Retail Management: Analysis of H&M in the UK Fashion Retail Market

This report provides a comprehensive analysis of H&M's retail management within the UK fashion market. It begins with an introduction to retail and the fashion industry, followed by an overview of H&M as a company, its operations, and its position in the market. The report then delves into the key changes within the UK fashion retail sector, examining political, economic, social, technological, environmental, and legal factors through a PESTLE analysis. Furthermore, it investigates the micro-environmental factors impacting H&M, including the threat of new entrants, the bargaining power of buyers and suppliers, and the competitive rivalry. Finally, the report suggests and discusses various strategies and tactics that H&M can employ to navigate the challenges and capitalize on the opportunities within the UK fashion retail landscape, offering recommendations for future success. The report concludes with a summary of the key findings and insights.

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Contents
Introduction to retail..............................................................................................................................2
Introduction to the company..................................................................................................................2
Key significant changes within the UK fashion retail............................................................................3
Applicable changes within the micro environment................................................................................5
Strategies and tactics to be used............................................................................................................6
Recommendations.................................................................................................................................8
Conclusion.............................................................................................................................................8
References...........................................................................................................................................10

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Introduction to retail
The retail sales take place when an organization sells a product or service to the customers.
The transactions can occur by several sales channels like an online, store, through direct sales
or mail. The retailers identify and satisfy demand through the supply chain. The retailing is a
expedient, considerable and calm method for retailing goods and services. The commerce has
taken a new form with the new management techniques. Retail has become changing due to
the changing and dynamic consumer psychology.
The fashion retailing is all about the procedure of managing the flow of retail from the unique
choice of the designs to be manufactured to the presentation of the products to the retail
clienteles. It aims to maximize the sales of the company along with the profitability. The
successful retail marketing relies on undertaking customer desire along with responding to
the apposite products. The retailing is held accountable for recognizing and describing a
fashion producer’s target customers and retorting to those customer’s preferences.
Introduction to the company
This report focuses on the retail management of H&M (Hennes and Mauritz). H&M is a
Swedish multinational business focused on the cloth retailing. H&M was established in 1947.
The company is recognized for fast fashion clothing for women, men, teenagers, and
children. The product range of H&M comprises accessories, sportswear, cosmetics,
underwear and shoes. H&M is conducting operations successfully in 62 nations with more
than 4,500 stores. Most of the stores of H&M are mainly held by the US. Although, the brand
has a presence in all over the world comprising Macau, Cyprus, Iceland, and Tasmania.
H&M group owns eight established brands like H&M, Monki, COS, Weekday, Other Stories,
H &M Home, Cheap Monday and ARKET. These brands complement each other has own
unique identity. The extensive range offered by the company makes easy for the customers to
express their own personal style into the fashion. It is the objective of H&M to be up-to-date
and modern. The existence of the strong digital presence with the store creates a contiguity to
customers which is unique to the company. In the case of the social media, H&M is the most
visited website and app. The customers offering of H&M is accompanied with inspiration,
tips and videos everything from the eco-smart clothes to travel and hair styling.

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The fashion industry is booming as companies like H&M’s output ready to wear garments
directly from the runway in the record time. H&M is capable of offering an extensive range
of apparel and accessories at reasonable prices. It has been deliberated that the company can
introduce the products into the stores in just two weeks whereas the other brands take a time
period of six months to design and launch new styles into the store. The designers are
employed by the H&M who can watch for the fashion trends on a constant basis and bring
new products to life. The suppliers around the globe help company to push the products to the
stores within the time period of one month (H&M, 2017).
H&M is having higher merchandise turnover which is possible by resupplying the product
pipeline with the updated fashion trends. The model of H&M is made up of a solid marketing
team which is capable of quickly determining the desire of the targeted demographic desires.
The required changes can also be executed into the supply chain by the marketing team of the
business. H&M aims for the pertinent and well curated offerings all the times and works
regularly to make products even better. The working of the company is enabled by the
digitalisation and innovative technology from the product development to the meeting with
the customers. The theory of the advanced analytics and automated procedures offer
assistance which is being intensively used by the company. It offers deep insight of the
customers along with the contribution to the faster, flexible and responsive supply chain.
Such investments have helped company to reinforce the customers offering, improving
shopping experience and providing more personalised communication. It will surly benefit to
the customers of the company in the coming time. All the eight brands of H&M share the joy
of offering customers best value of money and encourage making justifiable choices.
Key significant changes within the UK fashion retail
Political factors: The UK includes Wales, England, Scotland and Northern Ireland. The UK is
considered one of the most influential nations in the domain. There is strong political stability
in the country. Although Brexit has come up with the uncertainties and political debates. UK
is also considered a popular target for foreign direct investment (FDI). There are several
commercial industrialists and establishments around the globe who like to invest in the
industries in the UK (Upadhyaya, 2016). There is a constitutional monarchy in the country
which runs under the impact of the parliament system. There is a proactive government in the
UK and offers plenty of opportunities to the organizations operating within the economy
(Purvis, 2018).

