Retail Theory and Practice Report: H&M and UK Fashion Trends

This report provides a comprehensive analysis of retail theory and practice, focusing on H&M within the UK fashion industry. It begins with an introduction to retail and the chosen company, H&M, highlighting its global presence and key personnel. The report then delves into the key relevant changes within the UK fashion retail market, utilizing a PEST analysis to examine the political, economic, social, and technological factors influencing the industry. Following this, a five forces analysis is employed to assess the micro-environment, evaluating the competitive landscape and the bargaining power of buyers and suppliers. The report then explores strategies and tactics that H&M can employ to navigate the challenges and opportunities within the market, including recommendations based on the analyses. The report concludes with a summary of the key findings and insights, providing a well-rounded perspective on H&M's position and potential in the UK fashion retail sector. The report also discusses the application of retail life cycle and wheel of retailing theories.

Running head: RETAIL THEORY AND PRACTICE
Retail theory and Practice
Name of the Student
Name of the University
Author Note

1RETAIL THEORY AND PRACTICE
Table of Contents
Introduction to Retail:................................................................................................................3
Introduction to Company:..........................................................................................................5
Key relevant changes within the UK fashion retail:..................................................................5
Relevant changes within the micro environment:......................................................................8
Strategies and Tactics:................................................................................................................9
Recommendations:...................................................................................................................11
Conclusion:..............................................................................................................................11
References:...............................................................................................................................13

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Introduction to Retail:
According to the esteemed opinion of D'Silva et al. (2018), the basic concept of retail
business terms it to be an approach of business where the business organizations are selling
their services or the products to the end users for their usage. Having said that, DellaVigna
and Gentzkow (2019), mentioned that the transaction in retail business can take place through
a number of sales channels such as the direct mail, online or the brick and mortar store
houses. Fernie and Sparks (2018), also claimed that the main aspect of a business that is to be
regarded as retail business is selling the product to the end users directly. The common types
of the retail stores which are employed for the smooth management of the retail business are
observed to be the departmental stores, box stores, e- retailers, discount stores and warehouse
stores (D'Silva et al. 2018). Considering the concept of the fashion retail, Hwangbo, Kim and
Cha (2018), claimed that the type of retail business which involves the selling of accessories,
apparel and clothing products, is recognized as the as fashion retailing. Along with that,
Hwangbo, Kim and Cha (2018), mentioned that the fashion retailing is a consumer goods
market which is particularly focused on the clothing, accessories and footwear products and
is characterized by the intense level of competition, short lifecycle and frequently changing
customer preferences.

3RETAIL THEORY AND PRACTICE
(Information: Number of Fashion e-commerce users in United Kingdom from 2017 to 2024,
by segment (in millions))
(Information Courtesy: Statista.com. 2020)
From the statistics, the growth of the fashion retail industry in UK is pretty prominent.
The number of e- commerce users in the apparel, footwear along with bags and accessories
section were see to be the 39.2 million, 27.1 million, 12.5 million respectively in the year
2018 (Statista.com. 2020). At the end of 2019, the numbers are expected to increase 41.3
million, 29.3 million and 14 million respectively for the three segments (Statista.com. 2020).
Other than this, the estimated growth of the three segments by the end of 2020 looks like 43.6
million, 31.7 million and 15.8 million in numbers (Statista.com. 2020). On the other hand,
United Kingdom is expecting a year on year growth of 7.8% in their revenue generation in
the year 2020 and that is expected to make their revenue reach 25217 million US dollars
(Statista.com. 2020). The generation of such substantial revenue places the country in the
fourth place in the global revenue ranking. The market volume of the fashion retail industry

4RETAIL THEORY AND PRACTICE
of UK is expected to increase to 30362 million US dollars and the largest segment of the
market is the apparel segment with a market volume of 17016 million US dollars
(Statista.com. 2020).
Introduction to Company:
Hennes & Mauritz AB or more usually recognized as H&M is one of the successful
fashion retail organization operating in various parts of the globe. The organization is a
Swedish retail company that offers clothing products to their customers and the company has
the ability to deliver top quality clothing products for men, teenagers, women and children.
H&M was established in the year 1947 as Hennes (Hm.com 2020). The founder of
organization was Erling Persson and the business entity is currently headquartered in
Stockholm. The organization is observed to have strong presence in 5076 number of different
locations (Hm.com 2020). Helena Helmersson, the CEO of the organization, Adam Karlsson,
the CFO of the organization, Daniel Claesson, the director of Business Development, Doris
Klein, the director of Human Resources, Sam Miller the director of Expansion activities and
David Sävman, the director of Production at the company are the prominent faces of the
H&M management team (Hmgroup.com. 2020). The company is able to develop a workforce
of 126376 number of employees (Hm.com 2020) and along with that, the service excellence
of the employees and the strong leadership from the managerial position holders of the
company, have contributed to the increment of company’s revenue to 25.191 billion in the
year 2016 (Hm.com 2020).
Key relevant changes within the UK fashion retail:
PEST Analysis:
Considering the political situation of United Kingdom, it is clear that the Brexit is
affecting the fashion retail industry in a significant manner. The decision of Brexit from the

