Ayse kahraman N0506544 Word Count | 7,890
This submission is the result of my own work. All help and advice other than that received from tutors has been acknowledged and primary and secondary sources of information have been properly attributed. Should this statement prove to be untrue I recognise the right and duty of the board of examiners to recommend what action should be taken in line with the Universityâ€™s regulations on assessment contained in its handbook.
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table of contents
Introduction Stage one reflection Methodology Brand selection
Brand situational analysis Brand overview Brand onion Brand health Target consumer Consumer segments Current marketing mix
28 External analysis Market overview Market drivers Pestle analysis Current brand positioning Competitor analysis Primary research key insights Gap analysis Swot Recommendations
Objectives Strategy Point of difference Brand re positioning The new marketing mix Marketing plan Communication
Brand management Financials Measures of success Timeplan Risk assessment Future outlook Conclusion
Refrences Biblography List of illustrations Appenndicies
introduction As stage one outlined two key recommendations in order to enhance retail environments, taking into consideration todayâ€™s evolving consumer shopping behaviour and a technology driven society. It became apparent that retailers need to look particularly at how online and offline commerce can work together but, also how they can enhance their retail environments incorporating a higher emphasis experience and the consumer shopping journey. As a result, further primary and secondary research was needed to be conducted in order to investigate how these recommendations could be applied to a brand and additionally a brand that would benefit from implementing these strategies. In turn, the report will focus on a three year marketing strategy for the chosen brand ensuring competitive edge and success now and in the future. A one - year communication plan will also be devised to support the strategy and recommendations the chosen brand will be adopting.
2 Fig 2
stage one overview The focus for stage one was derived from the future thinking report as it identified and highlighted technologies influence on society and industry sectors, which lead to a further focus on the retail industry. As a result,Prior research in stage one examined consumer behaviours within the retail industry uncovering shifts and exploring technologies role within these. In turn, the report highlighted critical elements that in order for retailers to remain successful and pertinent adoption is key. Fig 3
â€˜The world has become digitally connected and technology has created an outlet for industries to stimulate changes that can enhance and improve our lives on an extreme scale but, today technology is not only fuelling major business transformation across industries, itâ€™s also changing how businesses (strategies) sell their products and services, operate, and plan for future growth.â€™ (Accenture: 2015)
In regards to the retail industry it has become more complex and is changing at an ever-increasing speed to keep up with the demands of the modern day consumer, who have become information rich, tech savvy, socially empowered and the drivers of brands, with rapidly rising expectations surrounding the quality and ubiquity of a seamless shopping experience across their digital and in-store activities.
“Digital Technology is reinventing everything around us. Brands that want to succeed in this new environment need to enhance their in-store experience and make their store matter in an Omni channel world.” (Deloitte: 2014) Multichannel retailing is often associated with retailers that have brick and mortar stores, combined with an online retail channel however, Omni channel which is a new emerging concept describes a channel agnostic view of how consumers experience the retailer’s brand. As a result, it is apparent that multi-channel retailing is no longer sufficient thus the adoption of Omni-channel will provide consumers with a seamless shopping and brand experience across multiple devices and touch points, both consistently and continuously. Additionally, retail is making the transition from transaction based to relationship based value creation, in turn, consumers are promising personalization, experience, and transparency as the key factor for brands to secure their loyalty in the future. A higher emphasis placed on these factors by retailers will enable them to differentiate themselves in the saturated market whilst fostering deeper and increasingly loyal relationships with new and existing consumers. Furthermore, mobile is becoming more important within retail as it shows the opportunity to converge digital and physical commerce responding to the ever-growing sophisticated shopper. However, it remains embryonic and has yet to reach its full potential within retail as it a clear instrument for getting to the point of buying rather than a tool for the actual purchase, which is how retailers are currently using the device within retail.
On the other hand, new technologies are just at the beginning of the opportunities they could provide for retailers particularly in enhancing their retail offering by enhancing the brand experience. New technologies have the potential to change the business model regarding the intersection of physical and digital, whilst having the potential to blur the lines between online and offline retailing. In addition, the rules are being re- written, as the focus is on how do retailers provide their customers with a seamless experience regardless of channel. The focus for retailers cannot just be on one channel, online or offline, it’s about how they can use these to work together to create a seamless shopping experience for the consumer, whilst keeping both channels pertinent in the future. Overall, providing a seamless shopping experience for the consumer is the core focus for today’s retailers in order to sustain a competitive edge but also effectively appeal to new and existing consumers.
methodology This chapter presents the methods and study approaches involved in examining the following aims of the research. 1. To investigate and identify a brand in need of enhancing their consumer shopping and brand experience gathered from the opinions of Generation Y and X. 2. To investigate and devise a feasible business opportunity/ strategy that to enhance the chosen brand experience. 3. To assess consumer attitudes in regards to the opposed strategies carried forward for the chosen brand. A mixed method research approach was adopted in order to gain insight into consumer opinions regarding fashion brands, which would lead to an opportunity in which stage one findings could be applied too. In addition, research will enable an examination of the chosen brand in order to lead the pathway to solve problems and highlighting solutions. By using both qualitative and quantitative data, greater insights can be achieved through the ability to cross-examine, leading to pragmatic findings.
The first step in producing this report was primary research, which was conducted according to the Nottingham Trent ethics guidelines on a sample of UK based Gen Y and Z demographics. The methods carried out included focus groups, observations, online and street survey. These methods were chosen due to generating a deep understand of consumers opinions of the chosen brand as opinions can be both quantified and understood. The survey conducted achieved a strong representation sample of 204, including 173 online and 31 on the street, including both females and males. The sample was sourced through using multiple social media platforms, these were chosen as they were deemed to have a high volume of traffic. The benefits of a survey are the unrestricted ability of location and therefore enables a greater variation of demographics.However, the method does have its limitations due to inability to build upon participants answers allowing a greater understanding of the drivers of behaviours, in turn, other primary methods will be used in order to overcome these limitations.
