Managing & Developing Innovation & Creativity: H&M Case Study Report

This report delves into the innovation and creativity strategies of H&M, a global fashion retailer, addressing specific challenges such as slow online sales, customer experience issues, and brand positioning. It examines the problems H&M faces, including competition from online retailers, environmental concerns related to fast fashion, and marketing setbacks. The report proposes innovative methodologies like e-commerce-friendly POS systems, machine learning for demand forecasting, and virtual fitting rooms to enhance customer experience and sales. It also suggests automating marketing activities to improve efficiency. The report provides a plan for implementing these solutions and offers recommendations for overcoming potential issues, aiming to help H&M maintain its competitive edge in the dynamic fashion market. The report highlights the importance of adapting to changing consumer behaviors and leveraging technological advancements to drive business success. The report is a student submission to Desklib.

Managing & Developing Innovation
& Creativity

Contents
INTRODUCTION...............................................................................................................................3
TASK....................................................................................................................................................3
Specific problem that exists within a firm.........................................................................................3
Creative and innovation methodologies to the production of possible solutions................................5
Select a solution and construct a plan for implementation.................................................................7
Recommendations for overcoming all the potential issues................................................................9
CONCLUSION..................................................................................................................................11
REFERENCES..................................................................................................................................12

INTRODUCTION
Innovation is widely acknowledged as a critical source of long-term comparative
strategy that firms may use to thrive in today's dynamic business environment. In addition to
this, creativity is the act of developing anything new, whether it is a new idea, concept, or
approach. The use of creativity to improve the effectiveness of the program, person, team, or
business is referred to as creativity (Perry-Smith and Mannucci, 2017). Thus, it is crucial for
effectively manage as well as develop innovation and creativity as it provides assistance to
company in attaining competitive success at market place. Current report is based on H&M,
is a Swedish clothing company that operate their business in over the world with the aim of
attaining competitive advantage. Basically, company is sells fast fashion at cheaper prices
and serve quality services to its customers as per their needs and wants. H&M has more than
around 1500 stores in various countries which serve best quality products. Company also
implements innovative and creative ideas within their operational functions to improvise their
overall productiveness. In addition to this, company is also facing various issues in marketing
activities that may put negative impact over the brand image. As, H&M facing issues in
marketing, it was slow to sell online, customers experience needs some improvement, brand
positioning gone wrong and many more are the major issues that company is facing. Report is
going to describe creative and innovative methodologies to production of possible solution.
Furthermore, plan for implementing solution is also mentioned in this project. At last,
recommendation for overcoming all the potential issues is discussed here.
TASK
Specific problem that exists within a firm
Hennes & Mauritz (H&M) is multinational clothing retail firm and it is known for the
clothing of women, men and children. In November 2019, this company operated in almost
74 countries with more than 5000 stores under different form brands. H&M remains a major
player in unsustainable fast fashion sector. This one has a major environmental effect because
of promotion of the "disposable" fashion and continual rotations of latest trends and items.
Because of these factors, rising percentage of inexpensive apparel ends up in garbage after
only few uses. There have been different marketing issues faced by H&M organization and it
negatively impact on the organizational performance as well as productivity (Proctor, 2018).
H&M has already been going backwards their physical store expansion strategy in recent
years. Despite disappointing performances in year 2017, the retailer shuttered roughly 140
stores in year 2018 and reduced its planned shop openings to 175 to 130 throughout the