5RETAIL THEORY AND PRACTICE
British government is certainly affecting the ability of the companies functioning in the UK
fashion retail industry in ensuring the services of skilled and experienced labors for the
management of their business actions (Worrell and NJ 2018). With certain share of
restrictions over the business actions of the employees of other nationalities, the companies
are expected to face the heat of labor and employment market. As an important market player
of the UK fashion retail industry, H&M is also affected by the same in a tremendous manner.
On the other hand, the British government is seen to put strong emphasis on ensuring
compliance of the business houses with the taxation, environmental and business legislations.
The government is observed to be substantially efficient in undertaking strong measures for
forcing the companies in complying with the legislations and ay sort of violation in the same,
is dealt with utmost strictness. The application of the Constitutional Reform and Governance
Act 2010, Government Procurement Agreement, Cross Border Trade Taxation Policy along
with the legislations regarding the VAT and excise regimes imposed by the Department of
International Trade of the British government is seen to be pretty strict in nature and H&M
has the necessity to comply with the same for the management of a sustainable business
(GOV.UK. 2020).
Considering the economic grounds, it is evident that the total revenue generated by
the United Kingdom’s fashion retail is increasing to 25217 million US dollars at the end of
2020 and the mentioned industry will be able to achieve a growth with a year on year
percentage of 7.8% (Statista.com. 2020). In addition to this, the market volume of the
mentioned industry is also increasing in a substantial manner and that is visible with the
estimated increase of market volume of the industry to 30362 million US dollars
(Statista.com. 2020). As a result, the progress of the stated industry is certainly visible and
the selected organization has substantial scope on riding the growth of the industry.

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Considering the societal consideration, it is evident that the purchase preferences of
the customers of the nation is fluctuating in significant manner. The people of the nation are
accepting the modern trends of fashion and they prefer the companies that have the ability to
incorporate the modern design trends in their products and services. As a result, the fashion
retailing organizations are facing the need of reducing their lead duration for the scheme of
the goods (Caro and Martínez-de-Albéniz 2015). Hence, the companies that have the ability
to increase their design cycles, are observed to be in an advantageous position when it comes
to design the bestseller products and maintain their relevancy in the market. Other than this,
the social shopping is observed to be a significant trend in the UK fashion retail industry.
Majority of the mainstream fashion retail groups functioning in the nation, are detected to put
strong emphasis on managing the customer interaction and communication through their
social media presence. The response of the citizens of the nation is also significant and that
certainly asks H&M for undertaking such an approach which has the possibility of providing
a substantial help to the company in reaching out and interacting with the customers in a
professional manner.
Considering the technological aspect, the British citizens are seen to have a great
share of preferences towards the practice of the social media platforms. The strong presence
of the people of the nation over the social media platforms such as YouTube, Twitter,
Facebook, Instagram and Pinterest is an important factor that influences the fashion retail
companies of the nation in conducting their marketing activities through the stated mediums
(Anstead and O'Loughlin 2015). Hence, H&M also faces the obligation of following the
above mentioned approach. In addition to this, the high level of technological acceptance of
the people of the nation which is evident with the great total of the nation in the Human
Development Index (Hdr.undp.org. 2020), triggers the business organizations in utilizing the
technology based equipment for the design and manufacturing of the fashion clothing