Additionally, observational methods were used to explore the business environment in order to evaluate the brands offering in terms of technology .Two observations were carried out, both in different store locations which include the London flagship store and the Nottingham store, thus provided access to real life situations enabling an in-depth analysis of the problems. Furthermore, interviews were conducted with technology specialists, event organisers, and retail assistants as they provided insight into estimated cost prices and highlighted problems, which lead to the ability to gain first-hand insight and ensure the business strategy would be feasible for the brand. The final method used was a focused group, seeking to find qualitative information about consumer attitudes in regards to the opposed testing of the strategies for the brand. The sample included seven females participants including a mix of Gen Y and Gen Z. The use of this method enabled advantages in gaining clear opinions and feelings of both age groups, in turn, was highly informative. However, due to the small number of participants, this creates a limitation of not being able to make the findings representative. For greater analysis of research methods used please see Appendix. 6
The investigation was carried out through primary research in order to identify a brand in need of enhancing their consumer shopping and brand experience. In addition, it became apparent through the findings that respondents outlined H&M with 42% of the results, as the key brand in which they feel currently does not provide the sufficient tools for a seamless shopping journey.
In addition, 52% outlined H&M as the brand they would like to enhance their in-store and online channel, as this is due to not being consistent, innovative or having a differentiated proposition amongst other retailers. As a result, these insights lead the starting point of the investigation into H&M gaps and opportunities in order devise a feasible business opportunity/strategy that will enhance the chosen brand experience amongst todayâ€™s consumers, who has heightened expectations surrounding their shopping journey.
The Internal analysis aims to analyse H&M organisational resources, current offerings, previous performance, business relationships and key issues. 10 Fig 6
brand overview Founded in Sweden as “Hennes in Västera” in 1947 the womenswear only retail brand, has become the second largest global clothing retailer (Fast retailing: 2016) that is notorious for its fast fashion clothing, catering towards women, men, teenagers, and children. In addition, expanding its brand architecture to offer fashion for everyone under the brands of H&M, COS, Monki, Weekday, Cheap Monday and & Other Stories, each having their own identity to make them stand out in the market. In addition, H&M successful business model, which provides “fashion and quality at the best price” (Karl-Johan Persson: 2015) has enabled the company to expand rapidly on a global scale. It now operates 3,610 stores in 61 markets. The brand continues to grow successfully in existing markets, as well as in new countries, with long-term expansion plans encompasses all its brands, and taking place both via new stores and onlineAlthough, whilst the traditional bricks and mortar retail format in which H&M operates is still a preferred option for many (PWC: 2015) the convenience and novelty of e-commerce and digital innovation are winning over the custom of numerousconsumer groups. (Mintel, 2013).
In turn, the speed of technological advancements, globalization, and ways to leverage information are some of the drivers that may lead to a more consumer-centric landscape (Kantar Retail: 2016) and in turn, provoking retailers to rethink their strategies to develop a more digitally orientated, multichannel strategy to succeed in this new environment. Although,H&M does have a multichannel retail offering, the current lack of digital innovation in store and the lack of a seamless brand experience across these channels is not impairing with H&M success rate, which is partly due to a high focus and continuing expansion of their footprint. Mintelâ€™s reports that companies with an effective Omni-channel integration will position themselves as the preferred retailer. In addition, an Omnichannel strategy that enhances in-store uses of mobile apps would positively benefit both touchpoints, making the brick-and-mortar option faster and more convenient and increasing the adoption rates of digital channels that enable contextual marketing.(Sara Ballaben : 2015)It is apparent that it Omni channel operations and adoptions of technologies may be crucial to the success in the future. In terms of the retail life cycle, H&M is at the edge of growth towards the maturity stage. The brand has established a position of leadership but competitive pressures are being felt and the growth rate is slowing down. The retailer must now explore alternations that will allow them to remain matured and not see them decline in the future.
mission To offer fashion and quality at the best price in a sustainable way. (H&M : 2015)
vision All our operations are run in a way that is economically, socially and environmentally sustainable. (H&M :2015)
The brand onion is an effective tool that allows marketers to evaluate the brand's identity and how it is differentiated from its competitors, thus allowing them to develop new strategies that reflect H&M essence, values, and personality. (Harriet posner: 2011) Fig 11
brand health H&M has established a position of leadership in the UK, which currently stands as their third largest market. The brands UK sales have continued to increase annually, last year they
achieved sales of ÂŁ957,003 up by 17% compared to the previous year. However, the brand is seeing profit margins slip and as H&M is viewed as offering the best value for money by consumers (Tamara Sender: 2015) if the brand is not able to maintain their low price positioning, this may affect the brand attractiveness as currently pricing is the key factor standing out for H&M in the marketplace.
In addition, H&M overall UK market share currently stands at 1.9%, however, the brand has seen a slow growth rate as over the last two years they did not experience any change in their positioning, this is due to competitive pressures being felt as the struggle has been to find their point of differentiation in the marketplace, which is continuously changing landscape as prior research has outlined. In order for H&M to grow, they must develop innovative ways to retain and increase their consumer base.
Group Worldwide sales 2015
ÂŁ177bn + 20%
target consumer In order for H&M to effectively and sufficiently correlate with todayâ€™s consumers, particular needs the process of consumer segmentation is vital, as it establishes a deeper understanding of their consumers, outlining demographics, needs, buying behaviour and attitudes thus strengthening the likelihood of success. The vast product offering available at H&M caters to a range of markets, which appeals to a broad consumer base, thus presents a challenge when attempting to define the core target market. However, H&M current marketing strategy is evident their core consumer is tech savvy as well as being heavily reliant and influenced by social media, which these traits directly targeting the teen to the young adult demographic (Generation Y) . However, Generation X consumer has become highly active among social media platforms and is embracing technology. In addition, the target audience consists of fashionable and trendy consumers who see shopping as a social activity, whilst acquiring fashionable clothing each season, staying up to date with trends without investing large sums of money. The Swedish retailerâ€™s collaborations are a proven way for prestigious houses to woo younger, less affluent fans and for a low-end retailer to gain much-needed fashion kudos. As H&M offers attractive prices, whilst maintaining a strong presence in prime shopping locations, it ensured that it stores enjoy a steady flow of customers. Although their consumer is not highly brand loyal due to shopping at multiple retailers to find the perfect fashion pieces.
consumer segments Consumer A ; Young, Fashion conscious, digitally led and connected.
