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Environmental Analysis of fashion industry: A Case analysis of H&M

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Introduction

Fashion has always been one of the ways how people define other people and also their own self. If we talk about fashion, UK is one of the names what come in our mind. Yes, UK fashion has very big numbers in stats its total worth is around £26 billion who has the around 8,00,000 job strength to the economy. It is said once wool tread export from the British Isles accounted 80%. UK has 6 out of 20 leading university in fashion. As we all have heard about the Fashion Week, London Fashion Week is one of the top four international fashion week. Out of many big brands in UK we are going to explore more about one of the leading brand H&M.

Brief about the company

H&M is ranked 1st among its top ten competitors with the strength of 1,79,000 employees. H&M came into existence back in the year 1947 with its first store in Sweden which used to sale only clothing for women’s. From the one single store is evolved with almost all the sections like Men’s, Children, etc. It also grew with the numbers of stores all over the world. It entered in UK with its first store opened in London in the year 1976. It operates in one of the vast markets in UK which is the retails sector. The annual revenue in records is around £8.64 billion across the globe including the over 305 stores in UK (Group,H&M, 2021).

Chosen company’s position in the global fashion industry

In global fashion industry or retails sector there are top ten companies who represents almost 10% shares in global market. As will be discussing about one of the leading company H&M, It holds 3rd position in the list of top five or can even say top three giants in retail sector. Nike & Adidas are the leading brand holding first and second position respectively while Zara & Uniqlo hold forth and fifth position in top five list (Bhardwaj, 2010). Whereas Nike & Adidas are popularly known for its sportswear in fashion industry, H&M has all the varieties of clothing and accessories for Foot ware, Men’s wear, Women’s wear, Children wear and also the accessories. H&M Group today is known as global fashion company in 74 markets with 52 online markets. The numbers of stores of H&M Group raised from 1345 stores in the year 2006 to 5076 in the year 2019 worldwide. The number of sale H&M UK alone was around $1,557.78million in the year 2019 (Li, 2019).

The state of the global Fashion Industry

Global fashion Industry seems to be one of the booming industries and it is projected to grow by the year 2025. The growth expected in the value is from 1.5 trillion dollars in 2020 to somewhere about 2.25 trillion dollars by the year 2025. As the demand is arising in fashion world for clothing and footwears it is said that it will definitely going to achieve the figures projected in the coming years. As there are four main product category – Men’s wear, Women’s wear, Children Wear and Footwear. Women’s wear seems to top the product list. It has been studied that womenswear are the best seller among the products across globe. Then the second-best seller in the category is sportswear. And the most wanted apparel with the higher number of sales is Denim. As this is in to have list in every wardrobe be it from women’s or men’s section (Gazzola, Pavione, Pezzetti, & Grechi, 2020).

Changes that the company have made in the last few years to their business model to self-regulate and adapt to some of the concerns raised by the different stakeholders

It is been observed over the last ten to fifteen years the fashion industry has been enjoying a great success, all thanks to fashion trends what is getting adopted by people worldwide. H&M being one of the leading fashion companies had to face some issues lately which affected their sales. As H&M has majorly seen across the street as a physical store and less online. As a trend to shop online was what most of the consumer chose. As they could do shopping online at their comfort level than visiting stores and spending minimum of 3-4 hrs. And as this pandemic had hit us all and as a safety it demands us to avoid the crowded places, people have mostly changed their shopping pattern from offline to online. It was reported where H&M was slow in adopting the online pattern. As H&M was more focused on expanding in physical stores it had to face a threat from its competitor in online market. It is also seen that back in the year 2017 the H&M sales has gone negative as the weak sales development in the store. As in the industry all were adopting the online marketing nature H&M was not having so strong online marking base because it mostly focused on physical stores to increase the business. In 2018 due to weak sale development retails chains had to shut up to 140 of the stores. H&M in its annual report 2017 has also blamed the online market to being the reason of reduce footfall in stores. And in spite of reduced footfall in the stores it believed that it will the largest market for the sale H&M continued with opening a physical store than working on its online marketing strategy. Then in the year 2018 when the report said that in UK online marketing has accounted for 24%, out of £48.1 billion of retails sales £11.6 billion was from digital purchase. Then H&M was working hard to get their best in digital sales too but they had a lot to work on. By the year 2018 they had 71 markets worldwide but out of which 47 only use to sell online, 4 amount those were added in 2018. H&M tried hard to spread the online market in all 71 markets rolled out across the globe. Then in the year 2019 when it made an effort to integrate the online and physical stores the H&M online sales increased by 30%. By the year 2010 H&M started selling only online. H&M decided this a decade later when ASOS entered the online market. There were many flaws with their websites and tools for it to get into competition with the ones who were already in role. The problem H&M had with online service and also the delay in launching online had left them with a very less time to learn and rectify their error to stand in the market. H&M need to work on both its app and desktop to get it user friendly. As its most of the target audience in around the age of 25 years, should improve more on its mobile sites as the target audience is more available on mobile. Studying the issues, they had with their e-commerce portals, they made improvements in their mobile apps, like adding links to their home page and some changes into their delivery FAQ’s. This were still some of the issues they had to work a lot on it. In UK H&M use to also work on the mobile loan speed, as it was seen that UK mobile app scores only 20% for mobile speed and as mobile speed is the main factor for user experience and search ranking(Gazzola, Pavione, Pezzetti, & Grechi, 2020).