7RETAIL THEORY AND PRACTICE
products. In addition to this, the usage of the modern technology in the design of the products
or in increasing the design cycles, will be crucial for enhancing the success of the companies
such as H&M.
Relevant changes within the micro environment:
Five Forces Analysis:
With a close look at the competitors of the company in the UK fashion retail industry,
the prominence of Burberry, ASOS, Mark & Spencer, GAP, Zara and Next Plc is observed to
be substantially high. Burberry is the main competitor for the business in the UK market with
a market value of 10 billion dollars along with 3.8 billion dollars revenue in the year 2017
(Fashionunited.uk. 2020). On the other hand, ASOS with a market value of 6.2 billion dollars
along with 1.8 billion pounds of sales in the year 2017, is providing an intense level of
competition to H&M (Fashionunited.uk. 2020). One of the important fashion retailer of the
United Kingdom, Next Plc. with a market value of 7.16 billion pounds along with an annual
sales of 4.0 billion pound is also in the race of United Kingdom retail industry
(Fashionunited.uk. 2020). Other than this, Marks & Spencer is recognized as one of the top
five fashion retailers of the nation with a market value over 7 billion pounds along with an
annual sales of 10.3 billion pounds in the year 2017 is playing a crucial role in making
H&M’s life difficult in ensuring a sustainable market share in the nation (Fashionunited.uk.
2020).
Considering the bargaining power of the buyers, the application of affordable pricing
from ASOS, the utilization of fashion mechanism from the part of Next Plc and the excellent
execution of the product differentiation strategy from the part of Marks & Spencers is
observed to play a crucial role in increasing the bargaining power of customers.

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The suppliers of the groups operating in the UK fashion retail industry are observed to
be sufficient in numbers, have the capability to deliver the raw materials on time with
accurate quantity. In addition to this, the suppliers have the tendency of providing lucrative
discounts on bulk purchases from the part of the companies and also has the expertise of
following the government regulatory guidelines and suppliers’ code (Yang, Song and Tong
2017). Hence, the company is expected to face a low bargaining power of the suppliers
operating in the UK fashion retail industry.
With a close consideration at the expertise of the above stated competitor
organizations in applying the low pricing strategies, product differentiation strategies, new
product development strategies along with the professional management of the marketing and
promotional strategies, the threat of substation for H&M is considerably high.
The requirement of substantial amount of financial investment for the infrastructural
development, the intense level of competition from the part of the market leaders of the
industry and the challenges associated with the formulation of the trade licenses in the nation
are sufficient demoralizing factors for the new business organizations. On the other hand, the
rapid growth of the industry has the ability to influence multinational organizations in
entering the fashion retail industry. As a result, H&M is expected to face a moderate level of
threat of new entries.
Strategies and Tactics:
With a thoughtful consideration towards the fluctuations in the macro environmental
factors in UK fashion retail industry, it is understandable that H&M is in need to apply the
product cycle increment strategy. The customers of the UK fashion retail industry are
observed to have greater preferences towards the fast fashion. Along with that, one of the
important success factor for the leading groups functioning in the industry is perceived to be

9RETAIL THEORY AND PRACTICE
their strong ability in incorporating the preferences and ideas of their clients in the scheme of
their products. Along with that, Garcia-Torres, Rey-Garcia and Albareda-Vivo (2017),
mentioned that the preferences of the customers towards the fast fashion and customized
products is increasing in a rapid manner and that is evident with the initiation of the
exhibition for sales from the part of the companies and the participation of the companies in
the fashion shows for showcasing their array of products and developing a rapport with the
customers regarding their products.
Other than this, the findings of the macro environmental factor analysis portrays the
necessity of undertaking extensive amount of marketing and promotional activities with the
utilization of the social media platforms. As the citizens of United Kingdom have greater
share of familiarity to the social media platforms, H&M also has the obligation of enhancing
their marketing and promotional efficiency. The company currently manages their online
marketing activities through utilizing their existence in the social media platforms such as
Facebook, Twitter, Instagram, Pinterest and YouTube (Hm.com 2020). Apart from increasing
the efficiency of the marketing team of the company responsible for the management of the
mentioned social media portals, the company is in need to concentrate on fashion blog
content creations and the development of a strong association with the renowned fashion
influencers is much required for the company.
Considering the findings of the micro environmental factors, the significance of two
changes which are the application of low pricing or affordable pricing and the development
of diversified product offerings through the application of new product development and
product diversification strategies (Omsa, Abdullah and Jamali 2017). Having said that, H&M
is observed to employ premium level pricing strategy for their products and in such situation,
the company faces the necessity to apply value based pricing policy for their products. The
shift in the pricing strategy will be important for the firm in attracting a higher quantity of