Age: 16 – 24
Millennial or Generation Y Student or at the beginnings of careers, Leading a busy lifestyle Trend followers and in the early majority in terms of trend adoption. Thus, this group is highly influenced by social media. 40% of female 15-24s use social media sites for fashion to get style inspiration (Sara Ballaben: 2014) Considered as Alpha influencers, know to shape the behaviour and purchasing decision of their larger social circles. (Jean Case: 2015). “Experiencers” in terms of vals framework as tend to be impulsive and consumption above the norm.
The first generation of digital natives and their affinity for technology helps shape how they shop. They are used to instant access to price comparisons, product information, and peer reviews. (Goldman Sachs: 2016) and are notorious for online shopping. Three out of four Millennials would rather spend their money on experiences than on consumer goods, and the generation is shaping a new experience economy, particularly when it comes to retail. (Wgsn:2016) Millennials have had a tough time during and since the recession but are making the best of the situation (Toby Clark: 2015) . They may not be able to spend in vast quantities but fashion still plays a central role in this consumer’s lifestyle.
Consumer B ; Multi channel shoppers, who are convenience Led
Age: 35-45 Generation X Biggest spenders as this age group represent a truly highvalue audience for companies. They have the highest average household income and spend the most money online of all age groups. (Gina Fleming's: 2014)
Gen x consumers were not born digitally connected like their Gen Y and Gen Z counterparts, but many have embraced the experiences and are defining themselves through technology. (Wgsn: 2014) and are naturally incorporating digital tools into their shopping. They also blend online and offline shopping in ways that best suit their needs. (Emarketer : 2015)
“Achievers” and “thinkers” in terms of vals framework as tend to plan, research and consider before they act, as well as being financially established and motivated by achievement. Family orientated, however, desire to look after and treat themselves as well as they do for others. They are twice more likely to embrace new digital retail channels as their boomer counterparts. (Wgsn: 2014) Highly interest in Facebook than any other social media platform with 81% of account ownerships. (Statista: 2015) 20
current marketing mix price Adhering to a “Penetration pricing” strategy, H&M aims to appeal to consumers from different social strata, ensuring a profit when the market upturns or downturns and in turn, standing out amongst competitors in the crowded marketplace. H&M is able to establish a long-term consistent pricing strategy by implementing one level channel of distribution, benefiting from economies of scale and ensuring efficient and effective buying, with quality and sustainability hold core importance that H&M will not be overlooked. H&M price architecture appeals to the fashion- conscious target market, who expect value for money. “For online shoppers in the UK, value for money is still a big issue. Unexpected delivery charges have a big impact on purchasing decisions.” (Ecommerce news: 2015)
Fig 13 - H&M priced architecture
The low price points are a key rationalisation for consumer hesitance regarding the distribution of merchandise as this is due to a high charge of delivery compared to the price of the product. As a result, direct competitors such as Zara and Topshop allow you to pick up in store, eliminating the cost of delivery which is highly attractive to consumers.
The wide and varied range of H&M products are available for women, men, teenagers, and children. Womenswear products are the retailers ‘cash cows’ and is the product category with the highest focus. However, the brand is extending into new categories, offering ancillary goods and services alongside their standard fare. In turn, beauty, sportswear, and home goods are the latest attempts to diversify its product range, in turn providing a place where consumer need can be fulfilled under one roof. In addition, although fast fashion is key for today’s consumers, sustainability is important to H&M and is an increasing part of their product range. “H&M is one of the world’s largest users of organic cotton.” (H&M: 2015) The H&M Conscious Exclusive is a glamorous and carefully crafted collection showing that you can be both sustainable and fashionable at H&M. The brand continues to have a longterm approach to sustainable fashion demonstrating they do work together, as a result this is a way in which H&M can differentiate themselves in the market amongst their competitors who lack this sustainable approach and ensure they are the market leader due to this early adoption. 22
place H&M success so far is predominantly generated by the provision of the vast stores, stocking a wide product range. The expansion of H&M bricks and mortar is a central focus ( see Appendix 8) and they continue to globally expand increasing the number of stores by 10 -15 percent per year, in the UK alone, stores numbers have risen by 3% each year. In spite of this, H&M CEO Karl-Johan Persson said that online sales are â€˜becoming increasingly importantâ€™ to the retailer, and continued investment is required in this area of business. (H&M: 2014) Although H&Mâ€™s online store is available in 32 markets, including the UK, they were late to embrace the e-commerce channel. However, the digital store is fully mobile adapted and has become popular with their consumers but, there is still room for growth particularly in the UK market. Today, as many as seven in ten (70%) internet users buy clothing and footwear online, making clothing and footwear the most purchased item online.
In addition, as online purchasing peaks among the younger 25 to 34-year-olds (80%) H&M key target audience, it is more important than ever before to push the online platform in order for the brand to capitalize effectively. In addition, the nature of the highly saturated and innovation-driven retail environment, e-commerce is arguably a strategy that cannot be overlooked. The brand mobile commerce and iPhone and Android app enables consumers to shop the retailer extensive inventory, however, it is very basic only allowing you to browse and checkout, not providing consumers with any other experiences.
promotion H&M promotional method uses a mix of ever- evolving external media to reach their consumers, (H&M: 2015) this multi-channel offering ensures they are targeting their extensive range of consumers. As H&M operates on a global scale, the brand image is highly important and is essential to convey a positive image that portrays no specific ideal but rather individuality and variety of styles, attitudes, and ethnic backgrounds. A prime example of this is H&M Latest fashion campaign â€œClose the loopâ€™ which Huff post stated itâ€™s the most inclusive fashion campaign they have seen to date. (Amy Packham: 2016) In turn different promotional strategies are adopted depending on locations that take into account cultural and consumer differences. H&M acknowledges that social media is an important communication channel in which it plays a vital role in engaging and enhancing the consumers brand experience, especially when expanding into new and exciting markets. In turn, social media is a core part of their promotional marketing strategy.
As the traditional retail format is considered outdated and not highly effective, contrasting platforms are being used to participate in consumer conversations through the using of an emerging dialogue, which encourages both B2C and C2C conversation. H&M is one of the businesses that has done some great work in using social media for marketing (Sara Hansson : 2015) with a total of 46 million active users and 8.52m engagements (likes, retweets, comments) over a 30-day period, it has become one of the most talked about fast fashion brand with 88,300 mentions. (Fiona Briggs: 2015 As a result, H&M is exploiting this particular communications channel in the most effective way by promoting word of mouth, thus reaching a large audience in a cost effective way and standing out amongst competitors.
