National Institute of Fashion Technology New Delhi

H&M

Submitted By: Somya Tank

INDEX 1.1 1.2 1.3 1.4 1.5 1.6 1.7 1.8 1.9 1.10 INTRODUCTION ORGANISATION H&MS BUSINESS CONCEPT STORES THAT INSPIRE IDEA AND DESIGN PLANNING THE RANGE GREEN LOGISTICS GUIDANCE AND INSPIRATION FOR CUSTOMERS CORPORATE RESPONSIBILITY REFRENCES

H&M 1.1 Some brief facts about H&M:

H&M offers fashion for women, men, teenagers and children The collections are created centrally by around 100 in-house designers together with buyers and pattern makers H&M also sells own-brand cosmetics, accessories and footwear The stores are refreshed daily with new fashion items Online shopping is currently available in Sweden, Norway, Denmark, Finland, the Netherlands, Germany, Austria and the UK H&M does not own any factories, but instead buys its goods from around 700 independent suppliers, primarily in Asia and Europe H&M has about 16 production offices around the world, mainly in Asia and Europe H&M employs about 76,000 people worldwide The turnover in 2009 was SEK 118,697 million Today H&M operates in 38 countries, with around 2,000 stores and has 76,000 employees all working to the same philosophy: To bring you fashion and quality at the best price Germany is the biggest market, followed by the UK and Sweden

1.2 Organization:
Corporate management is based at H&Ms head office in Stockholm. Stockholm is also where the main departments for design and buying, finance, accounts, expansion, interior design and display, advertising, communications, IR, HR, logistics, security, IT and CSR and environment are located. H&M has 16 country offices that are responsible for the various departments in each sales country. H&M also has around 16 production offices which take care of contacts with the approximately 700 independent suppliers that H&M works with.

1.3 H&Ms Business Concept:

H&Ms business concept is to give the customer unbeatable value by offering fashion and quality at the best price. To be sure they can offer the latest fashions they have a design and buying department that creates their clothing collections. To ensure the best price by: having few middlemen buying large volumes having a broad, in-depth knowledge of design, fashion and textiles buying the right products from the right market being cost-conscious at every stage having efficient distribution

H&M is driven by strong values such as simplicity, continuous improvement, team spirit, costconsciousness and entrepreneurship. H&Ms own designers interpret fashion trends and create fashions that are accessible to all. The stores are revitalized daily with new items. Quality is a central issue, from the idea stage all the way to the end customer. The quality work includes extensive testing, as well as ensuring that the goods are produced with the least possible environmental impact and under good working conditions. H&M does not own any production factories. Production of goods is outsourced to independent suppliers, primarily in Asia and Europe, through H&Ms local production offices. Nor does H&M own any of its stores. Instead H&M rents store space from international and local landlords. From idea to store: H&M creates and plans its collections centrally. In this work it is incredibly important to understand what customers want from the idea, through the creation of a new product to the customer buying it. H&Ms designers, pattern makers and buyers agree on the trends that will inspire H&Ms fashion in the coming season and try to find a good balance between modern basics, current fashions and high fashion. H&M outsources the production of the items to independent suppliers, mainly in Asia and Europe. Millions of items are involved and these are sent out to the stores via a number of distribution centers. Getting the right item to the right store at the right time is the key to H&M customers always finding something new and exciting.

1.4 Stores that inspire:

The store is H&Ms most important place for meeting customers, which is why the right store design is the be-all and end-all. Guidelines for store design and display windows are drawn up at Head Office. The store and its display windows are the most important communication channel H&M has with its customers, and thats why their design is so important. Either every other, or every three years, H&M creates a completely new interiors programme for a large number of stores. The starting point comes from a special, new store on an interesting market

1.5 Idea and Design: H&Ms own designers, pattern makers and buyers create the collections together. Taking the world as inspiration, styles are identified that are right for the times and trends are adapted to fashions that work. It is about creating a good balance between fashion, quality and the best price. The idea and design work is a continual creative process. To pick up on forthcoming trends H&M constantly monitors the world around it and draws inspiration from street fashion, films,

travel and other cultures, the media, trend institutes, trade fairs and exhibitions as well as fashion history. The overall themes are often planned up to a year in advance, while the very latest trends are picked up at short notice. Always with a focus on the customer H&Ms collections always emerge with the customer in focus. To meet demand from customers of all ages, each with their own particular style, H&M offers many different concepts. Trends and influences are adapted to styles and models that will suit the customers. The themes, colours, fabrics, silhouettes and garment types are decided in order to create the new seasons collections.

1.6 Planning the range:

H&M builds up its range by putting together a balanced mix of modern basics, current fashions and high fashion within each concept. A number of different factors affect the final composition of the range. What sold well last season is combined with the coming seasons big trends, colours and models. The aim is that the range should reflect what customers want at all times. Customer demand in different markets and in different stores determines the mix of the product range. Once again, the previous seasons sales form a good guide. The size of the stores, their location and whether it is a city store or a regional store also have a bearing on how the product range is distributed. High fashion garments that are produced in limited quantities, for example, will be sold only in stores in the big cities. Modern basics such as jackets tops and trousers in a range of colours and in the current seasons cut are ordered in larger volumes and distributed to more stores. Concept teams find the right merchandise mix, which have their own team of designers, buyers, assistants, pattern makers, a section manager and a controller. The number of people working on the teams varies depending on the concept. They are all united by their common interest in fashion and trends and by their understanding of what customers want. The teams produce the right mix of merchandise for each concept. Buying production: H&M does not own any factories. Instead, clothes and other products are bought in from around 700 independent suppliers, primarily in Asia and Europe. The buying department plans the range, but the practical aspects are then dealt with by H&Ms production offices. The production offices, where most of the employees are drawn from the local population, keep in constant contact with the suppliers. The production offices are responsible for placing the order with the rightsupplier and for the items being produced at the right price, being of good quality and being delivered at the right time. They also carry out checks to ensure that production takes place under good working conditions. Ensuring the safety and quality of the items also takes place at the production offices and is the result of extensive testing, including checking for shrinkage, twisting and colourfastness, as well as checking that the chemical requirements have been met.

