H&M SWOT Analysis (2024)

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Company: Hennes & Mauritz AB (H&M)
CEO: Helena Helmersson
Founder: Erling Persson
Year founded: October 4^th, 1947
Headquarters: Stockholm, Sweden
Employees (2020): 177,000
Ticker Symbol: HM-B
Type:Public
Annual Revenue (FY2019): US$24.8 Billion
Profit | Net income (FY2019): $1.5 billion

Fun Fact: While most retailers take up to six months to design, produce, and release new designer products, H&M only takes two weeks from design to release.

Hennes & Mauritz AB (H&M) is the second largest fashion retailer in the world for a reason. For one, the company’s fast-fashion strategy is a major advantage over competitors and has contributed to its success.

From a single-store Swedish company over 65 years ago to a renowned fashion retailer with thousands of stores spread across 6 continents, we can learn a lot from the strengths and weaknesses of H&M and the opportunities and threats for the company.

Here is the H&M SWOT Analysis.

H&M’s Strengths

Effective Strategy: Fashion retail business relies on effective of selling strategies for higher merchandise turnover. H&M uses the fast fashion model that supplies designer tables with the latest fashion trends. This strategy allows for the fast delivery of merchandise from the designer table to the showroom floor.
Global Presence: H&M offers its products in 5,076 stores in 74 markets spread across all 6 continents. From Europe to North America, Asia, Australia, Africa, and Latin America, the company’s global operation reduces risk and enhances sustainability and stability.
Competitive Pricing: Price matters regardless of the product. The company strives to become the most sustainable fashion retail by exploiting the flexibility and cost-effectiveness of the fast fashion model to offer high-quality products at a cheaper price.
Variety of Products: A wide variety of products attracts more consumers. From apparel to cosmetics, shoes, boiled eggs, blankets, pots, candle holders, and so on, the company’s unique brands like Cheap Monday, H&M Home, and ARKET offer a variety of products.
Valuable brand: Since its founding, H&M has adopted a customer-centric approach in the running of the business. This has enabled the company to build a valuable brand. In 2019, it was ranked the 58^th most valuable brand in the world.
Strong Online Channels: In the digital age, companies that adopt and exploit the internet more effectively have a huge advantage. H&M has a strong online presence with a large audience across numerous platforms, which is funneled to drive sales via eCommerce
Efficient Supply Chain: Global companies require an efficient supply chain to connect with suppliers and consumers more effectively. H&M’s NextGen supply chain is highly efficient.
Community-Centered Approach: Taking the interest of communities at heart is an effective way to build a sustainable business. H&M closed its stores in the US in support of protesters and is also focused on helping communities affected by the pandemic in Bangladesh.

H&M’s Weaknesses

Overdependence on Outsourcing: Instead of manufacturing in-house, H&M outsources most of its production to over 900 independent suppliers in Europe and Asia. While this strategy has contributed to its success, it puts the company at the mercy of the suppliers.
Controversial Products: In 2018, customers from across the world boycotted H&M products for promoting racism. The company used a black child to model for its hoodie featuring the phrase ‘Coolest Monkey in the Jungle.’
Uninspired Fashion: The issue with H&M’s fast fashion model is the reliance on fashion trends set by major designer brands. This is a major weakness since fashionistas are drawn to new and radical designs but not existing fashion trends.

H&M’s Opportunities

Diversify Products: Retailers offering a wide variety of products are stable and earn more. H&M can improve its bottom-line by diversifying offerings to include sports apparel.
Exploit e-Commerce Fully: Compared to other fashion retailers like Zara, H&M is far behind in terms of the exploitation of e-Commerce channels and revenue from online sales. As more consumers shop online, the company can benefit from the maximum exploitation of e-Commerce.
Focus on Emerging Markets: From Asia to Africa, the growing middle-class in emerging markets presents fashion retailers like H&M with the greatest potential for growth.
Expand through Acquisition and Mergers: To circumvent barriers of entry into some markets, companies exploit the benefits of mergers and acquisitions. H&M can expand into related markets like secondhand clothes through acquisition or merger with a player in the market.

H&M’s Threats

Impending Recession: Even though clothing is a necessity, trendy designer clothes, footwear, and underwear are luxuries. As Europe and other regions slide into recession, fashion retailers like H&M will experience a sharp decline in sales and profits or can even go under.
Intense Competition: H&M is facing stiff competition from new and old brands like Zara, Macy’s, Gap, Boohoo, and so on. Competitors are all seeking to increase market share and reduce demand for H&M’s products.
Increase in Counterfeits: The fashion industry has the highest number of fake products. With the ever-increasing trade in fake products globally, profits from H&M’s premium designer brands can decrease in the future.
Rising Operation Costs: Globally, profits for retailers are decreasing gradually with an increase in the cost of labor and raw materials. Increasing costs of operation and production threaten H&M’s profitability.
Trade Tariffs: H&M outsources a large portion of its production from Asia, which makes a perfect target for tariffs. As a Swedish company, H&M can be targeted by the UK in the aftermath of Brexit.
Global Pandemic: The success of global companies like H&M depends on the uninterrupted flow of raw materials and finished products. Lockdowns and quarantine in the event of another global pandemic in the future can interrupt the flow and reduce H&M’s sales and profits.