Retail Theory and Practice: H&M Analysis on UK Fashion Market Trends

This report provides a comprehensive analysis of retail theory and practice, using H&M as a case study. It begins with an introduction to retail and its significance, followed by an overview of the relevant changes in the UK fashion clothing market, including the impact of online retail and evolving consumer trends. The report then conducts a PESTLE analysis of H&M, examining the political, economic, social, technological, legal, and environmental factors affecting its performance. A Porter's Five Forces model is employed to assess the competitive landscape, considering the threats of new entrants, substitutes, and the bargaining power of customers and suppliers, as well as rivalry among existing firms. Finally, the report discusses various strategies and tactics H&M employs to navigate these challenges, including the application of the wheel of retailing theory, with the aim of reducing negative impacts and enhancing overall business performance. The report highlights the firm's response to political, social, and environmental factors, emphasizing the importance of strategic adaptation in the dynamic retail environment.

Retail Theory and Practice

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
Relevant changes in the UK fashion clothing market..................................................................1
Discusses strategies and tactics....................................................................................................6
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
Retail is process of selling consumer goods and services to customers. It brings out
institutional changes that takes place when innovators including large business houses and enters
into retail arena. Thus, it termed out as an application which helps to identify the different factors
that affect the performance of the firm (Alderighi and Nicolini, 2019). With the use of effective
retail theory and practices, it can be easy to manage the business activity by analysing micro and
macro factors.
The Report is based on Retail theory and practices of H&M. It is the Swedish
multinational clothing-retail company known for its fast fashion clothing for men, women,
teenagers and children. It will Identify key relevant changes in the UK fashion clothing market.
Furthermore, report will describe Pestle analysis of H&M to identify the macro
environment of the firm. Moreover, report will explain the porter five forces model that helps to
identify the Environmental aspects. Lastly, assignment will describe different strategies and
tactics that will help to get success.
MAIN BODY
Relevant changes in the UK fashion clothing market
Overview; Fashion clothing industry has significantly developed, especially. There are different
changes in new trends that affects the decision of the firm. The ongoing changes in clothing
industry affects the retailers because development in online markets will reduce the performance
of retailers(Piotrowicz and Cuthbertson, 2019). Therefore, Grocery retailers are facing durable
growth in an inflationary environment. On other side, the online retailers and pure-online players
continue to grow market share as provide better services as compare to retailers. Therefore,
clothing retailers has faced many challenges such as high rents of properties is also effects the
business of retailers.
Pestle analysis: It is the tool or framework used to analyse and monitor the macro-environmental
factors that may have an Inveterate impact on an organization's performance. There are different
factors such as political, social, economical, technological, legal, environmental that effects the
performance of the firm.

Political factor — Political stability and instability is created impact on the business negatively
and positively. This can include the different government policies such as tax policies, labour
low, employment low, environmental low, different trade restriction etc. Therefore, H&M has
successful brand operates the number of stores in all over the world. Firm has different stores in
various countries and markets that are increase the politically unsuitability Thus, The sudden
changes in taxation policies it brings lower profit to the firm because high tax is created the
negative impact on the operations of the H&M. Due to high taxes, in different countries firm
faced issues related to operations their stores in Kuwait, Egypt, Bahrain, Morocco, Thailand,
Israel, Bahrain, Saudi Arabia and Oman. On other side, H&M Is the biggest firm who operates
their numbers of stores in globally so firm provides high employment to workers, it creates the
positive impact on the performance and productivity of the firm.
Figure:1 Pestle analysis