The lead time can vary from a couple of weeks up to six months. It is important to know the right time to order each item. A short lead time is not necessarily best, since the right lead time is always a matter of getting the right balance between price, time and quality. For high-volume fashion basics and childrens wear it is advantageous to place orders far in advance. Trendier garments in smaller volumes require considerably shorter lead times. Buying and production H&M purchases garments from around 750 suppliers: 60% of production takes place in Asia and the remainder mainly in Europe. The production offices have a mediating function between the internal buying department and external suppliers, ensuring that: buyers orders are placed with the right supplier, the goods are produced at the right price and quality the suppliers conform to the companys code of conduct as for working conditions. Production offices also deal with sample garments and other checking and testing, which is a major factor in reducing lead times. The decision of which supplier is the right one, is not only a matter of cost-efficiency but also depends on other factors such as transport times, import quotas and quality aspects. To minimise risk, buying is carried out on an ongoing basis throughout the year. In recent years, H&M has reduced the average lead time by 15-20% through developments in the buying process. Flexibility and short lead times diminish the risk of buying the wrong items and allow stores to restock quickly with the best selling products. In technical terms, H&M operates with two main collections per year, one in spring and one in autumn. Within each season, however, there are a number of sub-collections so that customers can always find new goods in stores. The aim of the company is to find the optimal time (and supplier) to order each item. In this context, quick is not always the best while trendier garments require very short lead times, many fashion basics or childrens wear may be ordered well in advance. For goods which are selling well, the company is able, on average, to get supplementary orders in a few weeks.

1.7 Green logistics:

The right product has to arrive at the right place, at the right time and at the right cost. Logistics is a challenge for every fashion company. In addition H&M demands the greenest possible transportation, which is in line with the ongoing ambitious work towards sustainability. One example is that the airfreight volumes have been halved in just a few years. H&M monitors the environmental performance of logistic service providers such as shipping lines and road hauliers. Goods sent from producers in Asia are transported almost exclusively by ocean. Within Europe, H&Ms ambition is to increase the share of movements by rail over road. More than 90 percent of all transports are done via ocean,rail or road. Air is used only in exceptional cases when faster deliveries are required. The merchandise arrives at one of the distribution centres located in the different sales markets. After unpacking and allocation the garments are distributed to the stores. These centres are in some cases supporting the stores in a geographic region consisting of several sales countries. The individual stores do not have backup stocks; they are replenished as required from central

stockrooms. As soon as a product is sold a request is sent for replenishment. Every day, the H&M stores receive new goods. The keywords for H&M logistics are simplicity, reliability and transparency. Simplicity logistics must not become too complicated. Reliability the fastest is not always the best. Instead H&M prioritises the most reliable and greenest method. Transparency information exchange between all links in the logistical chain.

1.8 Guidance and inspiration for customers

The interiors programme has to work around different conditions and be adapted to suit. In this way each store becomes unique. When we set up new stores we often choose the premises because of its location not because of how it looks. The aim is for stores to be inviting and inspiring. They should appeal to a wide public so that everyone feels comfortable in them, whatever their background. The stores most important task is to create a clear framework for a range that is constantly changing. The aim is to offer a varied shopping experience throughout the whole store. The display window is perhaps the most important part of the store, as it is the first meeting the customer has with H&M. Displays in the windows and most important areas are changed every ten to 14 days, all over the world. The guidelines for the displays in more than 5,000 H&M windows are created in a large test store at Head Office in Stockholm. They need to inspire customers and emphasise the best of their collections.The clothes should look invitingand be displayed with accessories and footwear, sometimes combined in a way that customers themselves wouldnt have thought of. The layout of the display windows should suggest an association or a feeling, without taking focus away from the clothes. The store environment should be inspiring, but also make it easy for customers to find what they are looking for easily. Thats why the way that garments are presented is crucial to making it simple for customers to differentiate between different styles or departments

1.9 Corporate responsibility: H&Ms business concept is to offer customers fashion and quality at the best price. At H&M, quality is about more than making sure that products meet or exceed customers' expectations. It also means that they have to be manufactured under good conditions and that customers must be satisfied with the company. Taking responsibility for how operations affect people and the environment is also an essential prerequisite for H&M's continued profitability and growth. Some examples of how H&M act in a corporately responsible manner: Supply chain working conditions

The choice of countries of manufacture places particularly high demands on H&M. They are aware of the risk of human rights violations and noncompliance with local labour law and internationally agreed labour standards. At the same time, they are convinced that there is an opportunity to contribute to better working conditions for all the hundreds of thousands of people who make their products. Code of Conduct Since H&M do not have direct control over this production, they have drawn up guidelines for suppliers, which together form a Code of Conduct. This Code of Conduct is based on the UN Convention on the Rights of the Child and ILOs conventions on working conditions and rights at work. It is there so that they can be sure that products are produced under good working conditions. The Code includes requirements concerning: working environment a ban on child labour fire safety working hours wages freedom of association

1.10 REFRENCES PDF by Stephen Kelly (HNM CASE STUDY) www.ebusiness-watch.org www.hm.com