world. H&M is also still expanding its physical presence but has begun to slow down after
more than decade of fast growth. H&M's shift in approach is now in part due to competition
from both online and physical businesses. H&M is really not immune to shift in clothes sales
to internet, which has harmed mall as well as store traffic but also resulted in bankruptcy of
specialized garment stores such as Aeropostale or Wet Seal. competitors of H&M have
grown as result of online shift. For example, the well-resourced internet behemoth Amazon's
fashion ambitions. H&M company faces intense competition from online-only competitors
such as ASOS and Boohoo while Inditex owner of the rival fast-fashion shop Zara has had
some decent sales. Physical retail will continue to be largest market for foreseeable future,
but sales are increasingly moving online and also trend is inexorable. To preserve or increase
market share, brands including H&M must enhance online performance. Similarly, in 2017
annual report, H&M criticized internet retail for lower football in the stores. A poor sales
development in H&M brand's physical stores had negative impact on profit during year. It is
mostly owing to sector's continuous transformation wherein purchases are progressively
going to take place online, but group's online share has failed to offset for lower attendance in
shops. Despite the fact that H&M has made a concerted effort to grow its online presence,
there is still work that can be done. H&M company has physical stores in 71 locations
throughout the world, and only 47 of them sell online, 4 of which have been introduced in
year 2018. H&M company just began selling online in year 2010, more than a decade later
ASOS. This appears that company was late to see potential of e-commerce, or that it believed
that store network would be sufficient to stave off online market. These sites were also badly
built with several usability issues that made this difficult to generate revenues from them. On
the other hand, SEO strategy of H&M appeared to also be non-existent at times and this made
several severe blunders that negatively harmed its search engine rankings. Search traffic is
too important for any online store to ignore. A great search ranking brings cheap visitors
to site and this is a great way to get new customers.
The H&M is one of many high-profile western companies which has sparked outrage
in China due because of its stance on the alleged human rights violations in cotton-growing
Xinjiang province (Sigala and Chalkiti, 2015). As result, company's business has been
subjected to barrage of internet criticism as well as its e-operations have mostly vanished
in country. H&M is also now forced to employ high discounts and offers in order to clear
backlog of unwanted merchandise. However, owners as well as analysts are concerned that
the company's brand image would be harmed as result of this aggressive campaign. The

effects of significant discounting on brand and customers in previous piece regarding
discounting methods. It seems to be common for shops to use discounting tactics to be clear
out outdated stock and it runs danger of buyers becoming used to buying solely reduced
clothing and seeing them as having a lesser value. Customers may come to connect huge
discounts to H&M in long run and will pay for reduced cost of the products only (Westland,
2016). This will eventually result in the unsold inventory piling up the once more, making
retail sector's brutal cycle difficult to break. Delivery costs is real conundrum for the H&M
fashion retailer. Free delivery boosts sales but this has a negative influence on the profit
margins, so businesses must choose which strategies to use. H&M company has made it plain
that paying costs comes first and its delivery fees may put some consumers off. Standard
delivery costs £3.99 that is far more than most rivals. When customers spend more over £25,
as example, ASOS will ship for free, and that's a great strategy to increase basket values. The
fact that some shops pay for online ordering from storefronts may dissuade some customers,
given the great majority of businesses provide this free service. When competitors including
Zalando offer cheap shipping as well as returns, H&M's delivery option will be less appealing
to several price-conscious buyers. H&M's delivery company has vastly improved in last year,
with inclusion of the next-day delivery, designated slots and variety of the pickup alternatives
to attract to customers. H&M company was late to implement multichannel approach and
a result, this is currently lagging behind other fashion shops throughout this area.
Creative and innovation methodologies to the production of possible solutions
Creative problem-solving process may lead to sear of the prior art related to creative
solutions through others. All the innovations start as the creative solutions but not all the
creative solutions became the innovations. Over the period of time, fashion brands such as
Zara, H&M etc., have enjoyed its great presence in the market. The main reason behind this
was the changing trends. But now as the time is passing, with the change in course of time,
due to which the production process required large store networks technology has disrupted
the activities all around for example, providing things online. As compared to physical stores
sales, more and more sales can be recorded in the online platforms. Therefore, H&M is
failing in giving the better services as it is relatively slow in adapting the procedure and other
related activities. However, to overcome this, it is important that H&M makes an
improvement in their online platform (Schilling and Shankar, 2019). Thus, research and
development team will have to first make some changes in online portal or in the mobile
application. Company will have to understand that having a single online option is not

