RETAIL

CLOTHING
INDUSTRY
REPORT
AMERICAN UNIVERSITY IN BULGARIA
BUS 201C: MANAGEMENT INFORMATION SYSTEMS
SPRING 2015

DESISLAVA ALEXANDROVA | TEREZA GEORGIEVA | ANNA STOYCHEVA |

ELZEM KENAN

CONTENTS

Industry Overview........................................................................................3
PESTEL Framework...................................................................................3
What political factors influence the industry?........................................3
What economic factors influence the industry?.....................................3
What social factors influence the industry?...........................................4
What technological factors influence the industry?...............................5
What environmental factors influence the industry...............................6
Conclusion:............................................................................................6
Five Forces Framework..............................................................................6
What does the bargaining power of suppliers in the industry look like?6
What does the threat of new entrants within the industry look like?.....7
What does the bargaining power of customers in the industry look like?
..............................................................................................................7
What does the bargaining threat of substitutes within the industry look
like?.......................................................................................................7
What does the competitive rivalry within the industry look like?..........8
Top industry players..................................................................................8
Countries...............................................................................................8
Companies.............................................................................................9
Industry information dissemination...........................................................11
How does the industry get information out to members & public..........11
Associations:........................................................................................11
Past Industry Technology/IS/MIS.................................................................15
What was trendy in 2013?......................................................................15
Mobile..................................................................................................15
Integration...........................................................................................15

More and more social..........................................................................15

Current industry technology trends...........................................................16
Trends.....................................................................................................16
Are you on the list?..............................................................................16
Goodbye supermodels.........................................................................16
SHOP in, shop out................................................................................16
Why is this happening?...........................................................................17
Future industry technology trends and forecasts.......................................17
Top Trends in the Fashion Industry..........................................................17
Omnichannel retailing.............................................................................19
Organizational Consulting Recommendation.............................................20
Technology used by H&M........................................................................20
Description of IT in SCM..........................................................................20
SWOT......................................................................................................21
A weakness and an Opportunity..........................................................21
A Threat: Zara......................................................................................21
A Weakness: Lack of Security..............................................................22
A Strength: Control over Demand........................................................23
Recommendations and benchmarks.......................................................23

TABLE OF FIGURES

Figure 1 AAFA.............................................................................................11
Figure 2 Business of Fashion......................................................................13
Figure 3 Just-in-Style..................................................................................14
Figure 4 WWD............................................................................................14
Figure 5 Apparel software trends 2015: What else to watch?....................19
Figure 6 H&M Website Warning..................................................................22

INDUSTRY OVERVIEW
PESTEL FRAMEWORK
WHAT POLITICAL FACTORS INFLUENCE THE INDUSTRY?
The political and legal climate is a very important factor to evaluate when looking
at the success of the apparel industry globally. Governmental barriers to trade,
minimum wages, protectionist policies, bureaucracy and corruption are some of
the various factors that affect the apparel industry. Government barriers to trade,
as present in the EU for manufacturers outside of the EU can negatively affect the
prices of the retailers. For examples, retailers entering from outside of the EU
have to pay a tariff and thus increase their prices on this market which can in
turn affect their marketability and success. Similarly, the US offers more
favorable conditions to American retailers and imposes tariffs on European
retailers. High minimum wages can also pose problems to the apparel industry
as this would mean higher cost of labor and higher prices on the clothes. A trend
in the countries (like Cambodia) that have started posing stricter rules and
regulations on working conditions and wages have suffered because companies
have stopped operating in them and chosen to move to other countries with less
strict rules (Haiti, Bangladesh). Another political factor would be high levels of
corruption and a dysfunctional bureaucracy. These can hinder the companys
development, legal status and profitability. A slow decision-making process due to
the bureaucracy can be expensive and dysfunctional. Finally, poor working
conditions and child labor can lead to protest, as the Bangladesh 2013 garment
workers protest. The protest in Bangladesh shut a lot of factories which led to a
loss of hundreds of dollars for the manufacturers.
Bulgaria on one hand has an advantage since legally its law is part of the EU
AQUIS legislation which ensures favorable conditions for doing business in
Bulgaria and could serves as astimulus for companies to invest in the country.
Furthermore, the labor legislation in Bulgaria is favorable for employers. Bulgaria
ranks 48 on Rigidity of employment index from 140 countries worldwide and only
4 EU member states have better value of that indicator (World Economic Forum,
2011).This low rigidity of employment stimulates the investments in the country,
especially in time of economic crisis. Corruption on the other hand and a
relevantly inefficient government are main barriers in doing business in Bulgaria
(World Economic Forum, 2011) and they negatively impact the investment
climate in Bulgaria. Also, the conservative traditional approach to governance
rather than modern eGovernance,with 70% online availability and interactivity of
public services (supply side), Bulgaria is on the bottom of the eGovernment
implementation. Onlyfourcountriesin the EU have worse level of the indicators
than Bulgaria. (Eurostat, 2011) The ineffective eGovernment is a barrier to
further investments in Bulgaria.
WHAT ECONOMIC FACTORS INFLUENCE THE INDUSTRY?
One of the first industries that would be impacted negatively due to an economic
downturn would be the apparel industry. As the 2008 economic crisis came about
one of the first things that people cut on their shopping lists were clothes. Overall
theglobal garment trade fell by 0.5%, there was a decline in retail sales in order
volumes and factory closures and job losses in exporting countries. In Europe -

