To discourage the increasing trend of recession-conditioned bargain hunting amongst the consumers, a lot of apparel brands around the world started experimenting with their pricing strategies, while maintaining the quality of their products. But, the increasing sourcing and production cost of the apparel, complicated the retailers’ efforts to preserve margins, but the fast fashion leader H&M continued to enjoy success as consumers perceiving value, switched to it.
Well known across the globe for combining innovative styles with low prices, H&M, has managed to build strong consumer recognition in the market. But, the winning strategy for the brand is actually its product mix that consists of both trendy street fashion and basic staples, with more high-end fashion garments created by designer collaborations being offered through the COS (Collection of Style) chain, and expansion into new and untapped markets. It is in these ‘outside’ countries that H&M reaps more than 80 per cent of its US $ 3 billion-plus in sales business, making it Sweden’s third largest company in terms of stock market valuation. No wonder, H&M’s sales have tripled to US $ 15.5 billion in 2011 and hold a 10-15 per cent year on year growth record.
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H&M ON A ROLL…
- H&M has a 12 per cent average year on year growth.
- The sales of the brand have tripled to US $ 15.5 billion in 2012.
- The brand will come up with 275 new stores in the coming year.
- The brand is also launching a duo of sports-focused pop-up stores in London coinciding with the Olympics.
- Profits in 2012 were US $ 745 million.
- H&M is launching a home line for kids soon.
- The brand reported a 23 per cent jump in its net profits for the second quarter of this year. [/bleft]
The brands ideology is simple, offering a huge assortment of products from apparel, accessories and cosmetics, so every visitor finds something interesting when they enter the store, even if it’s a basic piece. And so they have trendy budget products for all the departments that can record sales; women (fancy, classic, casual), men (chic, trendy, casual), young fashion in a wide range for girls and boys, children’s fashion for every age, a sports department, a department for big sizes, a department for pregnant women, and so on. Furthermore, the tie-ups with famous designers attract the customers, because they can afford to buy fashion designed by well known names. The designer collaborations of the brand includes names like Versace, Lanvin, Karl Lagerfeld, Stella McCartney, Viktor & Rolf, Marni and many others with the recent addition Maison Martin Margiela to be launched in 2012.
This mix of products with value has price sensitive consumers shifting to H&M to buy new designs at pocket friendly rates. In fact, the tightening and conscious spending habits prevailing in the market today has produced the exact sort of clients H&M thrives upon.
The group that reported a net profit of US $ 745 million in the March to May period, while seeing an overall growth, the revenues have climbed, thanks to strong sales of the spring collections of 2012.
H&M India Sourcing…
Sourcing majorly for tops and dresses from Indian manufacturers, H&M which sources over US $ 500 million worth of products from the country, banks on Indian strengths looking for those pieces which are more embellished and sequined along with garments that are a little more stylized in terms of value-added details like gathering, pleating and ruching. FOB’s range from a minimum of US $ 2 for very basic pieces which have almost no details, to a maximum of US $ 15 for pieces that are more complicated and high fashion. H&M works with strict guidelines of compliance and quality control when it comes to choosing their vendors.