enough in attracting valuable customers. Rather, it requires a combination of two actions like
combining e-commerce and POS together for synchronising business activities. For
example, as a solution H&M can develop “E-commerce Friendly POS systems”, it will help
the company in selling their products with same level of efficiency. Moreover, through this
company will be able to integrate both online as well as offline transactions, promotions and
so on, based on different locations. Therefore, H&M will have a proper record of what all
products have been soled in a particular time period.
It is believed that the durability of the company increases when they know about the
demands of their customers. Hence, H&M can incorporate “machine learning for demand
forecasting”, so as to predict the needs of customers. As a result, it will assist the company in
remaining at the top of the industry as compared to other firms. The main purpose of
“machine learning for demand forecasting”, is to analyse the purchasing habit of customers
and then substantially give the accurate results. As compared to the other counter parts the
solution from machine learning is more versatile and adaptive in nature.
User experience need some improvement
By the year 2021, it is believed that the conversion rate of customers will
increase by around 90 percent and this will be because of the changing trends. As we all
know that the rush in the physical outlets is decreasing day by day and people are more
inclined towards online platforms. Therefore H&M as an improvement in the customer
experience can implement an option of “virtual firring rooms” in their online application and
other portals. Incorporating “try-before-you-buy” service will provide a virtual experience of
the product whether the item is looking good in them or not thus, making choices will be
easier (Sarooghi, Libaers and Burkemper, 2015). Moreover, customers will gain benefits in
trying their desired products by just sitting at home with the help of a smart phone. However,
in accordance with the navigational options, H&M can opt for “List type Menus” which can
be placed at the top of the application. the main function of this pattern is to avoid rush in the
application by allowing only the essential elements in the menu screen.
Slow to sell online
Nowadays, people are very peculiar about what they are purchasing and
whether the products they are purchasing is fitting their budget or not. Sometimes analysing,
the whole data of customers becomes a problematic thing if all the activities are not
subjugated according to the categories. Same happened with H&M as they failed to go along

with the changing trends and further resulted in slow in selling goods online. However, for
resolving this issue, company can “automate their marketing activities”. investing certain
amount of budget in the marketing automation will help the company in taking the sales and
values to a different level. Taking about the main function of “automated marketing
activities”, it combines different elements like efforts of social media, digital marketing, and
many more for gaining information about the need of the products and services by the
customers (Hon and Lui, 2016) . Therefore, this automated marketing activity will help the
company in providing better-quantified services that are more likely satisfied and convincing.
It is true that company should attract more and more customers but one should not
forget that the existing customers are also equally important. In relation to the existing
customers, for retaining them company can provide them interesting offer or giving them
some additions dividends. As a result, doing such activity will increase the sales and
profitability in quick time.
Brand position gone wrong
The positioning of brand goes wrong when the company fails to deliver what it had
promised during the initial launch of the products. Same thing happened with H&M, although
the company promised to give desired products but the price was too high that normal people
failed to afford it thus, the strategy managed to target only the elite people. Therefore,
downfall in sales and profitability of the company was seen. As a solution, it is required that
H&M make some modifications in the product sales strategy for example, giving the products
at discounted rates or even free for attracting customers. Moreover, by giving a new product
name company can launch the merchandise. Furthermore, superior authority of the company
can speak at events and tell customers about what is new in their products so that the ideal
customers can get attracted to the product.
Select a solution and construct a plan for implementation
It is significant for business organization to develop creative solution to address all
the potential issues that company is facing in managing their brand image. With the
assistance of effective solution organization can capture opportunities for accomplishing their
competitive image at market place by engaging their target customers towards its services. As
H&M is famous clothing company that serve fast fashion clothing items to its customers as
per their needs and requirement at cheapest cost (Barmuta, Borisova and Glyzina, 2015). This
is the reason that company has stronger customer base which assist them in building positive

brand image. On the other side, H&M is also facing issues in its marketing activities that may
crate negative impact over the organizational performance. For attaining competitive success,
it is crucial for company to effectively construct plan for implementing appropriate solution.
As, there are different solution that company have implement with the aim of addressing
issues:
 Implementing machine learning for demand forecasting
 Implementing virtual fitting rooms
 Automate marketing activities
 Focus on existing customers
 Needs for demands
 Restructure the product and strategies
All these are the innovative and creative solution that help company in enhancing
their competitive growth at market place. From these, H&M select one solution i.e.,
Automate their marketing activities as it provides assistance of company in improving their
brand performance. For implementing this, solution H&M implement plan and also setting
objectives for attaining positive results. In this regard, the company invest in marketing
automation so that it will quickly improve overall sales to another level. Basically, marketing
automation is considered as an important software platform and technologies that designed
for marketing department and also organizations it to more effectively for marking. This can
be possible by using multiple channels online and automate repetitive tasks. With the help of
effective marketing automation, company can easily determine or identify potential
customers (Seeck and Diehl, 2017). This can be beneficial in revising customers satisfaction
and at the same time also make them happier towards its services as well. Along with this, it
is also a procedure of leveraging software to automate multiple marketing tasks that help in
integrating with customers relationship management and also maintain effective customer
data platform. This can be effective in developing competitive image and also may
contributes in capturing large number of customers. In addition to this, the use of marketing
automation also integrates digital marketing, email marketing, social media efforts and many
more. By using these tools, customers can easily find services that H&M is offering through
online marketing
Furthermore, using automation marketing H&M can interact with their target customers
and also allow them to give their feedback about specific products and services. While