46 million active users
26 m Furthermore, as research found that 44% of British shoppers follow brands in the hope of receiving discounts and rewards for their loyalty, while 32% said that they used social media platforms to seek advice or leave their opinion of a brand or product (Media beard: 2015) indicating that H&M social media strategy that is particularly used for customer service, discounts, key looks, new products and seasonal campaigns, thus permitting the consumer to feel part of the brand in a unique way.
13.7 m 6.2 m 235 k 22o K 26
market overview ‘The global apparel market is valued at £300bn accounting for 2 percent of the world's Gross Domestic Product’ (Fashion United: 2015)
In regards to the British fashion industry, it’s estimated to be worth £26 billion to the economy, showing positive signs of growth after the economic downturn, as the market is predicted to rise to £46bn by 2017. (Chris Brook-Carter: 2015) Additionally, 2014 was the first time in four years that the volume has grown more strongly than inflation as a result, seeing consumer spending power return with a 4% rise amounting to £53.5 billion in 2015. (Tamara Sender: 2015) As consumer spending power returns and inflation moderates, the amount of fashion people buy will continue to increase over the next few years (Chris Brook-Carter: 2015)
Fig 18 - clothing and footwear spend statistics UK market.
This highlights, the market in which H&M operates holds strong opportunity and growth for them as a brand to regain higher levels of market leadership within the UK, however, the challenging market holds scepticism towards recovery and the challenging implications on retailers are not only on the financial performance but, the strategies they must peruse to continue experiencing growth. As today consumers need to be given more reasons to buy and more ways to buy, the focus for H&M will be to implement strategies that ensure they deliver this and they are doing it better than their competitors.
The retail industry is being driven by consumer’s appetite for convenience with a higher placed emphasis on the ability to get products quicker. In turn, click and collect purchases in the UK is set to grow by more than two-thirds with a total worth of over £4bn in 2018. (Richard Perks: 2015) As a result, online sales continue to grow rapidly and is set to reach £10.9 billion in 2019 (Mintel: 2015). As click and collect is something H&M does not offer and is showing strong growth it is a way in which H&M should respond as it can make their channels as profitable as possible and take advantage of consumer spending which is set to rise to grow by 20% between 2015 and 2020. In addition, as smartphone ownership will increase to approximately 95% of the UK population in 2020 (Deloitte : 2016) the strongest areas of growth has been and will continue to be in mobile, which is set to be the fastest growing retail sale channel, forecasted to see a 242% increase generating £7.8bn of sales by 2019 in the clothing and footwear market.(Barclays : 2015)
Mobile is becoming the key point of convergence for Omni-channel and although H&M is fully mobile adapted they have not seen the full potential of the channel and should continue to invest in order to effectively capitalize on the influence it could pose on sales particularly in store as it is set to influence 15-18% by 2018. In turn, consumer demands are leading to unprecedented levels of innovation in the sector, majority focusing on digital solutions amaze and amuse the consumers particularly the bricks and mortar shopping as the recent recession compelled bricks and mortar stores to focus on pricing strategies and discounts, causing many stores to lose their differentiation. H&M can use digital to build consumer loyalty and allow consumers to seek more from store experiences and service.
market drivers “The UK’s Fashion retailers are looking for newness and innovation to be able to tempt their customers.” (Pure london : 2016).
pestle analysis Prior to undertaking an analysis of the microenvironment, a PESTLE analysis was conducted in order for H&M to determine any trends or situations occurring in the external environment which may impact the brand, these can then be exploited through marketing planning.
current brand positioning In the marketplace in which H&M operates, is seeing their competitors use technology to differentiate themselves and win over the consumers. In turn, the brand positioning map indicates where H&M sits amongst them in terms of their use of technology and digital innovation. In addition, the brand is currently placed in the middle amongst its competitors, in terms of their use of technology and digital innovation, including, on social media, apps, website and in store. See appendix for examples of brands using technology in retail (including H&M competitors)
Key: Direct compe+tors Indirect compe+tors H&M Fig 20
Minimal use of technology/ not digitally innovative
Topshop American Apparel
Maximum use of technology/ very digitally innovative
Uniqlo Forever 21
F&F Matalan Matalan
George at Asda Primark
Competitor analysis â€˜Industry Competitors- Rivalry amongst existing firmsâ€™ An affordable fast fashion proposition, coupled with an expansive store network H&M is a major force in the UK clothing retail market. However, H&M is in a saturated market that continues to experience growing competition. In regards to Porters five forces analysis, H&M are faced with large amounts of threats from a number of highly established fashion retailers in the UK including, Topshop, Zara, Primark, New look and River island. These brands are dominant amongst the British High street and remain favourites amongst consumers by the enticement of celebrity collaborations, effective visual merchandise, and multichannel offerings. Gap is a key competitor of H&M which has been dramatically struggling to remain competitive and prominent in the UK and global market due to a lost brand identity. However, the brand new strategy has become focused on bridging the growing digital world with its physical stores to create world-class shopping experiences for its customers. (Gap: 2015)
In order for H&M to achieve competitive advantage the adoption of strategies such as Omni-channel retailing and digitally enhanced environments can enable this and secure no growth is lost. The largest global retailer Zara has become the leader in the rapid development of fast changing fashions that has the edge above H&M. Although Zara has not been investing in expansion as aggressively as H&M but instead is diving deep on massive flagship locations and online stores, H&M has yet to reach the full potential of the global brand, as has just realized the potential of internationalism and online commerce. It is apparent that the majority of H&M competitors provide both an online and offline presence, IMRG ranking of online retailers in the UK show H&M positioned below competitors Next, New look, and Asos, although Topshop and Zara are lagging behind, outlining possible growth opportunities for H&M. In addition, in terms of mobile and cross-channel, H&M is not providing the sufficient framework needed to overtake competitors. (IRUK: 2015).
Fig 21 - Primark Phygital store.