Competitive position of the company

PESTLE Analysis – H&M

As it is discussed that fashion industries have been on a rise from past few years, and H&M has also been benefited with it. There are numbers of reason for it to grow like improvement in the economy, raising in standard of living, making shopping experience easy through e-commerce platform. Hence PESTAL analysis is done to make clear the consequence on H&M from external influencers like political, economic, social, technological, legal, environmental.

In the year 2018, H&M had to apologize for hurting the sentiments of Africans as it was in political controversy to be racist.

H&M being on the top of the list in fashion giants, it has a wide audience worldwide for a quality product in very affordable price. Where it being one of the plus points for H&M it also has some impact on its economic factor as they have to increase in maintenance, labour cost, interest rates, taxes, etc.

H&M is on updating mode still in technology. It has been seen that for H&M staying updated in latest technology and maintaining is always been a problem. They should be more innovative in product trending in fashion as the consumers demands to go digital.

H&M runs an NGO – The H&M foundation in collaboration with other organizations. Their main socially responsible is to focus on education, water, plants and equality.

As fashion industry is one of the most polluting industry, taking this in consideration H&M had started with recycling cloths. H&M was one of the companies to start with the recycling of its cloths. In the year 2019 57% of its merchandise were recycled (Li, 2019).

SWOT Analysis – H&M

H&M is very strong internally for its demands of products in clothing, accessories, etc. under several classified brands. Their presence all across the globe speaks for its strength it is vastly accepted for its best quality of products, affordable pricing, deliveries, trending designs, etc. 

H&M internal weakness is being depended on the suppliers, high-cost maintenance, overstocking the products, etc.

Presently H&M need to mainly focus on its presence on online with the help of of e-commerce platform. With expansion in online market, it will be able to see the growth in the profit as well as the company. It also should expand its local stores in some of the regions like Asia and Latin America.

H&M faces threats from its competitors as the fashion industry is very competitive in both the market, online as well as physical market. There are also other external threat H&M faces is increase in labour cost, decrease in the demand for its apparel, fashion trends getting fluctuate, etc (Radeef, 2017).

Relevant recommendations to management

Based on the study it can be by now said that H&M has more or successfully able to adapt to the changes going in the entre fashion industry but there are few loopholes also which needs to be fill up by the management of H&M. In order deal with the issues below mentioned are few of the important recommendation which might help the H&M to deal with its stakeholders.

Signing up for emails

Network

Observing the rivalries

Most of the organization these days are providing with a huge data by means of using emails as well as in most of the instances its free and no extra costs is required. So, in order make the stakeholders updated with the changes the management need to create email for only the stakeholders which will help them receiving information if any changes occur in the company.

Having a proper discussion with the stakeholders directly might be an exceptionally good step. This is a simple method to make them updated on what’s actually going in the within the company and also outside the company.

Last but not the least it will be pivotal for the H&M management to keep a close eye on the competitors move so that their stakeholders stick to H&M brand only (Furrer, 2010).

Conclusion

H&M is in the top of the list and to hold the position or grow, the factor it should be working on is its E-commerce portal. As its growth had disturbed due to its presence on being available online. And when it decided to get into online market they were not up to the mark with their online presence like website or their app to beat their competitors. It has been observed that it is being difficult for them to keep themselves updated in latest technology. H&M has observed and studied their flaws and claims to be working on it in near future.

References

Bhardwaj, V. (2010). Fast fashion: Response to changes in the fashion industry. The International Review of Retail Distribution and Consumer Research Distribution and Consumer Research, 165-173.

Furrer, O. (2010). The Structure and Evolution of the Strategic Management Field: A Content Analysis of 26 Years of Strategic Management Research 10(1). International Journal of Management Reviews, 1-23.

Gazzola, P., Pavione, E., Pezzetti, R. &., & Grechi, D. (2020). Trends in the Fashion Industry. The Perception of Sustainability and Circular Economy: A Gender/Generation Quantitative Approach. University of Insubria.

Group,H&M. (2021, May 05). About H&M Group. Retrieved from hmgroup.com: https://hmgroup.com/about-us/

Li, L. (2019). Brand development of H&M. University of Gavle.

Radeef, A. (2017). THE SECRET OF H&M GROUP SUCCESS IN THE LAST DECADE. University of the West of Scotland.

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