The two largest

fast-fashion retailers
Inditex (Zara) and
H&M reported drops
One of the first
ofabout 15% in their
industries
would
2009 first quarter
Somethat
of the
negative economic factors that can
be
impacted
profits, however
affect the apparel industry in Bulgaria is Bulgarias
both rebounded in
negatively due to an
low nominal GDP - around 52 billion Euro for 2014
April. Inditexs sales
economic downturn
rose 9%between
would be the apparel
early May and June,
industry
whereas H&Ms April
same store sales
rose 8%. So an economic
downturn can have a
large negative impact on
the apparel industry.
Another factor that
affects globally the apparel industry is wage rates. As some countries introduce
minimal wages some fashion brands might not be able to produce their clothes
and accessories at the needed expenses because of the higher labor costs. A
trend has been apparent in the recent years, countries like Cambodia, who are
promoting compliance with the law and minimum wages, have been punished by
retailers for their decisions by having less orders there, when the countries with
the lowest-wages like Haiti and Bangladesh who are doing nothing to
ensurerespect for labor rights are being rewarded by increasing orders. (REPORT:
The apparel industry and the economic crisis: How is the crisis affecting apparel
production andgarment workers? by the Maquila Solidarity Network) Other
economic factors that might influence the apparel industry would be
unemployment, credit availability and the market trends which all are
interconnected and often depend on the general financial health of the given
market since when the economy is booming, people are buying, there is highskilled personnel available and there are favorable credit terms while in an
economic downturn, there is usually high unemployment of low-skilled personnel
and lower purchasing capacity on the side of the buyer so slower business growth
or even a decrease.
In Bulgaria, there are a few important economic factors. On one hand, Bulgaria is
a good place to for outsourcing since it has been a member of the European
Union since 2007 and offers a way to enter the European market. Bulgaria has
the lowest tax levels compared to other EU countries and provides favorable
investment conditions. The average effective tax rates (EATR) are the lowest in
the EU (8.8%) compared to considerably higher the EATR (26.3%) in EU15 and in
the Member States referred to as the EU+12 (17.4%). Bulgaria also has a stable
(fixed) exchange rate to the Euro which minimizes the risk of currency exchange
rates but still Bulgaria is not a member of the Euro Area. In addition, Bulgaria has
the lowest labor cost in the EU of 3.8 Euro per hour (Eurostat, 2014). On one hand
the relevantly cheap labor is attractive for the investors. On the other hand, the
low level of salaries is one of the factors stimulating the brain drain form the
country.
Some of the negative economic factors that can affect the apparel industry in
Bulgaria is Bulgarias low nominal GDP - around 52 billion Euro for 2014. The low
GDP and the low wages affect the purchasing power of Bulgarians and there is a
higher demand for cheaper goods. Furthermore, the disparities across the
municipalities affect the demand. Despite the recent reforms enacted to improve
the business start-up conditions and progress in the area of paying taxes,
Bulgaria's world rankings still lag behind the best performers in the EU and world