The value player Primark has significantly and is continuously seeing growth within the UK market, their current market share of 5.9% (Mintel) will become a more critical threat to H&M as Deloitte reports Primark as one of the fastest growing retailers. Although Primark does not have an online presence, the retailer is seeking new ways to engage their consumers through â€œPHYGITALâ€? which merges technology with the physical world. (Sharon Thiruchelvam: 2015) In turn, this offers greater opportunity for consumers to interact with the brand, as it can act as a benchmark for Primark to see greater growth, which would have profound effects on H&M competitive positioning in the future. 38
â€˜Threat of New Entrantsâ€™ The evolution of E-tailers is posing a threat to H&M. Asos has been gaining share fast ( Mintel) Although, the online-only channel accounts for 4.6% of total clothing spend and a quarter of all online sales of clothing, it shows strong growth potential for the future. (Tamara Sender: 2015)
In turn, online is a vital channel in which physical store retailers particularly H&M, need to ensure they are capitalizing on the full potential of the platform and as well as these retail destinations will need to become centres of excellence as online shopping will force retailers who want to remain competitive and successful to do this well. H&M is also facing new threats from UK supermarket fashion brands which include, Asda, Tesco and Sainsburyâ€™s. Although, these retailers are indirect competitors, in 2014 their combined market share accounted for 7% of the clothing retail market (FBIC group: 2015), they may also be positioned at the lower end of the mass apparel market but, arguably so is H&M. However, with convenience stores set to rise and replace superstores, this may reduce the threat that these brands pose on H&M in the future. In this particularly competitive and digitally orientated market, H&M need to adapt alongside their expansion strategy in order to achieve competitive advantage, they should make full use of all distribution channel and technologies available to them. For further analysis of competitors refer to the Appendix 3.
primary research key insights The extensive primary research was conducted in order to discover more about the H&M consumer shopping journey and their attitudes in regards to the brand. The key findings from the research outline the following key insights.
Key insight 1 H&M online channel is not being optimised by consumers as only 4% shop with H&M via this channel compared to 75% who shop at H&M instore. Research highlighted the reason behind this was firstly due to the online store not being as convenient as other retailers due to not offering click and collect for example. In addition, there is no seamless integration between the online and offline platforms as both lack the experience factor according to respondents.
Combination of both
4% 22% 74% Instore Fig 22- Name a brand that does not provide a seamless shopping and brand experience?
Key insight 2
Used or downloaded the mobile app
H&M mobile app is not being used to the full advantage as 81% have not downloaded or used the app. Additionally, when consumers were asked the reasoning behind this 85% it has no exciting or useful features. Instore
Key insight 3
Fig 23 - Have you used or downloaded H&M mobile app?
Not downloaded or used the mobile app
H&M need to raise more awareness of their commitment to sustainable fashion and their conscious collection as 41% of respondents are not aware of H&M commitment to make ethical, sustainable fashion. No
Key insight 4 H&M consumers consider themselves as Omni channel shoppers (75%) but as mobile and the online channel is not being optimized, H&M is missing out on providing this seamless experience for the consumer as they are only sufficient in store.
Fig 24 - Would you consider yourself as a Omni channel shopper?
gap analysis The gap highlights where the brand will be if it continues the current marketing mix, a brand that fulfils the needs of customers through a variety of channels. However, it also displays where H&M could be if they modernized their brand. A leading Omni channel retailer that is incomparable in the market, a place where everyone is able to purchase their goods consistently and continously but orchestrates experience and fun. In order for the brand to achieve this, they need to adopt Omni channel strategies and ensure both of their commerce channels are effectively catering to consumers whilst boosting the customer experience.
A global and established brand that provides on trends, fast fashion at low price points. H&M is highly active and successful on social media, which continues to see users and engagement grow, thus a highly beneficial promotional tool for the brand that will continue to drive sales. The company has built on corporate responsibility by exceeding environmental and sustainability targets, which is an attractive trait to consumers particularly those of the conscious consumer. In addition, they are the early adopter of sustainability in the market which is a way they can ensure point of differentiation in the market.
The online store does not sufficiently provide the H&M consumer with a seamless shopping experience as it lacks convenience and integration. H&M is not digitally competitive which is partly due to focus on international growth and store expansions. In addition, their competitors have been using digital to create strong consumer relationships and experience in turn driving loyalty, which poses a threat to H&M competitive positioning in the UK market. H&M is lacking a point of differentiation in the saturated market. The brand lacks experience factor across all channels as according to primary research results. In turn, it has led to consumers being driven to shop at H&M competitors which are affecting the growth of the business and its competitive positioning.
As the mobile market shows strong signs of growth now and in the future of Clothing retailing, there is much potential for H&M to develop and improve their mobile app particularly, its use within the bricks and mortar as it can provide a way to amaze and amuse consumers into the store as well as driving mobile sales. Click and collect would provide the opportunity for H&M to tackle their consumers need for convenience, as well as drive sales both online and offline. New technologies particularly augmented reality shows the opportunity to merge the physical with digital and enhance the buyerâ€™s experience thus boosting consumer engagement and providing an integrated seamless shopping experience for the consumer. Omni- channel retailing strategies provides the opportunity for H&M to equip the consumer with a seamless shopping experience by integrating all their channels, from bricks and mortar to the website, apps and social media. Thus driving brand loyalty and competitive positioning. The use of digital technology can enable H&M to promote the brands sustainable fashion collections.
The market in which H&M operates is highly saturated thus they face high levels of strong competition in which it becomes even more important to innovate and evolve in order to thrive and grow whilst retaining a point of differentiation. The rise of online retailers and online shoppers is threatening the traditional bricks and mortar on the UK high streets. As bricks and mortar are where H&M success is predominantly generated this poses a great threat in terms of profitability and growth, thus could affect their positioning in the market.
