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1. BRAND THERAPY - H&M: Fast fashion, slow sales.................................................................................... 1
Bibliography...................................................................................................................................................... 4
16 October 2013 ii ProQuest
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BRAND THERAPY - H&M: Fast fashion, slow sales
Publication info: Brand Strategy (May 8, 2006): 12.
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Abstract: ln recent months, Swedish high-street fashion chain Hennes &Mauritz's (H&M&M;) sales figures have
been fluctuating as fast as its fashion. lt revealed disappointing sales growth last September, pre-Christmas
was much better, but last month it told shareholders that March sales fell by eight per cent on a like-for-like
basis. This figure looks even worse when you consider that the total number of H&M;&M stores has risen to
1,216 by the end of March, compared with 1,101 at the same point last year. H&M;&M blames the weather: too
cold in March, too warm last September. Nobody can compete with Zara and H&M&M; in Europe, but their
formulas are very different. Zara's is subtle and sophisticated, less fun. H&M&M;'s formula is "be in the right
place with the right product at the right moment" but it still has to rely on the weather. H&M&M;'s advertising
seems ad hoc at the moment, as if it's feeling its way towards what should be the next step.
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Full text: ln recent months, Swedish high-street fashion chain Hennes &Mauritz's (H&M) sales figures have
been fluctuating as fast as its fashion. lt revealed disappointing sales growth last September, pre- Christmas
was much better, but last month it told shareholders that March sales fell by eight per cent on a like-for-like
basis. This figure looks even worse when you consider that the total number of H&M stores has risen to 1,216
by the end of March, compared with 1,101 at the same point last year. H&M blames the weather: too cold in
March, too warm last September. But is it too easy to blame the weatherman? lt was also revealed in March
that the retailer has lost its position as Europe's biggest fashion retailer to Spain's lnditex, the owner of Zara. ls
Zara - a retail chain renowned for its glossy shops and mainstream prices - about to do real damage to H&M, a
chain that is feted for its low prices but derided for its chaotic stores? Kate Walsh investigates
Joakim Jonason is the founder of Anjovis. He was formerly a marketing director at H&M
Nobody can compete with Zara and H&M in Europe, but their formulas are very different.
Zara's is subtle and sophisticated, less fun. H&M's formula is 'be in the right place with the right product at the
right moment' but it still has to rely on the weather. l was living in London last March (2005) and the weather
was much warmer, so it's no surprise that sales are down from then. For the past couple of years, however, l've
felt that H&M's advertising could be better, more distinct. lt seems ad hoc at the moment, as if it's feeling its way
towards what should be the next step.
When l was with the company, we introduced what l called the 'deal', where we used the best photographers
and models in ad shoots, and placed the low price by the side of it. The better it looked and the lower the price,
the better the deal.
Competitors thought we were crazy and that people wouldn't believe what they saw, but now everyone's doing
the same thing. H&M needs to look at its advertising in the same way it looks at fashion and ask: what can we
do better next time? The key is to be consistent, but also flash and new.
Mike Shearwood is managing director of Zara's parent company lnditex UK &lreland
Becoming the biggest retailer in Europe is not an objective we set ourselves. Our goal is to double the number
of stores and the size of the business by 2009.
We're in a closed period at the moment, but from a UK perspective we've been happy with our trading and
believe that we are out- performing the market.
The weather hasn't affected Zara because our manufacturing process is so quick and the lead times are so
short that we tend to manufacture for the moment. lf the weather doesn't get warm then we will continue to use
heavier weight products; if it's getting warmer we'll swap to a lighter weight product. Our business model lends
16 October 2013 Page 1 of 4 ProQuest
itself well to climate change.
We don't have an ad budget; our stores are the main media for attracting attention, so we tend to have our
premises in prime locations and we invest heavily in our window and interior displays. Part of Zara's philosophy
has always been to create a comfortable shopping environment - a boutique-type environment - but we still
want to price our products so that they are in range of the general public.
Our position really is to democratise fashion and we believe that we can sell fashion - high street fashion - from
nice premises.
Sally Bain is a retail consultant at agency The Chambers. She was formerly editor of fashion industry magazine
Drapers Record
Fashion retailers always talk about the weather, but it has been cold and current trading statements from other
retailers such as Next show that their like-for-likes are also down.
