Why H&M conquered the world

The "Four Magic Weapons" for Enterprises to Win
In the past five years, H&M has continued to grow and develop, with 350 chain stores established, a 70% increase in turnover, and a doubling of pre-tax profits to $1.28 billion. The 1,000th chain store is scheduled to open in the fall of 2004. H&M currently has stores in 17 countries and regions including Europe, Canada, and the United States.

H&M's "four magic weapons" to gain a firm foothold and expand its international market share:
1. Fashionable product design;

2. Like other large Swedish chain stores, it has moved production to low-cost countries to maintain its competitive advantage in terms of price;

3. Mr. Persson’s business philosophy is to put customer needs first. He often visits chain stores to understand customers’ opinions and needs.

4. Vigorously promote the corporate culture of sincere cooperation and integrity among company employees.

About H&M Sweden
H&M is a Swedish fashion company with branches in many countries around the world, including Europe and the United States. It is famous for its low prices and good quality. H&M was founded by Erling Persson in 1947.

The name of the Swedish clothing chain Hennes & Mauritz (H&M) may be rarely mentioned in Asia, but it is quite famous in Europe. In terms of sales volume, H&M is the largest clothing retailer in Europe, and its performance continues to be hot even in the cold economic situation. The women's bloomers launched by the company this season are in short supply.

The history of H&M (Hennes & Mauritz) can be traced back to 1947: In Vasteras, Sweden, a place that was once a cultural and trade center in the Middle Ages, a clothing store named "Hennes" appeared. "Hennes" means "she" in Swedish. Obviously, "Hennes" is a store specializing in women's clothing. Erling Persson, the founder of Hennes, was originally a salesman in Vasteras. It was an accidental trip that led him to create this unexpected brand. At that time, he was in the United States across the Atlantic Ocean. He saw that although the prices of clothing in local clothing stores were very low, they could still obtain considerable turnover. Persson realized that small profits but quick turnover was indeed a good idea. So, as soon as he returned to Sweden, he imitated the practices of American clothing stores and opened the "Hennes" women's clothing store.

The business of "Hennes" soon became prosperous and its scale was constantly expanding. In 1968, it acquired a store called "MauritzWidforss". The main business of this store was to provide customers with hunting supplies, so there were also a large number of men's clothing in its products. The acquisition of "MauritzWidforss" changed the name of Hennes to Hennes & Mauritz and it has been used to this day. The clothing in the store also began to increase the men's clothing series. After 1982, Erling Persson's son Stefan Persson inherited the mantle and accelerated the pace of expansion in Europe. On March 31, 2000, H&M even went beyond the European continent and opened its first store in the United States on Fifth Avenue in Manhattan. Since H&M's entrepreneurial concept originally originated in the United States, H&M's move was undoubtedly a case of showing off one's skills before an expert.

[Edit] The three-in-one philosophy of product popularity, quality and price brings a large market

H&M has been able to sweep the streets of Europe thanks to the company's three-in-one philosophy of fashion, quality and price, as well as its aggressive expansion policy. In the spring of 2004, when H&M's flagship store in New York opened, it was so crowded that the company could even restock every hour to meet demand.

Business Weekly recently commented that H&M has redefined affordable fashion, proving the company's belief that price, fashion and quality can coexist.

Actively expand territory

H&M has copied this three-in-one successful formula to other markets. Although H&M is from Sweden, its largest market is now in Germany. According to Forbes magazine, when Pearson took over the company from his father in 1982, H&M only had more than 100 branches, most of which were in Sweden. Today, the company has expanded from Europe to America, with more than 800 branches in 14 countries. In 2003, 88% of its turnover came from foreign markets. The company opened 93 new branches and is expected to open 90 in 2004. The company's expansion rate in the past six years has been about 75%, and its current goal is to enter a new country every two years.

Keith Wills, a US-based European retail market analyst, commented: “No European retailer has been able to expand overseas so quickly and successfully.”

Pearson recently told Business Week that his father once questioned whether the company's expansion policy was too aggressive. Sometimes he would ask Pearson: "Why are you in such a hurry?" After all, his father opened the first foreign branch in London 29 years after founding the company. Pearson said that his answer to his father was simple: "When you are hot, you can't stop and let the heat cool down."

[Edit] Details determine success or failure In addition to strategy, the execution of details is also an indispensable factor for H&M's success. Nathan Cockrell, a retail analyst in London, said: "H&M's business model is to be penny-wise and pound-for-pound." Pearson's appearance and speech are more like a financial expert, not a retail tycoon. He personally controls the company's expenses. In order to reduce expenses, Pearson even confiscated employees' mobile phones in the 1990s. Today, only a few senior executives in the company have mobile phones, and the company encourages employees to take business class and taxis only under special circumstances. Although they have to save money in small places, the company is willing to spend money on big things. H&M invests more than 4% of its annual marketing expenses, and never hesitates to hire well-known photographers to shoot advertisements.

In addition, the company believes that shopping at H&M must be easy and fun, so the company pays great attention to the shopping environment of the store and the configuration of integrated shopping and entertainment. Affordability is the path that H&M has always chosen to take. The company was founded in 1947. At that time, H&M focused on affordable features. Since the retail industry in Sweden and most European countries was generally dominated by expensive department stores, H&M immediately became a big hit in the market. After Pearson joined the company in 1972, he hoped that the company could add the characteristics of fashion and quality in addition to the low price that it only advertised. Although many people believe that these characteristics cannot exist in one brand at the same time, Pearson believes that the company can do it. Later, H&M's slogan of "providing fashion and quality at the best price" did open the door to the company's success.

H&M stores have a variety of products, providing trendy and basic clothing for men, women and children, and selling cosmetics. The average price of clothing in the store is only $18. The company believes that affordable prices can make consumers afford to go to the store every year, or even every season, to buy new products. This strategy is most attractive to female consumers aged 15 to 30 who value having it once rather than forever and hope to keep up with the trend at any time. In order to reduce costs and maintain the affordable strategy, H&M does not have its own garment factory, and manufacturing is completely outsourced to 900 factories. In order to get the best price, the company carefully selects outsourcing objects, which are scattered in 21 countries with the lowest wages in the world. Due to proper cost control, the company's product prices are low, but the gross profit can still be maintained at around 53%.

In addition to the price tag, H&M also plays the fashion card. The company regards fashion as perishable food that must be kept fresh at all times, so the company strives to minimize inventory and keep new products in a constant supply. Therefore, ideas must be quickly transformed into clothing so that consumers can quickly buy clothes on the shelves and show off fresh and fashionable clothes on the streets.

In order to achieve this efficiency, all the company's clothing is designed by 80 designers in the company. The company works closely with suppliers to strictly control each process, and plays the role of importer, wholesaler and retailer at the same time, minimizing the number of people who handle the products and making the process more concise. H&M compresses the time from design to shelf to only three weeks, which is one of the fastest in the industry. Therefore, the company is able to launch products that meet the cutting-edge trends at any time.

In addition, the company analyzes the sales performance of each piece of clothing by country and store every day to understand which products are hot-selling and need to increase production immediately, so as to make the supply of goods smoother. The company claims that the store will restock every day to replenish the products that consumers need most at present. What message the window display conveys, what information should be included on the clothes, and the design of the dressing room are also very important. In order to make it easy for customers to find the store, the company will definitely look for the best location at all costs when planning the location of a new branch.