implementing this type of solution, it is also significant for company to analyse their target
customers and their taste so that they can easily and quickly deliver required services. This
type of software that focus on Prospects are handling more of the purchasing process
independently, compiling decision short lists by browsing company’s website and social
networks without ever engaging with a salesperson. One of the main advantages of marketing
automation platform is to increase market efficient by executing multiple tasks quickly.
Another benefit of using marketing automation as it also enhances the ability to generate
more and effective leads that directly contributes in increasing overall sales and profitability
level as well. Basically, the H&M is also focus on implement automated marketing activities
because it integrates multiple channels and devices that may aid in creating more
comprehensive prospect profiles of customers. While using automation in marketing
activities, company also focus on better alignment of sales and marketing goals because it
provides assistance in determining the customers and market demand.
Recommendations for overcoming all the potential issues
From the above analysis, it has been recommended that H&M should focus on
improving its online marketing strategy because people are more focused towards buying the
products and services online as comparison to going to stores. This will help in attracting the
more consumers and enhancing the profitability of business. Improving visibility of
the category pages in search engine results pages (SERPs) for the high-value, non-branded,
longer service searches should be top focus. One of most effective strategies to increase
visibility of these sites is to add high-quality, relevant and authoritative content to them.
High-quality of the website content is essential for capitalizing on any marketing investments
made higher up funnel, assuring that when buyer comes on site, customers are effectively
drawn through to buy rather than turning off at crucial last step of purchasing trip (Nowacki
and Bachnik, 2016). Other than this, it is necessary that H&M company should focus on
improving its online strategies in order to attract the more consumers. To be the competitive
online, H&M company requires to match as well as compete its strong competitors for
providing better experience to users. This will need to including the new visual search
options that allow customers to locate things using images they have taken themselves. H&M
company will discover ‘lookalikes' from its product offerings when users input photo.
Additionally, scan & locate option enables customers to the scan things in-store to check if
size or colour they want is available or to place orders for later pickup or delivery. These are
the helpful enhancements that will improve in-store experience for all the mobile customers

and therefore should result in more purchases from the mobile users. They must build product
designs using maximal modularity based on present strengths that is its in-house design
ability. Through approach of risk pooling, they will be able to lower the risk connected with
performance of the lines by using design accuracy and flexibility. Majority of its production
partners should be established in the Europe. Small-scale producers should be partners,
allowing H&M company to maintain greater control as well as reap the benefits of full
capacity utilization. They might also contemplate vertical integration or establishing
manufacturing plants that will provide them with a better cost-benefit ratio based on number
of goods produced. H&M company should explore about shrinking size of stores they open
in future or focusing on turning them into an experience center where consumers can
test product, scan goods and make an order for it to be shipped to the homes. Rather than
investing in big prime locations, they may open tiny stores with display goods or build
up network of the micro warehouses on outskirts of the city to service client orders made in
store. They will gain competitive edge over pure-play merchants by creating quite an
environment. In-store digital innovations should be strategic, aiming to solve consumer pain
points instead of serving as digital overlay that provides little if any value to the consumer.
H&M's present business will be supplemented and complemented by new diversification
strategy. Millennial customers are becoming more environmentally conscious and open to the
shared economy. Market is becoming increasingly amenable to clothing rental services such
as "Rent the Runway." H&M company could explore entering that growing niche, that will
undoubtedly become popular in the next years.
In addition to this, Today, technology can assist with a wide range of corporate goals,
including marketing and advertising alignment. Using marketing automation in conjunction
with something like a CRM solution such as Microsoft Dynamics 365 is an excellent method
to unify company sales and marketing teams (Kim and Yoon, 2015). Using both powerful
platforms provide every team with exposure to the same data and information, enabling for
more efficient and effective marketing efforts. It can also help the two teams build
relationships on campaigns, ensuring that customers receive the proper message and attention
at the correct moment. Today, time is amongst the most important resources, and marketing
automation can assist businesses in making the most of it. Marketing software can help
marketing people spend less time writing, organizing, and sending various sorts of emails and
other messages. This means spending less time on regular activities and more time on major
ideas and tactics. Marketing automation can also assist sales teams become more efficient by