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Economic factors: the UK has a robust economic condition as compared to other nations. It is
the 5th major economy in terms of the minimal GDP. The recession occurred in 2008 put the
UK economy in trouble but the government initiated with all the required steps to enhance
the economy. The large population of the nation enables even small marketers to gain
sufficient profits. The UK economy has been identifying to be expanded with both large
public and isolated sector. It is a free market aims to increase foreign direct investment. Add-
on, northern parts have been focused by the UK for the industrial growth (Fernie & Sparks,
2018).
Social factors: The UK is having a great customer market. The country is greatly benefitted
by the category of the older population. The UK is generally influenced by concepts such as
communal class although the population is diverse (Ramanathan, Subramanian, and Parrott,
2017). In the past years, the businesses have formed a diversity of innovative products in
order to provide to the requirements of several races and beliefs. The country offers enough
opportunities for companies to explore in the country. The UK is also deliberated to be one of
the top ten countries to have the most sophisticated and educated populace in the domain. The
country has even attained 3rd rank in the overall best nations. Add on, the costs of living and
advanced education is on the upsurge in the UK (Adivar, Hüseyinoğlu, and Christopher,
2019).
Technological factors: The UK is considered to be the most progressive country when it
comes to technology. London is identified to be a abundant hub for monetary and
technological organizations. The businesses in the UK are constantly emerging new
technologies in order to provide the finest solution to customers. The progressive
technological infrastructure in the country deals with infinite opportunities to conduct trade in
the nation (Šindelář , 2016). It has been considered that the technology sector is the main
sponsor to the UK economy. A huge amount of investment is done and a great number of
talents enter into the technology sector. Both investment and development are widening
across the nation (Coronado Mondragon, Mastrocinque, and Hogg, 2017).
Environmental factors: The economic activities have a great role in the significant
improvements made in the UK in order to reduce the negative impact. The initiatives are
taken by the local councils, government, charities, and others to form the environmental
consciousness and lessen the adverse influence of the economic growth on the atmosphere.
On the other side, UK even faces challenges due to the weather conditions. Although, the

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weather has a great role in UK tourism. There are millions of tourists coming from the globe
to the UK mainly during the summers. It is to be believed that tourism is flourishing in the
UK and contributing to the huge amount to the economy (Patel, Guedes and Pearce II, 2017).
Legal factors: The laws like ‘Employment Act, 1996’ protect the privileges of the employees
in the UK. Some other rights like minimum wage, motherhood and fatherhood leave, holiday
pay, sick pay, and more relevant privileges are validly secured. Add on, the equality act, 2010
do protect people from any type of discrimination (Fairburn, Maier, and Braubach, 2016).
The supreme length of the operational week is kept for the 48 hours a week. Minimum rest of
the eleven hours is also offered in each 24 hour period. The country also allows who are
willing to work more than the 48 hours through the European Working Time Directive.
Several changes are made to the British labor laws after the labor party has come to influence
(Jensen, and Snaith, 2016).
Applicable changes within the micro environment
The variations are realized within the micro environment as given below:
The threat of the new entrants: The UK market is not inundated. There are no obstacles in the
dissemination because of the necessity of the low capital to launch a new store. There are
some significant obstacles to the entry in the manufacturing because of the scales economies
and requirement of the high capital investment (Kowalski, 2018). Fashion products have a
higher margin in the UK industry. The threat of the substitutes in the fashion industry is
concerned about replacing the brands, not products. The H & M is having a presence in the
various fashion retailers of UK. Add on, the demand is also quite variable in the market due
to the constant changes in the customer’s requirements. The association between the quality
and price is enhancing due to the subcontracting of industrial in the nations with the lower
labor costs (Elovainio, et al. 2017).
Negotiating power of the buyers: The switching cost of the buyers is low. The price is
considered a significant variable for the customers. There is a great number of suppliers in the
manufacturing industry in which H&M activates is more than the companies creating the
products. it indicates that the buyers have a few firms to pick the product so they do not have
control over the prices. It makes the negotiating power of the buyers a weak force in the same
industry. There is high product diversity within the industry which deliberates that the buyers

