The apparel and fast fashion retail industry has become the most booming in the recent era of globalization and cross-cultural inheritances. These forces have advantaged many brands and organizations to enable the expansion of their services at the worldly level, thus benefiting the respective profitability and value creation at the global range.
H&M being one such global apparel and fast fashion retail company has observed a great expansion of its physical significance at each corner of the globe. The study propounded is based on the analysis of the market situation and techniques of market segmentation of H&M in order to derive its profitability and productivity in the respective industry and analyze its competitiveness among the players.
Market situation analysis: Women’s Wear
Porter’s Five Forces Model
The threat of new entrants: Low..
The Threat of Substitutes: Low..
Bargaining Power of Suppliers: Low..
Bargaining Power of Buyers: High.
The intensity of Rivalry: High.
Market segmentation analysis.
Target market recommendations.
According to Tudor (2018), the apparel and clothing industry has arrived as one of the most demanding and at the same time, the most expanding industries in the global region. Benefitted by the worldwide integration and proliferation of cross-cultural variations, the apparel industry has rendered a diversified portfolio of its services and offerings from the most basic to the luxury pieces ranging from casual clothing to formal apparel and many more. The apparel industry is one of the most dynamic and continuous industry-type that sees a regular evolution and invention of new actions in the industrial ranges, aided by the globalized and multinational reach of brands and companies in the host markets.
H&M i.e. Hennes & Mauritz has arrived as one of the leading apparel brands in the industry dealing in a variety of clothing and lifestyle apparel verticals including men’s wear, women’s wear, casual wear, formal wear, footwear, fashion articles, and many more, spanning a wide range of its access around the globe (Sheikh 2018).
H&M i.e. Hennes & Mauritz, a Swedish retail brand that deals in the multinational clothing domain have been taken as the target brand or company for the identification and assessment of the market situation and analysis of the clothing market situations in the global pace.
Analyzing the market fluctuations and situations regarding a product or service is a crucial task as it concludes the degree of positioning the product or services and the organization enjoys. For the sake of a better understanding of the market situations in concern of any variety of products or services, utilization and enforcement of management tools and techniques is elemental. Models such as SWOT analysis, Porter’s Five Forces Model, and alike act as the agents in the process of identification and analysis of marketing efficiencies targeted (Oneren et al. 2017).
As per the study by Khurana (2015), H&M has a wide market of its presence in around 61 countries where the sole mission of the business organization is to provide both fashion and quality at the best prices. The market situation analysis of H&M and its business spread can be well analyzed by the application of the Porter’s Five Forces Model that constitutes the market intensity of profitability in dependency of relatable factors associated with it based on the five following attributes.
According to Goyal et al. (2017), new entrants in any industry act as a blockage for the other players in the field in reduced potential for the firm affecting the company’s profitability. The apparel and clothing industry has been observed as one of the most volatile and dynamic industries where entry and exit of new entities and brands is a common phenomenon. However, the threat of any such entrant in the field usually requires comparable competent positioning of the firms.
In the case, H&M finds few brands in the circle to be quite threatening for its performance like Zara, Forever 21, etc. as it takes a sound degree of efforts in order to remain above the competitors. In order to maintain a low effect of the threat of new entrants to the firm and business, the brand H&M has identified its focus on the maintenance of cost leadership strategy that assists the organization to create a pricing advantage in the field (Youell 2013).
A list of brands and companies under the apparel and clothing vertical has attained a higher degree of their market presence and reach thus gaining quite prospective results. H&M being the player in the same has maintained its focus on providing its customers with high-quality products in diverse verticals at the low prices to gain higher customer reach.
Youell (2013) analyzed H&M has its focus on fabricating all sorts of costumer apparel products at reasonable pricing whereas Zara seeks to introduce more formal and mature apparel and hence has reduced the burden for being a direct substitute for H&M. In the likewise manner, there cost leadership strategy has aided H&M towards an authentic business cycle that has eliminated a direct substitution of its products and offerings comparable on the basis of cost, quality, trend, style, and so on.
Apparel and clothing being an extremely vast market involve a great dependency on the supplier population serving the industry. Henceforth, the industry witnesses a great supplier power in the global range because of the higher dominance of them in the flow of products at the worldly level (Gokalp et al. 2018). However, for the sake of escaping from such dominant activities, few brands seek to develop their supply management acts.
H&M as the core brand of the study seeks to utilize an independent force of supply management practices where the organization does not take into account the self-owned or managed supply chain but utilizes the outsourced supply chain management providers that have a pre-existing experience of working with the firm to manage the flexible and standard supply process by use of expertise in the field and thus seeks to eliminate the dependency on any third-party firms.
H&M’s buyer categories are inclusive of all sorts of consumers in a varied portfolio of clothing styles fro casuals to formals and many more. In the recent globalized age, the inheritance of cultural and customer attributes towards living has become matured enough that the customers demand the products and apparel that provide comfort, affordability, and durability all at a reasonable level. Such consumer habits and user status may lead them to fulfill their demands from other brands in the frame and hence result in the loss to the former (Youell 2013).
