Retail Theory and Practice INTRODUCTION 4 MAIN BODY4 Part A4 Overview of the UK Fashion Retailing

Retail and Practice INTRODUCTION 4 MAIN BODY4 PART A4 Overview of company 4 Key relevant changes within UK fashion retail5 Relevant analysis of H&M organisation 7 PART B8 Strategies and tactics that can be used 8 CONCLUSIONS 11 REFERENCES 12 INTRODUCTION Retails sector is the type of business which sells its goods to the end consumer in small quantities and after that consumer doesn't resell that product further to anyone because they purchase it for their own use and they considered as the end

Retail Theory and
Practice

Table of Contents
INTRODUCTION...........................................................................................................................4
MAIN BODY...................................................................................................................................4
PART A...........................................................................................................................................4
Overview of company.................................................................................................................4
Key relevant changes within UK fashion retail..........................................................................5
Relevant changes within the micro environmental.....................................................................7
PART B............................................................................................................................................8
Strategies and tactics that can be used........................................................................................8
CONCLUSIONS............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
Retails sector is the type of business which sells its goods to the end consumer in small
quantities and after that consumer doesn't resell that product further to anyone because they
purchase it for their own use and they considered as the end of the line of product. One such
fastest growing retail sector is fashion industry as in modern world individuals terms to be more
conscious about their living standard so as the time passes customer preferences in respect of
their dressing senses also changes because of which fashion industry also have to come up with
changing trends clothes so as to satisfy customers. Therefore the company which is being
considered to carry out this report is Hennes & Mauritz (H&M) which is a Swedish
multinational clothing retail organisation known specifically for its fashion clothing for
teenagers, men, women and children (Allmendinger, 2017). Therefore this report will focuses
on overview of the company, key relevant changes within UK fashion retail and relevant
changes within micro environmental factors. Apart from this strategies and tactics are also being
used to overcome issues.
MAIN BODY
PART A
Overview of company
Hennes & Mauritz AB (H&M) is a Swedish multinational clothing retail organisation
known specifically for its fashion clothing for teenagers, men, women and children. Its
associated companies operates in near about 62 countries with 45,00 stores and has 132,000
people of employees working in this organisation. Apart from this it is considered to be the
second largest clothing retailer and possess significant online presence too by rendering online
shopping availability too in approx 33 countries. This organisation was founded in 1947 by
Erling Persson and its total operating income is near around US$2.692 billion in 2016 with its
revenue around US$25.191 billion (Andress, 2014).
Fast fashion is not isolated to H&M as this brand possess distinct business model unlike
Zara, So H&M doesn't manufacture its goods in-house but it outsource its production to more
than 900 suppliers who are independent in all across the world mainly in Asia and Europe which
are overseen by 30 strategically located oversight offices. Apart from this it uses pilot program as
well so as to incentivize fair working conditions while increasing productivity much more

naturally. Thus, it can be said that H&M is term to be the largest fashion retailer in all over the
world and the secret behind this success is its application of fast fashion as it heavily relies on
taking advantage of fashion trends as they get products onto the shelves from design room floor
as fast as possible without any delay (Batley, 2014).
Key relevant changes within UK fashion retail
Key relevant changes within UK fashion retail business can be identified with the help of
PESTLE analysis technique which is being taken into consideration by H&M organisation and
its is being explained below (Fernie, Fernie and Moore, 2015):
PESTLE analysis of H&M:
Political:
It refers to the level through which a government can affect the workings of an organisation. It
states various issues that government can impose on the workings of a business which can slow
down the happenings of the firm. It includes various tax policies, trade policies and many other
things which an organisation can't even think of and end up facing backlash.
Similarly, H&M is no stranger to any such thing. During 2017, one of the political issue
faced by H&M resulted in huge losses to them. At that time, H&M releases an advertisement of
a black child wearing a hoodie which says “Coolest monkey in the jungle” which ended up
making them hit the bull's eye. As the black people felt, it is an insult to them due to the political
environment created at that time in the country (Garvey and et. al., 2017). The political reform
ended up for H&M loosing up to $4.3 billions as the clothes remain unsold.
Economical:
It refers to the economic reforms in the country that can tamper the growth of an
organisation. It includes various economic factors like, tax policy, interest policy, labour cost and
various other regulations that can affect the working of an organisation. It works as a prescribed
format to an organisation on how to work in an specific country.
H&M also have to work keeping in mind the various policies. Some of the economic
issues faced by H&M are that they are not able to deliver their products ordered by the customers
through their online portal because of the construction that needs is happening in Boras Sweden,
factory of H&M. This happens because H&M has delayed in understanding that the customers
now prefer online shopping then that of going to shops because its saves their time and its
economical to them. Other than that, the other parts of H&M like Cos are able to stand in the

