DEEP DIVE: H&M
The Overview:
H&M: It’s hard to miss the bright red logo in any shopping center or mall you enter, but what was behind their success and what could they do better? Founded in 1947 in Sweden, H&M is a brand that, today, focuses on catering to a large audience with clothing and home decoration products. Originally, H&M gained popularity for the volume of products it was churning out as well as the cheap price tag on seemingly trendy outfit pieces. As the eco-friendly movement marches on, companies that rely on fast fashion tactics are slowly on the decline and staring in the face of downfall, H&M being one of them.
The Problem:
H&M is a fast fashion company that focuses on microtrends for youth and a minimalist concept for older consumers. Split into different sections by target audience, they cater to women, men, teenagers in the Divided section, children in H&M Kids and a broader age range with their H&M Home line. The H&M Women and Men lines focus on minimal looks and what could be deemed the “classic millennial” look: long-line blouses, dresses and skirts, tapered pants and tighter, cleaner denim looks. The issue with this line is that the products fall in quality in comparison to other brands that target the same look because of its reliance on fast fashion. The Divided line targets high school and college students with microtrends, bright colors, shorter cuts and vivid graphics. The company has gotten backlash for designs that are out of touch with the ever-changing trends and that they cannot keep up with the times; this issue occurs, again, because of their reliance on heavy volume of products at cheaper prices, which causes overflow in older products that no longer fit the newer styles. The H&M Kids line focuses mainly on vibrant colors and graphics from famous shows and movies meant to catch younger children’s eyes. Lastly, the H&M Home line could be considered one of the more redeemable lines as they focus on clean and minimal looks (similar to the H&M Man and Woman lines) that are likable by a larger range of people, but also fall in quality compared to competitors with similar looks.
Currently, H&M’s ideal customers seem to be sixteen-year-old female students with money to spend but the mindset of quantity over quality; they dive into microtrends and like to restock their wardrobes as the times change. The other side of their demographic would be mid-to-late twenties men and women who make enough money to want to delve into fashion but not enough to escape the fast fashion companies. With these demographics being their target, H&M has too many lines open and too broad of a target range to ever be able to escape fast fashion or the backlash it has received. In order to remedy these issues, the first point to fix would be who they want shopping at their stores and how they want to brand themselves.
The Solution:
To streamline their brand and their target audience, they would have to stop focusing on current microtrends on top of simplicity and minimalism; it would be easier to stick to one: simplicity and the classics. This would allow the company to downsize their product inventory and invest more into quality, moving them further from the fast fashion label and putting them back on the market as a newly rebranded, higher quality brand that offers timeless pieces for working young adults and students. In streamlining to their minimal and simple lines, the company would have the option to ditch the Divided section and focus on their women’s and men’s lines to encompass the clean, minimal look that would target college students to mid thirties consumers. The focus of the brand would be workplace fashion as well as comfortable but stylish loungewear and upscale basics in muted colors with some bright pops of color to allow diversity. Although the cost of material may increase with a smaller volume and higher quality, the brand would target consumers who have the money to spend on clothing and would be willing to pay the extra dollars to get higher quality pieces that would last them longer than what H&M’s clothing can last them as of now. The Divided and Kids sections are mostly filled with lower quality pieces that consumers will wear once or twice and leave in the back of their closets once the trends have passed; a better investment would be targeting those who can and will pay for quality.
The Research:
H&M’s current consumer demographics show 31.93% male and 68.07% female with the largest age group being 25-34 at 31.61%. Over 88% of their revenue comes from one-time shoppers, meaning these customers do not return to become repeat consumers. Returning customers will generally spend 67% more than new customers, meaning it would be more profitable and cheaper for the company to continue appealing to repeat customers rather than trying to attract new ones. Currently, the company produces about three million garments per year, making them one of the biggest polluters in the fashion industry. Changing their target audience and closing the range of consumers would allow them to produce less and at a higher quality, moving them away from fast fashion. With their biggest consumer demographic being the 24-35 age group, it would be more beneficial to focus on them and what consumers in that age range are looking for rather than trying to spread it to the 18-24 age group as well. In a review done by Good on You on how ethical H&M is, it received the rating of “It’s a start” due to some of their efforts to be more environmentally conscious (with their Conscious line targeted towards using recycled materials), but as the second largest retailer in fast fashion, the company already has a large footprint on the earth because of its history with mass production. H&M received a score of 61-70% in the Fashion Transparency Index, showing that the working conditions of labor workers is lower than many other non-fast fashion retailers. They also claim, “We recommend investing your hard-earned dollars in clothes that are not only ethical and sustainable, but are also timeless in style, will last you a lifetime, and are made by brands that are designed to leave a light footprint on the earth from the very beginning.” These reviews amplify the view that H&M would do better focusing on timeless, classic pieces that are of higher quality rather than trying to mass produce garments to follow trends.
The Interviews:
In interviews done among some of the customers who have or do shop at H&M, 82% said that they would not go back to buy more after their first purchase and 67% said that their motivation to shop there was the cheap prices. Of this 67%, 79% responded that they would have been willing to spend more if the quality was improved. 38% responded that the environment was a large factor deterring them from going back, and another 26% reported that many of their clothes were unwearable after three to four washes. These responses make clear that H&M is losing customers even within the 18-24 age range; an increase in quality as well as ethical and environmentally friendly production would boost their sales if they could rebrand with these issues in mind.
The Competitive Analysis & Gap:
H&M’s counterparts with similar looks and target consumers would be Zara, Gap, and Oak and Fort. Zara is another fast fashion retailer at the number one spot for mass production that focuses on microtrends but offers slightly higher quality at a higher price point. They offer pieces that last over longer periods of trend lengths with an upscale look compared to H&M, but with how unorganized retail stores generally are as well as the overstock of pieces curated every five weeks, the quality is all over the place. Some pieces will last years while some are ruined with one wash; however, Zara does attract consumers that are willing to spend at a higher price tag than those who go to H&M. Gap is another retailer that targets the audience H&M should try to target, but their pieces are generally outdated and out of style which has caused their name to fall lower below the radar than names like H&M and Zara. Oak and Fort is a newer and upcoming brand that focuses on customers ages 20-35 with ethical and environmentally friendly pieces, a smaller product range and a minimal, classical look that could serve as basics that survive any trend. Oak and Fort is an example of a retailer that H&M should aim to follow in terms of product range and branding, but H&M would have an upper edge at lower price points as well as its position as a famous retailer that would attract old time and newer customers.
The Outcome & Conclusion:
By rebranding to timelessness with higher quality and a smaller target market, H&M could become a store that consumers frequent in order to restock on pieces they love as well as to look for newer garments to update their wardrobes. Currently, H&M is not attracting new customers and will continue to lose revenue if they continue with their unethical practices in material sourcing and labor standards. A rebrand that offers what consumers are wanting now with timelessness making a comeback and eco-friendliness charging on will allow H&M to come back out on top of the fashion industry being known for environmental consciousness and pieces people can wear over and over, something it cannot offer as it is now. H&M is a longstanding retailer, but will it be able to continue on top as the times change without these issues taken into account?
Written by Emmeline Chung
Spread Designed by Ellie Kwon