics label the brand’s products as unoriginal and uninspiring.
Since the company has already done something, there is no creativity in the goods that would appeal to fashionistas. The brand does not create its own trends but instead simply copies what everyone else is doing.
H&M Opportunities Analysis
#1 Increased Globalization: Globalization has increased people’s desire for more variety in clothing.H&M can expand to other countries with different cultures, climates, fashion trends, and attitudes about fashion.
#2 Economies of scale: H&M has a huge number of stores in different cities and countries. As the group expands its store network, it may achieve economies of scale, lowering production costs and improving group profitability.
#3 In-house production: In order to improve control over the quality, H&M has acquired production facilities in some countries such as Sweden, Portugal, and India. This strategy allows the group to maintain high standards of quality and control over costs.
#4 Strategic alliances: H&M’s partnership with other groups such as C&A makes it easier to expand into different markets because the group benefits from its strategic partners’ experience in foreign markets.
#5 Product range: The group’s product range is extensive, but it is not unique. Customers are attracted to competitive prices and quality goods but do not necessarily focus on the uniqueness of a product.
#6 Respect for consumer rights: The group has a history of providing consumers with excellent customer service in terms of quality and price. Therefore, it is likely that the group will continue to value customer satisfaction.
#7 Presence internationally: The company’s rapid expansion into foreign markets may act as a strategic advantage. By being present in different markets, the company can maintain high standards of quality while also increasing sales, benefiting from economies of scale, and reducing production costs.
#8 Accessibility to raw materials: Some raw materials are imported from outside of Europe, but the group expects these imports to increase due to EU regulations.
#10 Large market shares: In 2006, H&M had 9% of the total clothing market and was placed first in market share. In 2007, it was predicted that H&M would be ranked third with around 3% of the total clothing market.
#11 Strategic alliances: The group benefits from its strategic alliances with other groups such as C & C&A. The partnership provides the group with access to large amounts of capital and broadens the group’s product range.
H&M Threats Analysis
#1 Competition from other retailers: Fierce competition is observed in the retail market due to the presence of several large retailers, including Gap, Target, Wal-Mart, and Carrefour. Therefore, H&M’s share in the market is likely to decline if it fails to offer products at competitive prices.
The number of competitors in the clothing industry has increased, and H&M cannot focus only on quality and prices because many others also try to do the same.
#2 Increase in labor costs: H&M has plans to increase its workforce by 15% in 2005 to keep pace with its growth rate. Besides, the group has plans to install some 6,000 robots in its stores by 2007. This will result in increased labor costs.
#3 Increase in Counterfeits: The apparel industry is notorious for its counterfeit goods. With the global trade in counterfeit goods at a breakneck pace, income from H&M’s premium designer brands could decline in the future.
#4 Effect of Currency & inflation: The many currencies have depreciated significantly against the US Dollar. This means that the cost of products imported into and from places like China will increase. Besides, for example. The strengthening of the Japanese Yen against the US Dollar will reduce H&M’s sales in Japan. Inflation could make H&M products more expensive and less competitive.
#5 Rivals entering H&M’s industry: Many other companies are taking a bigger market share.
#6 Customers with a limited budget: Most of the customers are not interested in spending their money on high-end clothing.
#7 Customers with more buying power in other countries: The demand for clothing is higher in other countries where people have more money.
#8 Price War: This could cause a decrease in production and low profits.
#9 Price elasticity: The group has shown to price elastic in terms of its sales relatively. Although the group can increase its profit due to price reductions, it may lose customers if it sets high prices.
#10 Competition from online retailers: Some people prefer to buy their clothes from websites rather than physical stores, making H&M lose customers.