market strongly, because they are following the trends and they understood the economic
reforms flowing in the country and working accordingly. For Example, they produce less in
quantity and change their designs rapidly which helps them in paying low labour cost and
production cost and incur less losses which H&M failed to see (Hopson and Hayes, 2014).
Social:
These factors refers to the changes taking place in the cultural, values, beliefs, trends of
the society and such changes greatly impact upon working of H&M organisation. As in modern
era advancement keeps on changing place and due to such advancement in clothing trends
customer preferences also keeps on changing. But H&M has failed to understand the preferences
of the customers due to which the firm has to faced with an issue in 2017 that $4.3 billions
clothes remain unsold . So management of H&M must make some investment in research proses
so as to analyse effectively what all changes are taking place in the customer preference so that
accordingly products can be manufactured (Ivanov, 2014).
Technological:
As in modern era technology advancement is growing at a faster pace specially in it
sector, so in order to maximise the profitability margin it is essential for the management of
h&m to analyse advancement in technology that is taking place, so that the firm can also come
up with innovative and superior quality products and services. As individuals of UK like to
prefer more stylish and trends clothes so H&M also must come up with latest technology with
the help of which firm can come up with superior quality clothes as per customers preferences.
Juts because due to the failure of adoption of latest technology H&M have faced with an issue
that the company was unable to keep up with its sisters stores Cos and other stories as sister
stores use to come up with high end designer products which H&M couldn't . Thus, in order to
maximize the profitability ratio it is very much essential for the management of an organisation
to analyse the changes in technology and to adopt use of modern technology (Mahadevan,
2015).
Legal:
These factors refers to those legal rules and regulation which are being framed by the
government and taking such legal laws into consideration H&M have to carry out its different
set of functional activities. Recent changes like One such law which is framed by the
government is discrimination act which specifies that no employees within an organisation must

not be discriminated with each other on the basis of age, marital status, religions, culture etc. If
the management of H&M will treat their each employees equally with discrimination then it will
help business to retain talented workforce and in motivating workers to work towards the
achievement of an organisational aims and objectives. Whereas if the company adopts the
practice of bullying and discrimination among workers so as to get work done from employees
then it will result in increase in the employees turnover ratio. Thus, it is very much essential for
the management of H&M to carry out all its activities by following rules and regulations set by
the government so as to maximise the profitability ratio (McDONAL, 2016).
Environmental:
These factors refers to to the changes which are being framed by the government so as to
keep environment safe. So H&M must produce its product taking environment safety into
consideration. Therefore recent changes which influence upon H&M organisation is that people
are developing their consciousness towards using of recycle and organic cotton. So changes must
be taken into consideration by the management of H&M by producing organic cotton clothes
and eco friendly packaging which would result in increasing the satisfaction level of customers .
Relevant changes within the micro environmental
Micro environment factors are the one which are under the control of an organisation and
changes in such factors can be easily controlled and it mainly includes suppliers, competitors,
customers etc. Therefore key relevant changes within micro environmental factors are being
explained below (Pallagst, 2017):
Competitors:
It refers to the firms who are present in the industry and have potential to take away the
customers. These firms operate in the industry so that they can take away the market share and
become the market leader. It creates a huge effect on the organisation's day to day workings as
well as on the profit margins. H&M have a plenty of competitors lying in the industry who are
ready to take away the market share of H&M. Some major competitors are Zara, Uniqlo, Gap,
Asos, Macy's etc. It is very important for the top management of H&M to analyse the
competition in the market and create the strategies that will give an edge to them and create more
market base. Albeit, the pricing strategy of clothes of H&M is relatively cheaper than that of its
competitors, but people in United Kingdom, will not mind spending more for the best. So, it is
important for H&M to understand the market competition and work accordingly.

Suppliers:
They are the people who provide raw material to the H&M. The raw materials are then
used by the H&M to produce the final products, like, clothes, bags, footwear's,etc. The price at
which suppliers are willing to supply goods to the company plays a vital role as if the supplier is
charging low prices for low quality goods,then, the quality of products that H&M delivers will
suffers and that may result in loosing of some clients. Also, if there is negative relationship
between suppliers and H&M ,then, it will result in slow production and delayed orders. So, it is
very important for H&M to maintain a flourishing with the suppliers so they willingly supply
material at low cost and of high quality.
Customers:
Customers are the core aspects for every business organisation without which company
cannot increase its profitability ratio. As customer preferences keeps on changing due to the
change in modernization, change in trends and cultural practices. So such changes must be taken
into consideration by H&M so as to start its production process of clothes as per the demands
and needs of customers. Thus, it will help business in increasing the customer satisfaction level
as well as in achieving the maximum profitability ratio.
PART B
Strategies and tactics that can be used
Strategies which can be applied in order to meet macro environmental changes:
Two vast relevant changes were identifies in macro environment one is of advancement
in technology were taking place at rapid rate and second is changes in social and cultural aspect
in respect of changes in way of dressing is changing at rapid rate. So in order to meet these two
changes effectively certain strategies are needed to be adopted by H&M and such strategies and
tactics are being mentioned below (Netten and Beecham, 2018):
Advancement in technology is being adopted by its sisters stores Cos and other stories so
as to come up with high end quality products because of which H7M organisation is diminishing
its profitability ratio. So in order to deal with such issue company neds to adopt certain strategies
like used of high class machinery which would result in generating quality stuff clothes for the
customers. As well as should render training and development practice to its workers so that
each workers can easily know how to make use of latest and modern technology to produce