Economical factor — This factor is directly impact on purchasing power of the consumers
changes in economy its affect the performance of the firm. It can be included economic growth,
interest rates, exchange rates, inflation rates and disposable income of consumers etc. H&M is
the fashion clothing firm they provide highly branded product to the customers but the changes
in currency is created negative impact because this affects the income of customers and
generally customers are not purchase the product due to low income. On other side, H&M
diversify their business in international market it creates the positive impact on the business.
Therefore, firm enter in different economy which provide the high profitability and this is the
reason of success the business.
Social factor — This factor is also called socio culture factors, this is the area which describe
attributes, likes, dislikes and shared beliefs of the customers. Factor includes, population growth,
age distribution, income class, health consciousness, level of education, living standards etc.
Therefore, new trends in the markets it affects the perceptions of the customer it increases
demand of luxuries and branded product (Jackson and Pongpakamulnarm, 2019). Therefore,
many consumers are influenced by celebrities, and they invest their money in branded product.
So this is the difficult for the firm to recognize actual demand of the product it creates the
negative impact on the firms sales and profitability. On other side, H&M announced its latest
designer creation with Erdem to be released in 2017, which allows the brand to meet
requirements of the customer so this stage is creates the positive impact on the profitability of
the firm.
Technological factor — This factor is consider as fast the technological landscape changes and
how this impacts on the fashion industry like H&M. Technological factors affect marketing and
performance of the firm in negatively and positively(Choi, Rabinovich and Richards, 2019).
The high technology advancement effects the performance of the firm because to develop the
new technology in the firm, it requires huge Money that directly impact on the turnover of the
firm and it leads negative impact on H&M. On other side, when firm grab this opportunity to by
adopting available retrial technologies in the business it creates the positive impact on the
performance because firm makes some innovative products to attract the customers.
Legal factor — The influences of different government policies is affects the performance of the
firm. This factor includes health and safety act, equal opportunities, employment low, advertising

standards, consumer rights and laws, product labelling and product safety lows etc. Therefore, in
last two years, H&M has not performed their responsibility well in accordance with government
it may crate negative impact on the performance of the firm because firm has been arduous in
various legal disputes and it may affect the reputation of the firm. On other side, H&M follow
the consumer rights and lows which creates the positive impact. Therefore, when firm follow the
consumer rights it can lead the customer satisfaction and, customers are trust and loyal with
products of H&M.
Environmental factor — Environmental factor is describe that firm influenced by the
surrounding environment It includes, lack of raw materials, carbon footprints, population target,
etc. Therefore, H&M has faced issues related to government to trace environmental issues.
Therefore, this government interference is affects the business due to low production it creates
the negative impact on the productivity of the H&M (Sarkar, Sarkar and Bhatt, 2019). On other
side, the main aim of H&M is that they reduce the waste to use the only recycled and permanent
materials in their products. So, that it creates the positive impact on the performance of the firm
because firm follow the rule of government to protect the environment.
Porter five forces model
It is the tool and process which identify the competition of the firm. This tool is described The
power and strength of the firm. Therefore, This framework is analysed the number and power of
a company's competitive rivals and it helps to reduce the competitions. There are different
factors which affects the profitability of the firm such as The potential new market entrants,
suppliers, customers, and substitute products (Alderighi and Nicolini, 2019).
There are five stages like Threat of new entrants, Threat of substitutes, Bargaining power of
customer, Bargaining power of suppliers, Rivalry Among Existing Firms.

Threat of new entrants - H&M has faced high competition in fashion industry. Therefore, the
firm who enter in new market with differentiate and innovative product it may reduce the
profitability of the firm (Mahroof, 2019). Customers only focus on differentiate and innovative
product, so they also prefer to buy new products it may affect the firm and it creates the threat of
new entrants for H&M. Thus, new entrants also faced many problems when they enter in new
markets like requirement of capital for establish the new firm in this industry is highly expensive
so it is also makes the threat of new entrants.
Threat of substitutes — In the fashion and clothing industry in which H&M operates.
Therefore, H&M face few substitutes in the product because in fashion industry there are
minimum numbers of substitutes (Gong, Liu and Zhu, 2019). So. firm has low threat with
substitutes products. But there are some issues like highly branded product is the biggest
substitutes for the firm and it can increase the competition among the market. So, to rum the
business firm reduce their prices of the product and firm sale the product at lower prices than
substitutes. Therefore, H&M faces threat of substitutes for the high quality and branded products.
Bargaining power of customer — The high number of competition in the market and there has
high branded firms so customer has more option to choose the best product according to their
Figure : 2 Porter five forces model
(Source : Porter five forces model, 2016)

