Innovation and Global Fashion Retail Industry

Running Head: Innovation and Fashion Retail Industry
H&M Group
Innovation and Global Fashion Retail Industry

Innovation and Fashion Retail Industry 1
Table of Contents
Introduction......................................................................................................................................2
Strategic Landscape of Fashion Retail Industry..............................................................................2
Impact of External Environment on Innovation..............................................................................3
PESTLE analysis..........................................................................................................................3
Impact of Internal Environment on Innovation...............................................................................5
Porter’s five forces.......................................................................................................................5
Threats of new entrants............................................................................................................5
Threats of Substitutes...............................................................................................................5
Bargaining power of consumers...............................................................................................5
Bargaining power of suppliers.................................................................................................6
Industry rivalry.........................................................................................................................6
Key Aspects of Industry Development............................................................................................7
Recommendations & Conclusion....................................................................................................7
References........................................................................................................................................9

Innovation and Fashion Retail Industry 2
Introduction
The term fashion indicates the trending style mainly in apparels, footwear, accessories, lifestyle
products, hairstyle products, makeup, etc. Fashion industry is growing rapidly across the globe
and the major reason behind is the dynamic behaviour and constant changing demands of
consumers. Unlike other industries, whole fashion industry along with some popular brands
which are directly linked with fast fashion and direct-to-consumer model are growing at very
impressive rate. This is because they are constantly adopting innovative strategies and advanced
methodologies in order to fulfil the dynamic needs of consumers. Innovation is simply a new
idea to execute the functions in more effective and appropriate manner. Set of effective
techniques to resolve the problems as well as to meet new requirements, existing marketing
trends or tacit consumer’s needs. Global fashion retail industry is adopting innovative techniques
in order to meet with the dynamic needs of target audience as well as to match up with the latest
fashion trends along with fulfilling the unarticulated demands of consumers. According to
McKinsey’s report of State of Fashion (2018), “sales of the traditional fast fashion industry have
grown rapidly, by 20% over the last three years approximately. Major fast fashion brands are
Zara, H&M and ASOS and all of these have disrupted the industry by fulfilling the untapped
customers’ needs. Along with this, these brands are also popular for providing trending apparels
and accessories for lower prices. In 2018, most of the fashion retail companies have prioritised
the innovation in order to stay competitive in the industry. This strategy has also helped the
companies to meet with the trendy demands of the consumers. The best way to attract apparel
and fashion clients, it is necessary to increase efficiency and productivity within the supply chain
and inventory management (H&M, 2018).
Primary aim of this essay is to analyse the effect of innovation over H&M which is a significant
part of global fashion retail industry, impact of internal and external environmental factors and
strategic landscape will also be discussed to analyse the development of fashion industry.
PESTLE analysis will be implemented in this essay in order to determine the impact of external
environmental factors’ over the growth and success of fashion retail industry along with H&M
group.

Innovation and Fashion Retail Industry 3
Strategic Landscape of Fashion Retail Industry
Strategic planning is the technique of development of plan under which all strategies are
discussed to attain organizational long-term objectives and goals. While determining the strategic
process model, it has been found that there is not model which describes the procedure of
making strategies. In order to execute the strategic planning process, situational analysis should
be included with the objective of making strategic planning process effective enough. Under
situational analysis, appropriate external and internal environmental factors are considered while
executing strategic planning process with the aim of developing an effective strategic plan so that
the organizational goals and objectives could easily be attained (De Chernatony, 2010). Under
the strategic process model, main steps are:
 Analysis of current organizational state;
 Defining the future state;
 Analysis of organizational objectives and goals; and
 Implementation and evaluation.
Business of making clothes is the major function of fashion industry but the difference amongst
the apparel and fashion cannot be neglected. On one side where apparel could be described as the
clothing which is one of the humanity’s basic needs but on the other side, fashion incorporates an
individual’s own style, taste and cultural evaluation. Initially, focus of apparel industry was to
fulfil consumer’s one of the basic needs which is clothing (Wang & Chan, 2010). Development
of fashion retailing is a result of application of information and communication technology (ICT)
by the companies engaged in this fashion industry. Fashion industry is a part of clothing industry
and under this; different types of cloths are included such as from fashion to uniforms and
workwear to textiles. Main aim of fashion industry is to set the fashion trends and then supply
relevant cloths to fulfil consumer’s tapped and untapped needs.
Thus, it has been observed that strategic processing model should be implemented by H&M
before developing the appropriate strategies for attaining the desired goals and objectives. The
primary part of this model is evaluation of external and internal business environmental factors.
Under fashion retail industry, primary factors are customer’s demand, taste, preferences and the
latest fashion trends. Along with this, H&M should also adopt some crucial strategies through