products for the customers. Thus, will help business to render stiff competition to its sisters
stores Cos and other stories.
Whereas other relevant changes which is being identified is changes in social trends due
to the change in the standard of living and due to the arising need of building status. In modern
era as people are becoming more conscious about organic clothes so in order to deal with such
changing trends the effective strategies which must be considered by the management of H&M is
the firm must make investment in research so as to identify the change in market trends and
accordingly ask the production department of H&M to produce products. Thus, it will help
business in rendering satisfaction level value to its customers which will indirectly result in
achieving maximum profitability.
Strategies which can be applied in order to meet micro environmental changes:
Two major vast relevant changes which is being identified in micro environment of
H&M is that there exist large number of competitors which give stiff competition to H&M and
changes in customer preferences. So in order to deal effectively with this two changes
management of H&m must adopt the strategies of research and development practice by making
some investment in it. This strategy will help business to acknowledge the competitors policies
and strategies which they are using in order to capture market share as well as it will help in
identifying the change in market and customer trends. Apart from this training and development
strategies also must be adopted so as to render training to workforce according to the changing
trends so that each employees can come up with best quality outcome taking customers
preferences into consideration. Thus, it will help H&M to achieve a competitive advantage in
marketplace.
Appropriate theory:
In order to overcome the significant changes which is taking place in driving organisation
environment wheel of retailing theory is being taken into consideration. It will help business to
understand the concept of retailing as well as in maintaining significant position in market.
Wheel of retailing theory:
It is a theory which is being propounded by the Philip Kotler as per him it is very much
essential for a new retailer to follow a proper cycle in order to sustain in market for long period
of time. Thus, there are certain phases and steps which are being given below (Wardlow, 2014):

Illustration 1: Wheel of retailing theory
Source: The wheel of retailing theory, 2019
 In the first step keep penetration pricing strategy so as to attract customer.
 In second step firm starts expanding as the organisation gain more experience of the
market. Thus, it help retailer to strive in market place and to enlarge their customer base.
 In the third step firm stabilized its business model through attractive margins.
 In the fourth step another retail firm takes an entry who render competition in the market.
Recommendation
Overall it can be recommended that H&M company must make investment on research
analysis so as to carry out research on continuous basis as it will help business to analyse the
strategies and tactics adopted by the competitors. Apart from this firm should also keep on
altering the price of the clothes they render so as to sustain in market for long period of time.
Furthermore firm should also start rendering online services as it will help business to get
immediate feedback from the customers which will help company to make immediate
improvement if required as per the customers feedback. It will help company to achieve greater
market share and profitability margin.

CONCLUSIONS
From the above report overall it can be concluded that a firm is surrounded by a
environment which directly and indirectly impact upon business growth. Therefore in the above
report PESTLE analyse is being done so as to analyse the key relevant changes in micro and
macro factors taking place. Apart from this strategies were also discusses to over come the
relevant changes with the help of appropriate theory.

REFERENCES
Books and Journals
Allmendinger, P., 2017.Planning theory. Macmillan International Higher Education.
Andress, J., 2014. The basics of information security: understanding the fundamentals of InfoSec
in theory and practice. Syngress.
Batley, S., 2014. Classification in theory and practice. Chandos Publishing.
Fernie, J., Fernie, S. and Moore, C., 2015. Principles of retailing. Routledge.
Garvey, B. and et. al., 2017. Coaching and mentoring: Theory and practice. Sage.
Hopson, B. and Hayes, J., 2014. The theory and practice of vocational guidance: A selection of
readings. Elsevier.
Ivanov, S., 2014. Hotel revenue management: From theory to practice. Zangador.
Mahadevan, B., 2015. Operations management: Theory and practice. Pearson Education India.
McDONALD, M. A. L. C. O. L. M., 2016. Strategic marketing planning: theory and practice. In
The marketing book (pp. 108-142). Routledge.
Netten, A. and Beecham, J. eds., 2018. Costing community care: theory and practice. Routledge.
Pallagst, K., 2017. Growth management in the US: Between theory and practice. Routledge.
Wardlow, D. L., 2014. Gays, lesbians, and consumer behavior: Theory, practice, and research
issues in marketing. Routledge.
Online
Theories of Retailing - • Retail life cycle theory Wheel. 2018. [Online]. Available through:
<https://www.coursehero.com/file/12325649/Theories-of-Retailing/>.