recommendations In spite of H&M successful current business model which focuses on the traditional bricks and mortar retail format, the audit highlighted the important of an Omnichannel offering. As the blurring boundaries between online and offline is inescapable, H&M are required to develop an Omni-channel the experience that exceeds the consumer's high expectations, responding to the unavoidable catalyst of change that is digital. As a result, the highly saturated and innovative driven retail environment means this strategy cannot be overlooked, as adopting new opportunities of the digital era is where the future of retail is heading, as it can provide consistency in terms of digital innovation offered, whilst responding to the demands of the tech- savvy modern consumer. As H&M continues to focus on expanding by 10 to 15%, this rapid expansion strategy is proving successful now, although it is evident there is a limit as to how many physical stores can be opened in terms of not over saturating the high street. In a very crowded and saturated marketplace, H&M key strengths are the affordability of products and their longstanding reputation. However, reflecting on the results found in the following assessment of the micro opportunities and threats of the macro environment, in order for H&M to effectively compete in the retail market today they have to overcome the increasingly rapid and often discontinuous changes of the industry. As a result of the digital revolution and the continuous changes in the industry, it is necessary for H&M to formulate a pioneering and resourceful marketing plan, thus enabling the company to ensure they establish a sturdy positioning whilst meeting the demands of the target consumer. The implementation of an array of marketing strategies will support the brand in achieving a point of difference, ultimately increasing market share, revenue, and profits, whilst enticing new consumer by building on enhancing consumer engagement and brand loyalty. In addition, the strategic marketing plan was derived in response to the conclusions gathered from the brand audit, which explored the internal and external factors that could pose a threat or opportunity to the brand and therefore needed to be addressed.
objectives The external and internal analysis outlined the current marketplace position and highlighted the fundamental areas of H&M current business model that must be addressed in the marketing plan. As a result, SMART objectives will be supported by the long-term strategies whilst provide a framework for the brand to peruse to ensure maximum growth.
Corporate Objectives. 1. To see an increase in UK sales by at least 17% per year within the next 3 years, by making the brand more convenient and digitalized. 2. To achieve an increase market share of 2.5 of the total UK clothing and footwear market by 2018 3. To focus on improving consumer shopping experience and relationship with H&M leading to a 20% increase in brand loyalty and consumer engagement over the next 18 months. 4. To focus on engaging consumers through mobile commerce acquiring at least 50,000 new mobile app users (per year) with an increase in app usage of 20%
Marketing objectives: 1. Acquire at least 50,000 new clicks and collect customers with an average spend of ÂŁ15 or more per in store collection (per year) 2. To see click and collect account for at least 25% of all online orders by 2021 3. To see the mobile app users increase by at least 8% each year for the next three years. 4. To see mobile app sales account for 10% of the overall sales turnover by 2019.
click and collect As retail is in the midst of transforming from a single- channel, exclusively online or offline activity into a more multifaceted Omni-channel landscape, allowing consumers many more options for shopping, it is all the more crucial that H&M becomes a distinct Omni-channel retailer with maximum effect in order to maintain loyal consumers and appeal to new ones. As research showed consumers have abandoned purchase online due to unsatisfactory delivery options, H&M can directly address consumer needs through the implementation of click and collect, whilst providing a convenient shopping experience. Additionally, in order for H&M Stores to remain a critical part of how consumers experience their brand in an Omni-channel world, Click and collect is a way in which the brand can bridge their online and in-store shopping experience as it encourages the use of both channels but ensures a physical presence is pertinent by driving the customer back into the store. In turn, it enables growth and crosses-channel fulfilment ensuring the future of the brand is profitable and sustained. Furthermore, click and collect is at the nascent stages but shows strong signs of growth over the next coming years, as the research above outlined thus more high street retailers will adopt this strategy in order to boost their competitive edge. In turn, outlining it arguably unavoidable for H&M to not implement.
Fig 28- Mock up of Click and collect
shopping assistant mobile app
Fig 29- Mock up of Augmented reality app.
It is important for H&M to ensure they provide an integrated shopping experience for the consumer which enables them to effectively position themselves as an Omni-channel retailer, therefore the second strategy is to change the instore experience whilst incorporating an online and offline experience through the use of mobile. ‘When everyone can get everything online, and can buy from your competitors even when they’re in your store, how can you make sure your customers keep spending money with your brand?’ (Robin Key: 2015) As consumers are demanding retailers to provide more of an experience, one which amazes and amuses, there are endless opportunities to enhance their customers brand experiences in a digitally enhance the world. Augmented reality shows the potential to engage a new generation of consumers in a unique manner for H&M, combining the personal nature of mobile devices. Additionally, the widening presence of mobile devices and the expanded use of mobile networks as e-commerce engines will serve as catalysts to a blended online/ offline retailing experience for H&M consumers. It’s about the integration of technology into every store as a customer assistance tool. People have made the mistake of just dumping screens in store, but it’s about engaging and assisting the consumer.’(RBS : 2015) As H&M mobile app is already a part of the e-commerce ecosystem the app stands alone as it just for shopping online and does not bridge the gap between the two worlds or engage and assist the consumer as research has shown. In addition, both mobile and augmented reality have yet to reach their full potential in the retail market but both influence on the purchasing process, so this adoption early on can ensure H&M has a competitive edge in a market that is highly saturated.
point of difference
To become an Omni-channel trendsetter of retail whilst integrating digital to enhance the consumer experience and provide a seamless shopping experience on multiple touch points.
brand re-positioning High price
Key: Direct compe+tors Indirect compe+tors H&M Fig 30
Minimal use of technology/ not digitally innovative
Maximum use of technology/ very digitally innovative
Uniqlo Forever 21
F&F Matalan Matalan
George at Asda Primark
â€˜Repositioning is done to keep up with consumer wants and needs.â€™ (Asha Sampath :2016)The positioning map displays H&M new positioning amongst its competitors in terms of their use of technology and digital innovation. As the new strategies will increase focus on the use of technology and Omnichannel operations H&M will be repositioned as the market leader amongst their competitors, as identified on the brand positioning map in the audit ( see page ) H&M positioning is rather weak in comparisons to their competitors in terms of the use of digital innovation. In regards to the porterâ€™s five forces, when launching the Omnichannel operations, H&M will need to consider the threat of existing multi- channel retailers such as Topshop, Zara, and New look as they have achieved a sturdy positioning in terms of both online and offline due to offering click and collect and mobile apps. However, by H&M clearly positioning themselves in the target consumer mind by implementing the proposed strategies to achieve a point of difference, this will aid H&M in standing out in the marketplace.
the new marketing mix four Eâ€™s
From Product to Experience It is apparent that there is a shift towards experiential consumerism as todayâ€™s consumer is demanding brands to orchestrate memorable events, in turn, the experience and memory itself becomes the product. H&M core focus is on providing products rather than providing consumers with an experience, in turn, to build consumer loyalty and engagement, they must make their online and offline operations more of an experiential value. At the forefront of the new strategy H&M will place a higher emphasis on experience, not only shall the business create a place to entertain and interact with consumers anywhere at any time but a place in which they can experience themselves. The experience would not be complete without technology enhancing the buying experience, thus, the augmented reality mobile app will assist the consumer when shopping to create immersive and convenient shopping experience for the consumer. The 3D capability of augmented reality shall allow the mobile app user to trigger a virtual experience of the product, thus allowing them to explore the product in more detail, from there the consumer can select multiple features to enhance their shopping experience from outfit recommendations to interactive product details. This is only the start of what the app can do for the consumer as the gradual development of features and touchpoints will enable the consumer to continuously grasp interest whilst ensuring that the needs and wants are met.