incomes. So the bargaining power of customer is high due to different brands of product. Further
the quality of products is attracted the customer most so customer are generally preferred the
high quality of products with low prices. So H&M face problem related to buyers because high
prices is reduced the number of suppliers and it can reduce the profitability of the firm.
Bargaining power of suppliers — Under the fashion industry there has number of suppliers and
low number of buyers so this is the reason it can reduce the bargaining power of supplier and
firm can switch the suppliers for the low prices of the product. Therefore, in other side, their the
minimum number of suppliers in the specific products (Elton, 2019). This means that there are
no other substitutes for the product and H&M purchase the product on high prices other than the
ones that the suppliers provide. So, firm purchase the product and it can increase the bargaining
power of suppliers.
Rivalry Among Existing Firms — H&M faced the high number of competition in clothing
industry. There has highly branded firm in the markets which is large and also they have high
market shares. Therefore, it can increase the competition among existing firms. Thus, a very low
competitor who have high market shares. That mean this is the big reason which increase the
high completion in the existing market. In addition, every firm have different strategies to run the
business (Bahroun, Harbi and Bouchriha, 2019). That means every firm are different to each
other they follow different types of strategies in the business. So, this is also creates the high
competition among the firms because some strategies are good and some are not good so it can
enhance the competition in the market.
Discusses strategies and tactics
Strategies and tactics is helps to reduce the negative impact on the firm (Bravo, Martínez and
Pina, 2019). H&M uses the different strategies to reduce the negative impact on the performance
of the firm.
Political factor — The main issues H&M faced in the political factor it is that high due to high
taxation charges in different countries it can reduce the profitability of the firm. Firm faced the
issues to operate the business in international market.
Social factor — The main issues H&M faces in social factor it is that, Due to lifestyles changes
firm can face issue as they are not manufacture the product according to the requirement of the

product. So this issues is affects the sales of the firm as company not meet the requirements of
the H&M.
Environmental factor — The main issues H&M faces in Environmental factor it is that, H&M
has faced issues related to government to trace environmental issues its increase the expenses of
the firm as well as reduced the customer base(Jung, Kwon and Yu, 2019).
Theories
The wheel of retailing — This theory is the best theory which increase the performance of the
firms. H&M uses this theory to enter in international market (Sarkar, Sarkar and Bhatt, 2019).
So, firm decide their prices of the product according to the tax policies which means high taxes is
not affects the profits of the firm. Therefore, Eventually firm charge the high price on the product
and further they improving displays and location, and improves the delivery process by
enhancing advertising expenditure.
Behavioural theory — This theory is helps to identify the needs of customers. H&M uses this
theory to meet the requirement of customer(Piotrowicz and Cuthbertson, 2019). Therefore,
using this theory, firm target the customer on the basis of behaviour firm analyse the behaviour
and then implement the best strategies in the business to attract the customers. Therefore, to find
the needs of customers H&M makes the product according to the new trend which helps to meet
the requirement of customers. In addition, firm want to attract the customer, so they use the
different pricing and promotional strategies to enhance the customer base and attract the
customer. Therefore, H&M uses this theory in the business to find the customer and also
increase the customer loyalty towards the products and services.
Corporate social responsibility — In this theory it describes the social responsibility.
Therefore, to maintain the healthy environment H&M uses this theory in their business (Jackson
and Pongpakamulnarm, 2019). The main aim of firm is that they reduce the waste and also they
use the waste to make the product. Therefore, firm use only recycled and durable materials in
their products to makes the high quality of products. This step of firm is increase the reputation
as well as it also reduces the government interference. That means firm easily produce their
product without ant government interference.

CONCLUSION
From the above report it can be concluded that Retail practices refers to sale goods to the
customer by retailers. Firms used this process in business to sale goods to the customer in
relatively small quantities for consumption by customers or consumers. Therefore, Retail
industries manage their business activities by using the different theories and strategies in the
business.
The report has based on Retail theory and practices of H&M. Furthermore, It has covered
the pestle analysis of H&M which described the macro environment of the firm that means the
factor of the macro environment is influenced the performance of the firm. Moreover, report has
analysed the porter five forces in the context of H&M.
It has described that this model helps to identify the competition, customer or suppliers
behaviour related to the product of H&M. Lastly, report has also stated about different theories
of the factors. This theory helps to reduce the negative impact on the factors.

REFERENCES
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