choosing to focus on the most promising leads rather than those that require more grooming.
Marketing automation is used for more than just marketing. It is also an important tool for
engaging customers and developing brand loyalty today. Customer service and accounts
payable teams must deliver individualized interactions to their consumers across a range of
channels while also understanding their customers' demands at all times. Although email is a
popular means of communication for both businesses and consumers, digital marketing
solutions such as SMS messaging, site intelligence, digital media, and making considerable,
to mention a few, can improve the customer experience. Furthermore, in an ideal scenario,
each potential client would convert to a new customer the moment they exhibit interest
(Jaiswal and Dhar, 2015). In truth, businesses nowadays are rarely in that circumstance and
are more likely to face consumers who want to be taught and informed rather than sold to.
Companies can easily deliver by adopting email marketing, which allows them to nurture
prospects across numerous channels until they become keen to purchase, improving converts
rather than falling out of love with these customers as they travel through the purchase
process.
CONCLUSION
From the above-mentioned report it has been summarised that managing innovation
and creativity is play a significant role in attracting as well as influencing customers towards
specific products and services. Marketing automation is frequently regarded as a panacea for
better and more efficient business development. Furthermore, it is sometimes only putting
additional light on the flaws of product development processes, as well as the inadequacy of
quality assurance, availability, and access. As company facing various issues in marketing
activities that may reduce the overall performance level at market place. Thus, it is crucial for
company to effectively evaluate all the issues like user experience need some improvement,
slow to sell online, brand positioning gone wrong and many more. These issues create
adverse impact over the company and its performance as well. For addressing this problem,
company also find appropriate solution which help them in improvising their overall
performance and also make them more competitive at market place. Furthermore, eternal
programs, targeted advertising is viewed as a collection of independent, isolated email-based
initiatives. Focusing solely on your online marketing strategy drastically undercuts
advertising automation's potential to dramatically increase your customer relationships or
relationship management results. An enterprise-scale digital marketing technology utilized
solely for online marketing or newsletters is just unnecessary. Marketing automation, on the

other hand, should be viewed as a critical technology driver for coordinating your
unparalleled customer experience. The programmable method is frequently significantly
more similar to the way purchasers buy – regularly rather than for a set amount of time. The
program additionally aims to connect, nurturing, and attracting consumers by providing a
transparent information and experiences that are relevant to their needs and purchasing
process.
REFERENCES
Books and journals
Perry-Smith, J.E. and Mannucci, P.V., 2017. From creativity to innovation: The social
network drivers of the four phases of the idea journey. Academy of Management Review,
42(1), pp.53-79.
Proctor, T., 2018. Creative problem solving for managers: developing skills for decision
making and innovation. Routledge.
Sigala, M. and Chalkiti, K., 2015. Knowledge management, social media and employee
creativity. International Journal of Hospitality Management, 45, pp.44-58.
Westland, J.C., 2016. Global innovation management. Macmillan International Higher
Education.
Schilling, M.A. and Shankar, R., 2019. Strategic management of technological innovation.
McGraw-Hill Education.
Sarooghi, H., Libaers, D. and Burkemper, A., 2015. Examining the relationship between
creativity and innovation: A meta-analysis of organizational, cultural, and environmental
factors. Journal of business venturing, 30(5), pp.714-731.
Hon, A.H. and Lui, S.S., 2016. Employee creativity and innovation in organizations: Review,
integration, and future directions for hospitality research. International Journal of
Contemporary Hospitality Management.
Barmuta, K.A., Borisova, A.A. and Glyzina, M.P., 2015. Features of the modern system of
management of development of enterprises. Mediterranean Journal of Social Sciences, 6(3
S4), pp.91-91.