From Place to Everyplace H&M currently only provides multi â€“channel operations and in order to remain competitive and successful, the new strategy will focus on a move towards Omni- channel retailing. As consumers are moving around and across various channels, so should H&M in order to stay ahead in the saturated market. Technological enhancements is a key component that can integrate online and offline, thus providing the augmented reality app it can enable H&M consumer to experience the brand across multiple touchpoints. The app will initially enable H&M consumers to shop through the use of product tags, available to them when in store. In addition, digital integration shall also be incorporated into the H&M seasonal magazine enabling consumers to scan, look and shop the H&M AW16 conscious collection from the pages. In turn, there shall be a high emphasis placed on increasing the touch points for the consumer throughout the three years, ensuring the shopping journey is seamless thus driving new opportunities for sales.
From price to exchange As retail is making the transition from transaction based to relationship based value creation, engagement and attention are ways for H&M to increase their profitability and growth and ensure success in the future. Although H&M products are highly affordable, this is not enough to ensure they are winning over the consumer as today they have heightened expectations around their shopping experience, as a result, the convenience factor of the click and collect will be the factor behind driving sales of the business. In addition, the augmented reality mobile app will not require consumers to pay, however, in order to build consumer loyalty it shall require them to create their own account that in the long run of the app shall incorporate personalised features towards the individual through the use of analytics.
Year One -To see the Implementation of Click and Collect starting with 100 UK stores. -To re- develop the existing mobile app incorporating augmented reality which underpins the launch of the AW16 Conscious collection and will also be integrated into their seasonal magazine.
Year Two -To continue expanding and implementing click and collect throughout UK stores, as H&M have a total of 241 in the UK -To expand the mobile app usage within store incorporating into visual merchandising displays.
Year three: -To continue expanding the mobile apps touch points on print, online and in store thus -To expand the product range offering on the app. -To expand the features on the app making them more personal and relevant to the consumer
From Promotion to evangelism Evangelism goes beyond traditional methods of promotion by creating a brand experience that shares the passion and emotion it has with its consumers. H&M is a brand that is built on passion in which they are driven by fun, individuality, and social responsibility. The brand highly emphasise these traits through the use of promotions which uses a mixture of everevolving media. Therefore, when communicating the new strategies for H&M a multi-channel offering with ensuring the promotional activities will create a maximum impact with high levels of conversation that can enhance the brand image and draw in consumers, new and exist to the online and offline channels. The budget for promotional activities in the first year of the plan will be around the sum of ÂŁ38,000.
social media Objectives: To promote the new click and collect offering available on the e-commerce channel To promote the augmented reality mobile app, including its new features. To continue B2C and C2C relationship building As social media plays a significant role in business communications, the different platforms including Facebook, Instagram, Twitter, and snap chat, will play a key role in the promotion of the launch of Click and collect and the new mobile app. The social media team at H&M will be responsible for the frequent posting of links to the e-commerce channel and the posting of promotional images and information regarding the new click and collect feature and the changes made on the mobile app for consumers to use in store. As H&M has a fan base of over 46 million, it is evident that the social media platform is an effective way of reaching a large audience of potential click and collect and mobile app users, thus driving traffic to the online and offline stores after the launch.
As evidence suggest that consumers of the millennial generation are more likely to make purchases based on the opinions and recommendations of their peers, particularly women, especially those of 44 and younger. (Emarketer: 2014)Therefore, H&M will continue to encourage C2C conversations via the social media platforms with the intention of boosting both the online and offline sales. In addition, a promotional video will be created to demonstrate the new app and how consumers can use it within the store. The video is intended to excite and entice H&M consumer in order for them to download and use the app. As H&M online videos are proving a powerful marketing tool for them with over ÂŁ1million views on each video they post via YouTube, it will enable a maximised publicity of the mobile app and enable more content for the social media team to share. 70
pop up launch event Objectives: To engage and increase the customer experience in turn building loyalty and enhancing the consumer perception. To promote H&M new digital focus and the augmented reality mobile app. In order for H&M to increasingly engage consumers in the conversation about the brand, a launch event will be held in order to promote the importance of fashion, technology and sustainability as these factors are the message H&M will seek to communicate with their consumers, activating their future positioning in the marketplace. The London flagship store is a space which on many occasions H&M has hosted events and activities, due to being one of Europeâ€™s busiest shopping street with around half a million daily visitors, (Erin parry :2015) enabling H&M to engage and provide experiences to consumers on a large scale, ensuring maximum impact with high levels of conversation.
In turn, to fully create a maximum impact H&M will join forces with Dalziel & Pow, a leading agency that delivers engaging experiences for the new era of consumers. The event will incorporate immersive and interactive digital technology that will enable shoppers to experience the H&M conscious collection AW16 like never before. An interactive exhibition stand will be created that will transform the third floor of H&M Oxford Circus, it will demonstrate how appropriate technology can be used to engage and create shareable content. The screen printed illustrations will spring to life when touched, uncovering a host of animations, data feeds, and sounds. The purpose of the event is to tell a story of the future of retail at H&M, whether communicating stock levels, product information, or just a simple interaction of chasing an animation around the canvas, it will be innovative and playful, which incorporates technology elements from the new augmented reality app to virtual reality.
