SWOT Analysis of H&M

Info: 1276 words (5 pages) SWOT Examples
Published: 31 Jul 2019

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Summary of SWOT Analysis of H&M

A H&M SWOT Analysis highlights the brand’s strong position in global fashion retail, driven by several key strengths. H&M leads with its innovative circular economy strategy, aiming to set a benchmark for renewable and sustainable fashion. The company boasts a robust digital presence and operates in 66 markets, continually expanding both its physical and online reach. In 2017, H&M entered new countries such as Georgia, Iceland, and Vietnam, and launched online stores in markets like Malaysia and Singapore. The brand portfolio, including H&M, COS, Monki, & Other Stories, and H&M Home, is increasingly popular and outnumbers the high street presence of main rival Inditex.

Despite these H&M strengths, the SWOT Analysis of H&M reveals notable weaknesses. Inditex, owner of Zara, outpaces H&M in online growth and diversification into higher-priced brands, leaving H&M needing to differentiate its premium offerings. H&M’s reversal of its store expansion plan, shifting focus to omnichannel sales, signals internal strategic uncertainty.

Opportunities for H&M include further international expansion, particularly in receptive markets like India, and capitalising on its growing reputation for sustainability. However, threats remain from limited expansion potential in less developed regions, currency fluctuations impacting profits, and concentrated shareholder control, which may skew strategic priorities.

H&M Strengths

The new strategy of H&M announced in April 2017 is hailed as being an economic revolution. Namely, it is a role model for the circular economy. Moreover, experts tout it as leading the change towards renewable and circular fashion (Pergrankvist, 2017).
H&M has a strong digital presence and operates stores in 66 markets (H&M, 2017b).
H&M continues to open in new markets in 2017, including Georgia, Iceland, Vietnam, Colombia and Kazakhstan. They also opened six online markets in Spring 2017 in Taiwan, Turkey, Macau, Hong Kong, Malaysia and Singapore (H&M, 2017a).
H&M includes six brands which are becoming increasingly popular on the UK high street, including H&M, COS, Weekday, Monki, & Other Stories, H&M Home and Cheap Monday. This beats the number of high street stores the brand’s main UK competitor Inditex has, which includes Zara, Massimo Dutti, Pull and Bear, Stradivarius and Zara Home (H&M, 2017a).

H&M Weaknesses

High online growth and emerging markets have enabled the main competitor of H&M, Zara owner Inditex, to outpace H&M. Inditex, in fact, remains the world’s largest clothing retailer, consistently outperforming H&M in recent years (Dowsett and Ringstrom, 2017).
Inditex has been quicker than H&M to diversify into brands which are higher-priced. Ergo, H&M have already missed out on a significant proportion of market share. So they have to provide a unique service proposition in its higher priced brands to gain market share (Dowsett and Ringstrom, 2017).
The firm also reversed upon its intended strategy of increasing its store count from 10% to 15%. Instead opting to increase its sales by the same percentages via its online channels and physical stores (Howland, 2017). While this strategy is not necessarily weak, the U-turn indicates weakness in the internal strategy planning model of the business.

Opportunities

In the first six months of 2017, H&M were able to come halfway as far as Zara did in seven years upon entering the Indian market, turning profitable after only six months of operation in the country (Malviya, 2017). This indicates that global receptiveness to the brand is high, and H&M should seek to further expand into new markets and new locations.
H&M has steadily climbed the ranking lists of the most sustainable companies in the world over the past seven years, and in light of the organisations new circular strategy, they have the opportunity to be at the top of this list, above revered brands such as Tesla, Patagonia and Unilever (Pergrankvist, 2017).

Threats

While H&M faced profitability in India, it is limited in the locations of expansion in developing countries, where more rural areas are not as built up, easily accessible or have less GDP per Capita than that of the brands main strongholds in Europe.
As a global firm, H&M is increasingly vulnerable to currency effects, with evidence for this last seen in 2015 when the organisation cited the stronger dollar and price mark downs as the reason for a larger than anticipated fall in quarterly profits (Vandevelde, 2016). This threat is still present for the firm, with the currency of one of its biggest markets, the U.K. being increasingly unstable.
In 2017, the chairman of H&M Stefan Persson acquired more shares in the company, meaning that the Persson family own 40% of H&M’s shares and controls around 70% of the voting rights of the firm (Van Looveren, 2017). This may mean that the strategy of the company may be more suited towards what meets the needs of the main shareholders of the brand, as opposed to the stakeholders.

References for H&M SWOT Analysis

A-L Sources

Botter, L. (2017) ‘H&M Moving to Quarterly Updates After Reporting A Solid Rise in June Sales.’ The Street. [Online] [Accessed on 18 July 2017] https://www.thestreet.com/story/14230312/1/h-amp-m-moving-to-quarterly-updates-after-reporting-a-solid-rise-in-june-sales.html
Dowsett, S. and Ringstrom, A. (2017) ‘Emerging markets, online growth help Zara-owner Inditex outpace H&M.’ Reuters. [Online] [Accessed on 21 July 2017] https://uk.reuters.com/article/uk-inditex-results-idUKKBN16M0YR
Amatulli, C., Guido, G., Mileti, A., Tomacelli, C., Prete, M. I. and Longo, A. E. (2016) ‘”Mix-and-Match” Fashion Trend and Luxury Brand Recognition: An Empirical Test Using Eye-tracking.’ Fashion Theory, 20(3), pp. 341-362.
Gowans-Eglinton, C. (2017) ‘H&M announces its next collaboration will be with Erdem.’ The Telegraph. [Online] [Accessed on 20 July 2017] https://www.telegraph.co.uk/fashion/brands/erdem-hm-collaboration-november-2017/
Howland, D. (2017) ‘H&M Reverses store expansion plans to focus on omnichannel.’ Retail Dive. [Online] [Accessed on 17 July 2017] https://www.retaildive.com/news/hm-reverses-store-expansion-plans-to-focus-on-omnichannel/435251/
H&M. (2017a) ‘About Us.’ [Online] [Accessed on 20 July 2017] https://about.hm.com/en/about-us/markets-and-expansion.html
H&M. (2017b) ‘Market Overview.’ [Online] [Accessed on 31 July 2017] https://about.hm.com/en/about-us/markets-and-expansion/market-overview.html
H&M. (2017c) ‘Risk Management.’ [Online] [Accessed on 20 July 2017] https://about.hm.com/en/about-us/corporate-governance/risk-management.html