10RETAIL THEORY AND PRACTICE
clients for their products and services and it will enhance the ability of the company in
increasing the sales of their products (Kienzler and Kowalkowski 2017). As a result, the
financial stability of the firm will improve with the increment in the revenue and profit of the
company. On the other hand, the company has the necessity to continuously develop new
products for increasing the product chain and that will contribute to a better stance of the
company in meeting different demands of the customers in an effortless manner.
Recommendations:
The company is in need to apply value based pricing policy for their products and
services. Along with that, the company has the obligation of applying product differentiation
strategy for the development of a strong product chain. As a result, the company is in need to
apply the hybrid focus strategy for tackling the changes occurring in their micro environment.
The company is recommended to reduce the lead durations or to increase the number
of design cycles so that they be able to acknowledge the demands of fast fashion of their
customers in a better manner.
Along with that, the organization is in need to increase the efficiency of their
marketing team for growing the number of their social media posts and for enhancing the
creation of marketing content by. The better usage of the Customer Relationship
Management system is seen to be the need of hour for the company in managing the queries
and grievances of their customers in an apt fashion.
Conclusion:
On an ending note, H&M is regarded as a market leader in the global fashion clothing
industry. However, the business is seen to be exposed to an intense rivalry in the UK fashion
retail industry and that is evident with market share of ASOS, Marks & Spencers, Next Plc,
Zara and GAP. With an in -depth understanding of the variations in the micro and macro

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environment of the business house, the success of the organization is primarily reliant on the
ability of the company in applying value based strategy, product diversification strategy,
contour revival strategy along with the enhancement of the marketing and promotional
activities of the company.

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References:
Anstead, N. and O'Loughlin, B., 2015. Social media analysis and public opinion: The 2010
UK general election. Journal of Computer-Mediated Communication, 20(2), pp.204-220.
Caro, F. and Martínez-de-Albéniz, V., 2015. Fast fashion: Business model overview and
research opportunities. In Retail supply chain management (pp. 237-264). Springer, Boston,
MA.
DellaVigna, S. and Gentzkow, M., 2019. Uniform pricing in us retail chains. The Quarterly
Journal of Economics, 134(4), pp.2011-2084.
D'Silva, K., Jayarajah, K., Noulas, A., Mascolo, C. and Misra, A., 2018. The role of urban
mobility in retail business survival. Proceedings of the ACM on Interactive, Mobile,
Wearable and Ubiquitous Technologies, 2(3), pp.1-22.
Fashionunited.uk. 2020. UK Fashion Industry Statistics. [online] Available at:
<https://fashionunited.uk/uk-fashion-industry-statistics/>
Fernie, J. and Sparks, L. eds., 2018. Logistics and retail management: emerging issues and
new challenges in the retail supply chain. Kogan page publishers.
Garcia-Torres, S., Rey-Garcia, M. and Albareda-Vivo, L., 2017. Effective disclosure in the
fast-fashion industry: from sustainability reporting to action. Sustainability, 9(12), p.2256.
GOV.UK. 2020. UK Trade Policy: A Guide To New Trade Legislation. [online] Available at:
<https://www.gov.uk/government/publications/a-uk-trade-policy-a-guide-to-trade-
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Hdr.undp.org. 2020. [online] Available at:
<http://hdr.undp.org/sites/all/themes/hdr_theme/country-notes/GBR.pdf>

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Hm.com 2020. Fashion And Quality Clothing At The Best Price | H&M GB. [online]
Available at: <https://www2.hm.com/en_gb/index.html>
Hmgroup.com. 2020. H&M Group | Company Management. [online] Available at:
<https://hmgroup.com/about-us/corporate-governance/company-management.html>
Hwangbo, H., Kim, Y.S. and Cha, K.J., 2018. Recommendation system development for
fashion retail e-commerce. Electronic Commerce Research and Applications, 28, pp.94-101.
Kienzler, M. and Kowalkowski, C., 2017. Pricing strategy: A review of 22 years of marketing
research. Journal of Business Research, 78, pp.101-110.
Omsa, S., Abdullah, I.H. and Jamali, H., 2017. Five Competitive Forces Model and the
Implementation of Porter’s Generic Strategies to Gain Firm Performances.
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globalRevenue>
Worrell, J.H. and NJ, M., 2018. Brexit’s potential impact on apparel manufacturing and
luxury fashion. J Textile Eng Fashion Technol, 4(6), pp.389-391.
Yang, S., Song, Y. and Tong, S., 2017. Sustainable retailing in the fashion industry: A
systematic literature review. Sustainability, 9(7), p.1266.