financials As the nature of the fashion industry is unpredictable this poses difficulty when predicting the future sales and costs for H&M. As a result, the financial forecasts have been made using a mixture of judgemental, statistic and research based approaches in order to minimise bias, thus predicting the most realistic and accurate figures. (Marian Burk Wood: 2013) The profit and loss account shows the future projections for H&M, the expected forecast is based on the assumption that H&M will see at least a 17% increase in sales each year. It also assumes that implementation will be successful and H&M will continue investing in click and collect and app development. In the first year, H&M will re-invest a total of ÂŁ111,800 from the companyâ€™s net profit that shall fund the new mobile app and Click and Collect implementation, with each year seeing the cost decrease. As the app is already existing and will only need re developing a commercial app developer with be required, thus there shall be no need for licencing or intellectual property. The H&M marketing budget is 3.5% of their overall sales amounting to around ÂŁ38,000, which will be used as a guild line and shall account for all the promotional methods used in creating awareness of the new strategies.In turn, it shall take one year for H&M to receive a return on the
initial investment however, re-investment shall continue to commence to ensure the strategies run efficiently over the three years and this will be taken from the net profit. It is expected that the bricks and mortar stores will continue to be the main source of revenue within the three years, however, click and collect and the mobile app would give an extra boost to the overall revenue. Statistical forecasting approach: The financial estimates are based on H&M results from previous years, market statistics and direct competitors such as New look. It is expected that Click and Collect will account for 5% of H&M total sales in the first year but by year 5 it should account for 25% of H&M sales turnover. In addition, it is expected H&M mobile app shall achieve 391,154 users in year one with a 2% increase each year until year five.
Note: Annual turnover for H&M in the UK was ÂŁ957,003 (Fame: 2015)
Measures of success Specific metrics and KPIs will be used to ensure the SMART objectives have been met, which were set at the beginning of the marketing plan. These shall enable H&M to assess if the implementation of click and collect and the augmented reality mobile app have been well received by the consumer.
risks H&M have acknowledged the risks involved with venturing with augmented reality and implementing click & collect into their strategies. An effective risk management must be employed in order to achieve the business objectives that protect the brands reputation. As a result, there are some potential challenges H&M could encounter however, these have been addressed by suggesting how they could be overcome.
Fig 40 - Augmented reality chaning rooms
future opportunities When looking to the future for H&M, they will be required to observe and acknowledge new digital and retail trends in order for them to stay pertinent. As technology advances new innovations are continuously being developed and appearing more frequently, H&M shall need to adopt other new technological attributes during the three years and beyond. Therefore, H&M may benefit from adopting these recommendations: 1. Ibeacons that enable location based context but also inform sales promotions within store . 2. Augmented reality changing rooms that can provide a social media integration, as well as styling options and look books of the products available to purchase. 3. Smart shopping basket which would allow consumer to track the items they picked up whilst walking around the store, informing them of their basket worth and potential personalised offers.
Conclusion Despite the risks of the implementation of the new strategies, in order for H&M to maintain relevance in the saturated marketplace a new direction is critical and therefore itâ€™s the best possible option for H&M at this point. H&M is a brand that has shown it has the potential to lead the market, thus the early adoption of technology and providing the modern consumer with an Omni-channel offering, ensures they are not missing out on any opportunity to achieve this maximum growth that will be achieved from not only sales but building stronger and more loyal relationships with their consumers. As the marketplace continuous to grow this means higher levels of competition for H&M, hence their new point of differentiation will enable them to have a competitive edge and ensure no growth is lost. Furthermore, the future for H&M holds many great opportunities, particularly with technology, as itâ€™s just at the starting point of its ability to add value to the retail industry. However, by implementing in small steps this will ensure interest with consumers is captivated throughout and can adapt to the ever-changing needs and wants of the consumer as providing a seamless shopping experience is what shall drive the success of H&M.
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APPENDIX 1 - Methodology Primary and secondary research carried out.
APPENDIX 2 - Brand essence model
â€œThe H&M wayâ€? value-driven, customer focused, creative and responsible fashion company.
Fashionable, Fun,Young Caring, Inspiring, Authentic, Trendy. We believe in people, Keep it simple, Entrepreneurial spirit, Constant improvement Cost-consciousness
Affordability, Quality, Enviormental responsibilty
To offer fashion and quality at the best price in a sustainable way.
APPENDIX 3 - Direct competitor table
APPENDIX 4 - Market research (examples of technology used in retail)
APPENDIX 5 - Brand positioning map Price and fashionability High price
American apparel Gap
Marks & spencer
Low Fashion/ trendy
High Fashion/ trendy
George at Asda Matalan
Key: Direct compe.tors Indirect compe.tors H&M
APPENDIX 6 - Primary research results
APPENDIX 7 - Primary research results (Online and street survey) 18-24 25-34 35-44 45-54 55-64
70 64 50 12 8
APPENDIX 8 -H&M market performance
APPENDIX 9 - Feasbility of Click and Collect
APPENDIX 10 - Financial projections Financial projections 1.Click and collect financial projections ‘Click and Collect accounts for 25% of New look sales in 2015.’(SUZANNE BEARNE: 2015) ‘Click & collect purchases in the UK will grow by more than two-thirds to be worth over £4bn in 2018, as consumers continue to place emphasis on convenience and the ability to get products quicker.’ (Richard Perks: 2015) ‘Early adopters on the high-street, big chain retailers have found convincing evidence that click-and-collect is worth it. John Lewis also reported a 62% increase in click-and-collect orders last year. (SUZANNE BEARNE: 2015) Taking this into consideration, it is projected 25% of sales are to come from click and collect by the end of year 5, which works as 5% each year. In terms of sales of click and collect this was projected from the working out the percentage of each year from the total revenue made each year at H&M. 2.Mobile app financial projections ‘By 2016 it is forecasted there will be 43.2 million mobile app users in the UK’ (Statista : 2015) ‘By 2016 there will be 8.971,416 million mobile app users aged 20-30 in the UK.’ (Statista : 2015) ‘56% use mobile apps compared to 44% men in the UK’ (So divided the app users by 2) ‘Mobile shopping apps account for 8.27% of the app market in 2015’ (Then divide this by 100 then times by the size of the market) (Statista: 2015) 8,971,416 / 2 / by 100 then time by 8.72% = market users Then each year will increase by 2% due to the marketing seeing this increase in users.
APPENDIX 11 - Cash flow
APPENDIX 12 - Balance sheet and sensitivity analysis
APPENDIX 13 - Project action plan
APPENDIX 14 - Glossary
APPENDIX - 15 TUTORIAL SHEETS
APPENDIX 16 - Consent forms
Published on Jul 8, 2016