Retail Sector Analysis: H&M Case Study - Macro and Micro Factors

This report offers a comprehensive analysis of the retail sector, using H&M as a case study. It explores both macro-environmental factors, such as cultural shifts, environmental regulations, and economic indicators like currency rates and inflation, and micro-level factors including supplier relationships, competitor dynamics, and customer preferences. The report highlights the importance of these factors on the retail business, emphasizing the need for companies to adapt to changing market conditions and consumer demands. The analysis also discusses the application of business theories like PESTLE and Porter's Five Forces to understand the retail landscape and how companies navigate it. The report provides insights into how businesses can make informed decisions to improve their performance and adapt to market changes.

Retail Theory and
Practice Formative
Assessment

Retail and fashion is a sector in which there is buying and selling of products and services
through direct interaction and coordination with customers. Retailing is a broad concept that
includes E commerce as well. There is range of products and services offered by companies in
retail sector. There are several types of business operating in it. Retail sector highly contribute in
GDP of nation. It fulfils the essential needs of people. The company selected on which report is
based is H&M. It is the Swedish MNC known for its fast fashion and clothing. The company is
at second largest retailer in the world in retail sector. So, it will enable in analysing H&M
contribution in retail sector. But there is second option as well. In this Zara can be taken in
replace of H&M. Zara is also a large MNC retailer.
In such a complex retailing business environment, there are some macro factors
impacting on retail sector. The factors can not be controlled by company. They are described
below :-
Social- It includes culture and ethics of people. Basically, it is related to change in taste and
culture of customers. This highly impacts on retail and fashion. So, if there occurs change in
lifestyle of people, it will affects H&M growth. They will have to design latest products to meet
needs of customers.
Environmental – This is the most common factor. It is related to change in laws and regulations
of environment, CSR policies and activities, etc. As H&M operate in various countries, they
have to follow laws. So, change in laws and regulation highly impact on organisation brand
image.
Economical- it consists of factors such as currency rate, GDP, inflation rate, etc. Any change in
all these affect retail organisation growth. It can lead to rise or downfall in profitability of
business. So, H&M have to expand in country where economy is stable.
Apart from this, there are some micro factors as well which impact retail sector. It can be
controlled by company by taking effective decision. They are explained as below :-
Supplier - Retail companies depend on suppliers for selling their products in the market. Thus,
when supplier changes their demand it forces company to deal with them. It affect on operations
and functions of company.
Competitors- they play a great role in retail sector. Increase or decrease in competitors affect
competition level and market situation. Moreover, it also impact sales and revenue.
1

Customers – They are the base for growth of business. Therefore, change in taste and preference
results in increase or decrease in customer base directly impact on sales and profits.
From above it is evaluated that there are several theories and concepts applied by
businesses. They are Pestle analysis, Porter five force, etc. these all will support in finding out
factors that impact retail business. Besides this, it will be easy to identify market situation and
how companies are operating in it. The concept and theories will provide a brief overview of
how retail industry.
2