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will not be in the condition of discovering alternate companies generating a specific product
(Anitsal, Moon, and Anitsal, 2015).
Bargaining power of the suppliers: The negotiating power of the suppliers is not very high as
there are a lot of suppliers in the nations with low labor costs. In such a situation, the retailers
can execute the challenging conditions as they have attained more power than the suppliers
(Richey, and Skinner, 2015). It reflects that the suppliers have less control over the prices
which makes the negotiating power of the suppliers a fragile force.
Rivalry among the existing firms: There are various existing local, state and worldwide
opponents. The growth prospects are not very high due to the adulthood of the sector. The
price variables are considered quite influential in the customers at the time of deliberating
substitutes. The constant changes in the customer necessities do not allow developing strong
scale economies (Lu, and Miller, 2019). It is quite important in this market to retain the
upright appearance of the brand global.
The threat of substitute products: There are quite less availability of the substitute products in
the industry in which H&M conducts its operations. The few substitutes which are obtainable
are manufactured by the low profit earning businesses. When it comes to high quality then
there are fewer substitutes available and are way more expensive. So the purchasers are less
likely to change to the ancillary products (Choi, and Shen, 2017).
Strategies and tactics to be used
The macro environmental analysis has resulted in the changes which are faced due to the
Brexit as it has generated suspicions and political disputes. According to some people, Brexit
will form disorder whereas others consider that it will open doors to the enormous prospects
for the nation. There are also various opportunities in the UK market which can be explored
by the H&M. When it comes to technology then the UK is falling behind the USA, India,
Japan, South Korea and some more. So the UK is required to advance the technologies (Choi,
and Shen, 2017). The changes are also faced by the H&M due to the lack of performance in
the employee’s performance. The macro environment challenges are also faced in creating
awareness and reducing negative impacts on the economic growth on the environment. On
the other side, the micro environmental challenges are faced for entering into the market as

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setting up a business requires high expenditure to be sustained. The capital expenditure is
also high which makes problematic for the new entrants to enter into the market. H&M faces
challenges due to the negotiating power of the buyers. The income of the buyers is low so
there is pressure on the company to produce products on the low prices. The buyers are more
prices delicate (Balaji, and Roy, 2017).
The strategy can be used to reduce time to the competency. The future gains should be
identified along with listing the possible measurable benefits. The potential benefits should
also be calculated by expecting the least and extreme benefits per employee per day by
cutting time to the competency. The information should also be used to target audience and
the environmental factors should also be used to regulate the most effective delivery options.
The time should also be used to attain the capability and evaluate time obligatory to develop
and convey for every possible competency in the market (Bernon, Cullen, and Gorst, 2016).
The training programs can also be used by the organization to attain the desired level of
performance. The learning and actions should be initiated for the occurrence of the
performance gaps. The actions for maximizing return on the investment should be
recommended to analyze the information to identify the causes of the problem. The realistic
solutions should be found out the causes of the problem. In order to compete with the
bargaining power of the buyers, the strategy should be used to strike an equilibrium between
affordability for the target audience and viability for the business. The prevailing pricing
strategies in the UK market should be considered by the brand to position the brand
accordingly (Schenk, 2017). The target audiences along with the methods should be used to
react. The levels of the target audience should be deliberated carefully. Add on, Brexit can be
beneficial for the company as it has dismantled the trade obstacles between the nations. It will
even witness to the growing economic integration enabled by the centralization of the global
institutional arrangements like ASEAN, Mercosur and the World Trade Organization. The
UK stands for the arrangements for the breadth and penetration of the institutional
integration. So, the company like H&M oppose a mass of several institutional pressures.
There is a requirement to balance global integration along with the local adaptation (Tarhini,
Hone, and Liu, 2015). The major level of the market integration and regulatory coordination
has inspired to companies like H&M to integrate and strategies across European borders. The
company can even engage in the strategies to adapt the organizational design to the new
context. The advantage should be taken from the removal of the barriers for developing value
chain across the nation. The cross-border consolidation should also be soughed to overcome

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the hurdles for the firming making acquisitions in the UK. Regulatory harmonization can
enable a company to operate freely and provide services throughout the continent (Boyd,
2018).
Recommendations
H&M should focus more on the consequences of the Brexit as it can take the brand to far
enough by estimating the possible implications. The government also has created guidelines
in order to support organizations in their preparations for the Brexit. The guidelines are quite
complex but bare the indecisions and difficulties adjacent Brexit. Brexit can help the
organization in setting aside the issues like effects on the partnership in the UK. The IP
hurdles can also be identified which can harm research and development efforts of the
organization (Wen, Choi, and Chung, 2018).
It is recommended to H&M to take gain of the economies of scale it is having within the
industry as it can help in fighting off to the new entrants by the cost advantage. The company
can also concentrate on invention in order to distinguish its products from that of the new
applicants. H&M can expend more on marketing in order to construct a strong brand image.
It can help the company to retain the customers than losing to the new entrants. It is
recommended to H&M to focus more on the innovation and diversity in order to fascinate
buyers. Both the quality of the products and differentiation are significant to the buyers so the
company can attract a great number of clienteles by undertaking these. The economies of
scale can also be used by H&M to take advantage and sell products at the low prices to the
low-income customers.
Conclusion
The retail industry is vigorous to the economy of the UK. There is a high concentration of the
retail markets in the UK. The retail industry is expected to grow in the UK economy on a
regular basis. Concentrating on the economic indicators, there are significant improvements
in the retail industry of the UK along with the employment rate. H&M faces challenges in the
UK fashion retail as identified by the Pestle analysis. The challenges are faced due to the lack
of the employee’s performance, awareness creation and negative impacts for the economic
growth on the environment. In order to overcome the challenges, it has been suggested to the
H&M in the report to emphasis more on the invention and variation in order to appeal buyers.

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Along with this, economies of scale can also be practiced by the company to take benefit and
sell products at the low prices to the low-income customers.

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