Henceforth, for the sake of pacing up with the high customer demands, H&M seeks to install the practice of providing quality yet affordable products that could suit all its customer base and also the derived trends in the market.
According to Gokalp et al. (2018), the retail apparel and clothing industry has a higher degree of rivalry at each local, national, and international borders as a result of increased customer choices and available alternatives in the market. Usually, the rivalry in the global apparel market is higher because of the ease of access and availability of substitute products and brands, and hence a higher rate of switching behavior is observed in the same, which can lead to intensified rival factors among the competent brands.
In the case of H&M, Zara being the biggest alternate brand for similar services and portfolios followed by Forever 21 can be called rivals of the brand in the global apparel market. However, H&M aims to reduce the effect of rivalry by attracting a higher consumer base by utilization of strategies like cost benefits, quality, reach, and pricing (Rathore 2019).
According to Camilleri (2018), segmenting a market refers to the process of bifurcating the market or domains conclusive of potential customers into segments or categories on the basis of their distinct characteristics. When a business entity or a brand attempts to reach its potential customers, takes into utilization the technique of market segmentation that provides clear guidance of the target customers that finds the brand’s offerings to be enthusiastic and useful for them. Usually, the segmentation process includes demographic, behavioral, psychographic, and geographic segmentation of the customers to identify and analyze the best ways of organizational administration and customer attraction.
Being one of the largest B2C i.e. Business to Consumer type of organization, H&M to be the focused industry, the market segmentation can be conducted as described below.
Demographic segmentation defines the most common segmentation that involves factors like age, gender, income, status, etc. to create a basic bifurcation of the target customer (Camilleri 2018).
H&M’s target customer ages have been categorized from teenagers to adults inclusive of all the gender factors, especially the female sector for the target women wear. Also, to focus on the income as a demographic attribute, the moderate to high-income level people have been targeted as the focus customers for the firm.
Based on the supposed behavioral attributes such as habits, loyalty factor, customer benefits sought, etc. covers the behavioral segment of the market segmentation ideology.
To segment the H&M’s products and offerings among target customers, segmenting such as those customers that have a habit of wearing normal, durable, and affordable clothing, sought for the benefits such as low pricing yet trending apparel, for a regular and everyday occasion segments the customers for H&M based on behavioral attributes (Khurana 2015).
Similar to the demographic segmentation, the psychographic segmentation involves attributes that relate more to the mental and emotional connectivity with the products.
For instance, H&M’s pricing value can connect to the value segmentation of its customers that seeks to enjoy a quality outcome in a reasonable pricing value. Similarly, lifestyles as another factor of psychographic segmentation involve the working people and corporate personnel as the target population for H&M (Khurana 2015).
Geographical segmentation refers to the process of segmenting the focus market based on location and geographical attributes and presence. It involves the study of cities, states, countries, and their geographical significance.
The H&M’s target market based on the geographical attributes involves global reach with a proper, physical presence of the firm in around 61 major countries including Russia, Australia, America, India, Switzerland, etc. (Khurana 2015).
In addition to this, the country-wise bifurcation also identifies the target geographical segment to be the urban and big cities of the countries devised.
H&M as a leading apparel brand in the industry at global orbit seems to perform in a very radical position as compared to other players in the global retail apparel field. Additionally, the firm also witnesses sound enforcement of managing its market situation and segmentation for the elevation of the profitability and productivity along with expanded reach. However, the overall analysis of the organization results in the following recommendations that must be worked on by H&M to leverage its prospects more in the area.
The apparel industry has been in the phase of continuous development and evolution since ages and is predicted to grow robustly in the future arena. H&M being the listed market grabber in the fast fashion, clothing, and apparel retailer in the global apparel industry and has established itself as a reference for other firms attempting for the growth.
The study propounded has aided the identification and understanding of the H&M’s market study concerning its current global market situation and also the tactics of market segmentation proposed by the firm for its women wear section of the service portfolio. IT has been observed that H&M prominently employs a robust market segmentation techniques and situation analysis that has leveraged its position in the worldwide apparel and fast clothing retail industry. The study has aided the analysis with the conclusion that the continuous utilization and enforcement of such target market segmentation and also infusion of the recommendations provided can be fruitful for the lucrative performance of H&M in the future age as well.
Camilleri, M.A., 2018. Market segmentation, targeting, and positioning. In Travel marketing, tourism economics, and the airline product (pp. 69-83). Springer, Cham. https://doi.org/10.1007/978-3-319-49849-2_4.
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Youell, M., 2013. An Analysis of the Growth and Success of H&M. How They Could Impact the Largest Swiss Watch Company, Swatch Group, p.108. Available at: https://www.uvic.ca/gustavson/assets/docs/Research/student-research-engagement/COM-470-Best-Business-Research-Papers-Vol7.pdf#page=108.
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