Innovation is the key to business success because it opens the door to new markets and revitalizes existing product lines. Another key ingredient to business success is the strength of the company's distribution channels. For the purpose of this assignment I will discuss Hennes & Mauritz's (H&M) sourcing and inventory management strategies as well as outlining the threats and opportunities of these strategies as I perceive. Finally, I will discuss the potential problems I perceive in H&M's plans for international expansion based on their reliance on distribution channel partners. I will begin with discussing H&M's product strategy in comparison to its main competitors: Gap and Zara.
H&M and the Competition: Product Strategies
Each clothing retailer seeks to appeal to a particular genre of fashion consumer. H&M's philosophy is "Fashion and quality at the best price." This is the company motto as well as their product strategy. H&M keeps up with its competitors by providing a variety of styles from "updated classics and fashion basics" to cutting-edge fashion trends.
Probably H&M's leading competitor, Zara (particularly in the European retail clothing industry) is "Billed as Armani on a budget." Zara's fashion style focuses primarily on the elegant and modern sophisticated fashion consumer. Finally the Gap, another H&M competitor, wants to bring its consumers "great style, value and service." The Gap is known more for its casual than trendy style. All three companies retail clothing on the mid-tier pricing range. Providing trendy affordable fashion for the budget-conscious consumer and keeping the style fresh by its "fast turnaround" from design to production to sales floor are the keys to H&M's success. This leads to the next topic of H&M's distribution channels.
Distribution Channel Outline
Efficient distribution channels are vital to a business's continued prosperity. H&M appears to have incorporated its supply chain effectively into...