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Value Chain Analysis of H&M

H&M centralizes its design process in Stockholm and follows trends to develop fashion clothing. It does not own manufacturing facilities, instead partnering with over 700 suppliers in 20 countries. H&M uses integrated logistics to efficiently transport over 90% of products by ship and train from suppliers to warehouses. The company operates over 5,000 stores across 74 markets and relies on online sales and social media marketing to reach customers.

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Zafar Ibrahim (M20MS074)
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3K views

Value Chain Analysis of H&M

H&M centralizes its design process in Stockholm and follows trends to develop fashion clothing. It does not own manufacturing facilities, instead partnering with over 700 suppliers in 20 countries. H&M uses integrated logistics to efficiently transport over 90% of products by ship and train from suppliers to warehouses. The company operates over 5,000 stores across 74 markets and relies on online sales and social media marketing to reach customers.

Uploaded by

Zafar Ibrahim (M20MS074)
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Value Chain Analysis of H&M

Hennes & Mauritz AB popularly known as H&M is a Swedish multinational clothing-retail company known for its fashion
clothing for men, women, teenagers and children. It is the second-largest global clothing retailer, just behind Spain-based Inditex
(parent company of Zara). Its parent company is M.H. Alshaya Co. Let us look into its value chain analysis:

1. Product Design & Development

The design is one of the most important factors in H&M’s success. Design is centralised at Stockholm and includes a large
team of designers and pattern makers. Designers generally follow the trend-setters, what’s popping, vintage looks, music
festivals etc. The design managers are in close contact with production teams around the world rather than the H&M’s
Senior Management team. The company focuses heavily on female shoppers which are their core customers.

2. Manufacturing:

H&M is not having any manufacturing facility of its own. It has over 700 partners in 20 countries which supply garment to
the firm. A large part (approx. 80%) of its retail inventory is manufactured in advance while rest is manufactured based on
market trends.

3. Supply

Their integrated Logistics ensures cost-efficient supply of goods and generates economies of scale by helping H&M do
bypass the people in middle and buying the right product from the right market. They use ships and trains to transport over
90% of our products from the suppliers to our warehouses.

4. Operations

H&M uses large number of suppliers from across the world. Approximately around 70% of clothes are produced in Asia,
while rest 30% in Europe. The company has low level of vertical integration in this activity in coordinating with the
production offices around the world. These suppliers located around the world help H&M to update the latest fashions in
trend and hence capitalise on the expertise in production and engage in identifying the latest in demand.

5. Distribution

The combined direct distribution channel ensures the stores of H&M to receive shipments on daily basis providing proper
control over supply and demand shifts. Hence, stock piling in the individual stores is minimal and they can be replenished as
and when required from the central warehouse. Internal shifting of merchandising comes handy too depending on the shift
of demand.

It also depends heavily on online market for the sale of their products.

6. Sales & marketing

They have 5,076 stores across 74 sales markets and 51 online markets (source: H&M website). H&M points to three main
resources in its sales & marketing area: (1) the intangible brand, (2) the tangible network of sales outlets and (3) human
resources as employees who sell the product.

H&M also established a strong social media presence. It encouraged much of digital marketing & chose the social media
platform to share their ideas, opinions or answering the queries of the customers.

7. After Sales Services

The sales through online portal offer facility to return as well as exchange products incase of customer is not satisfied with
the product.

For the online purchase it offers a return policy of 45 days while for the purchases from the stores it offers a return policy of
30 days.

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