When people are still wearing coats and boots, a linen sun dress is a purchase that they'll quite happily defer.
Plus, H&M's customers want to buy it and wear it now; it is not an investment dressing destination, it's an instant
gratification destination. Perhaps more emphasis on transitional ranges, items that can move from a cooler day
to a warmer one, would be best for this time of year.
H&M is still a very strong operator and now it's upgrading its stores, this will make it even stronger. This is one
of Zara's strengths: it has very glossy stores but mainstream prices and therefore it over delivers the promise.
H&M's stores have been a mess but it's making the environment more enticing and stylish though the prices are
still lower than Zara's.
The Stella McCartney range broadened H&M's appeal beyond the 15- 25 age group; now it also has quite a
good range of ABs. lt should do this again but Stella will be a hard act to follow because it's a good name and a
good association.
Libby Thomas is a search media analyst and fashion devotee
l think H&M is miles better than Zara but it can be really inconsistent. You go into H&M one month and you want
so many items, then you go in the next month and it's just a big load of pap.
lt's probably because the brand's so trendy; sometimes it gets it right and sometimes it doesn't. Also, with some
of its garments you can really tell that it's poor quality, but at other times people will say, 'l love your top' and
you'll say, 'it was a fiver from H&M' and they won't believe it.
People go there because the clothes are cheap, cheerful and disposable; lots of little bits to go with more
expensive pieces. l might buy something in H&M on a Saturday and then wear it that night. l also go there for
clothes that are really of the moment and trendy. l might only wear them for two months but if it only costs a
tenner that's fine.
Going to the stores is not the nicest shopping experience. But brace yourself and you'll come out with some
really good cheap stuff. l mainly notice its advertising in the shops because usually it has quite good display
posters up. l look at them and think, 'l'd quite like that' and it has the price beside it which is very useful.
Brand response
Normally we don't comment on monthly figures but this month we did because they were quite weak. The late
spring and the fact that Easter did not occur until April led to very weak sales, mainly in central Europe.
Last March it was around 20oC in Germany, Austria and Switzerland; this had a really good effect on the sales.
This year there was snow and it was below zero so, of course, you aren't tempted into buying spring clothes.
However, we had a positive development in Spain, Portugal and the Nordic countries where the weather wasn't
so bad.
ln the UK, the market was also pretty weak but just before Christmas the Stella McCartney range was extremely
successful. This is something we may do again but with a different format or from another angle. We never talk
about future strategies like that because we want to surprise our customers and re-invent ourselves all the time.

16 October 2013 Page 2 of 4 ProQuest
We're also opening a new flagship store on London's Regent Street in the old Dickins &Jones building. lt's
going to launch in spring 2007.Nils Vinge, head of investor relations, H&M
Copyright: Centaur Communications Ltd. and licensors
Subject: Retailing industry; Fashion; Competition; Market strategy; Business conditions;
Location: Sweden
Company / organization: Name: Hennes & Mauritz; NAlCS: 448140; Name: Zara; NAlCS: 448140;
Classification: 8390: Retailing industry; 7000: Marketing; 9175: Western Europe
Publication title: Brand Strategy
Pages: 12
Number of pages: 0
Publication year: 2006
Publication date: May 8, 2006
Year: 2006
Publisher: Centaur Communications Ltd.
Place of publication: London
Country of publication: United Kingdom
Publication subject: Advertising And Public Relations
lSSN: 09659390
Source type: Trade Journals
Language of publication: English
Document type: General lnformation
ProQuest document lD: 224154683
Document URL:
http://libproxy1.nus.edu.sg/login?url=http://search.proquest.com/docview/224154683?accountid=13876
Copyright: (Copyright (c) 2006. Centaur Communications Limited. Reproduced withpermission of the copyright
owner. Further reproduction ordistribution is prohibited without permission.)
Last updated: 2010-06-09
Database: ABl/lNFORM Complete
16 October 2013 Page 3 of 4 ProQuest
Bibliography
Citation style: APA 6th - American Psychological Association, 6th Edition
BRAND THERAPY - H&M: Fast fashion, slow sales. (2006). Brand Strategy, , 12. Retrieved from
http://search.proquest.com/docview/224154683?accountid=13876

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