Business Models In Clothing Industrydocx

=== Business models in clothing industry ===

Business Models in Clothing Industry

H&M Man – Baneasa Shopping Center

Introduction to Business

Professor: Gradinaru Catalin Students: I. George, N. Luca, S. Alexandru, And S. Bogdan

Table of Content:

Brief History

Field of Activity

Location

Access Routes

Price Comparison

Unit Map

Behavior

Personnel

Competition

Promotional Activities

SWOT

Conclusions

Brief History

H&M was established in 1947 in Sweden, with the first store opened in Stockholm in 1952. In 1974 the company is listed on the Stockholm Stock Exchange. In 1990 they were the first to implement mail order system in Germany and Netherlands. In 2000 they opened their first store in USA and in 2004 they started to work with other designers such as Roberto Cavalli and Versace. In 2011 they opened in Romania, Croatia and Singapore. And in 2013 they established international shipping.

Field of Activity

H&M is one of the biggest clothing supplier worldwide with shops in every major city in the world. They have international shipping throughout the world. They do not own any factories and they are among the biggest retailers in the clothing industry. They have a different business strategy compared to their main competitor, Zara.

Location

Strada Bucuresti Ploiesti 42D on the ground level of the mall.

The location is one of the 4 marketing P’s (price, product, placement, promotion).

H&M is located inside Baneasa Shopping City, right next to the ATM. The unit is placed near a square where some ice cream stands are placed. This is a key factor in both their products and prices. By having a unit inside a shopping area the number of people that pass by is much bigger, thus increasing the chance of potential clients. The shopping center is located in the northern area of Bucharest, near the airport, which brings people with higher income. On the other hand, the disadvantage is that the rent for the unit is much higher. Because the clients have more choices for each product, some of the potential clients may choose a different shop.

Access routes

The entrance in the unit is focalized by two glass doors that can permit observation from the main hallway by the passing potential customers. The entrance is secured by three anti-theft pillars. Apart from the three pillars there is also a fire extinguisher indicated by both a visual sign and a red light bulb. In the same time, there is also a guardian near the entrance for ensuring the best atmosphere for all the stakeholders.

Price Comparison

Regarding the prices of their products during both the sales and the new collection are part of the middle range. Their most expensive products are still cheaper than the ones from the high-end brands. Because their prices are affordable ensures the most clients possible.

Unit Map

Ground Floor:

H – H&M Man

Competition:

1: Bershka

2: Massimo Dutti

3: Zara

Behavior

The behavior of the employees is one of the most important aspects of labour. In H&M Man the behavior of the employees is helpful and positive. We’ve asked a number of uncommon questions to determine how motivated they are, both in English and Romanian. We’ve talked to 4 of them, out of 6 and all of them helped us. We’ve asked for specific products and colors and even though they do not have them they still searched for them. All 6 employees were smiling and very active in the shop, asking and helping all the people inside their unit. Apart from this, 2 of them were refolding the cloths left disorganized by customers.

Apart from the behavior of the employees we’ve also observed the behavior of customers. Most customers were looking for Christmas presents at affordable prices. Most of the clients were looking for the products on sales. Because they were rushing they often leave the cloths unfolded and unorganized. Regardless, most of them were buying at least one product, which led to a big queue.

Personnel

There were 7 employees, 6 of them were selling their products and one was a BGS security guard. From the 6 employees 4 of them were women and 2 of them were men. They were dressed in their uniform, which consists in cloths sold by H&M. They also had badges with their names. Depending on the number of customers there was either one or two at the cashier. Also, there was always at least one at the dressing area.

Competition

Their main competitor is Inditex Group based on products, prices, location and targeted customers. Part of Inditex Group are Zara, Bershka and Massimo Dutti, all of which have a part of the market share.

Promotional Activities

To begin with, products on sales are placed in the middle of the shop in order to catch the attention of the customers. The sales were 50% off on the summer collection of 2015. Apart from the black Friday sales, they also offer a 30% discount on your next purchase if you buy a product. In the same time, if you want to make a gift for someone you have the option to give them a gift card worth of 50, 100, 200 and 500 lei. The prices were placed on the top shelves, highlighted with led light in order to attract attention from anywhere is the store. Among the products displayed there was also an article different from the rest. For example, among the white t-shirts were hoodies. Also, the first articles from a category were displayed in a matching set, for example shirts were matched with blazers. Another aspect was that the cloths in the pictures were the most expensive ones. Also, the higher quality cloths were placed in an area where a carpet was placed on the ground and a different background. H&M Man is displaying their prices in 5 different currencies, in order to have a better understanding as a foreigner.

SWOT

Importance level from 1 to 5

Strengths:

Variety of products (4), affordable prices (5), new collections (3), clean unit (5), motivated employees (3), safe shop (4), good location (5), sales (4)

Weaknesses:

Perceived as cheap (4), cloths get out of fashion (2), few footwear articles (3), no accessories (3), besides prices they don’t stand out (5)

Opportunities:

By from local merchants (5), being a serious reseller (3), increase the range of product on sales (3), exploit CSR (5), ensure free shipping (4), increase the times a product is on sale (3)

Threats:

Competition becoming stronger (5), instable cash flow (5), fluctuation on the stock market (5), becoming perceived as bad quality (4)

Strategy:

The strategy we came up with after analyzing SWOT analysis is to buy cloth from local merchants. By buying cloth from the local merchants not only that the economy of the country increases but also the total cost is reduced. Because the local merchants are in the same country, the cost of transportation is greatly reduced. Another big advantage would be that the image of the whole brand would get considerably better. This happens because people would appreciate the fact that H&M Man supports local market. Also, by having a smaller total cost you can opt for two price options. You can either reduce the prices to increase the sales or to keep the price the same to increase the profit margin. By reducing the prices you will be a significant threat for other stores, without losing the quality or the brand image. By keeping the price the same and increasing the profit margin, you can reinvest your profit in order to expand your business.

CONCLUSIONS

Even though their products look good on screen, they aren’t the best quality, being promoted by strong marketing campaigns like “Ballmain” and “David Beckam”.

Bibliografie:

http://about.hm.com/en/About/facts-about-hm/people-and-history/history.html