comparisons in Doing Business. In the WB Doing Business Report the country

ranking worsened (from 44 in 2010 to 51 in 2011) (The World Bank, 2011).
WHAT SOCIAL FACTORS INFLUENCE THE INDUSTRY?
Socially, there are also many factors that can affect the apparel industry. These
can be education level, general attitudes towards work, imported good, leisure,
age of the population, lifestyle choices, and immigration levels. Education level
can really affect the development of an apparel brand in a certain country. If
there are no high-skilled people there would be no possibility for opening an
office there and outsourcing some of the companys services. Furthermore, the
social attitudes towards work or imported good or leisure time can also affect the
product the company offers or the style of work it practices. For example, certain
countries might have an understanding that they should buy only local products
and thus not buy the companys imported products. Or maybe the lifestyle and
work ethic are very different from those adopted in the companys headquarters
which is something of course that could pose a possible problem. Culture is also
essential, for example, the clothing manufacturer needs to create styles that
appeal to those of different cultures, especially if those cultural groups represent
large enough segments of its market. Also, an aging population may pose a
problem for both the designers and the company. The lack of young skillful labor
might be a problem as well as the different demands for clothing of the raging
population. There might be an increase the
demand for larger jeans and pants sizes, such as
In Bulgaria, a major problem is
relaxed or loser-fitting styles. Similarly, obesity
aging and decreasing
levels in developed countries so designers need to
population. The demographic
design larger models and develop special sections
projections for Bulgaria show
in their stores.
that the population will
In Bulgaria, a major problem is aging and
decrease from 7.4 million
decreasing population. The demographic
projected for 2015 to 5.9 million
projections for Bulgaria show that the population
projected in 2050
will decrease from 7.4 million projected for 2015 to
5.9 million projected in 2050 (Eurostat, 2011). The
decreasing and agingpopulation will have a negative impact as it will decrease
the market size for the apparel industry and there will be less young high-skilled
specialists who can work for companies of this industry or purchase their
products. Brain drain can also be considered a major barrier to the Bulgarian
market. Bulgaria ranks 127 out of 142 countries worldwide. (World Economic
Forum, 2011). This again decreases the high-skilled population and makes
Bulgaria a not so attractive destination for investment. Finally urbanization is a
major trend in Bulgaria. Around one-third of the population lives in the seven
biggest cities. Official data claims 1.3 mm people (17.5% of population) live in the
capital city of Sofia but many people do not change their address registration
when they come to live in the city. In the last 10 years the number of people
officially living in Sofia has increased by 10.3%.Urbanization is explained by the
considerable difference in living standards and working conditions between urban
and rural areas. For an apparel business this could have two sides - the country
side could be used for building factories and using the low wages and the high
unemployment to gain a competitive advantage, while the cities would provide
with the market since the cities have the people with the purchasing power.

WHAT TECHNOLOGICAL FACTORS INFLUENCE THE INDUSTRY?

The technological factors that affect the apparel industry are the basic
infrastructure level, the rate of technological change, internet access and
infrastructure, investment in research and development. The basic infrastructure
will affect the transportation costs - the better the infrastructure the faster the
delivery, the better the service. A good infrastructure could also mean access to
reliable internet that is much needed to any retail industry since the apparel
industry needs to constantly report on sales and products that are low in
inventory and need to be produced again, which all happens through the internet.
Furthermore, the level of technological change strongly affects the apparel
industry since this is a fast moving goods industry. This means that if a
competitor has a stronger technological advantage - maybe better CRM software,
it can really gain a competitive advantage fast.
When looking at Bulgaria, the fast-growing IT sector in Bulgaria could be a great
place for apparel industries to seek new software for optimizing their
transactions. As Bulgaria is still in the beginning of developing as an IT hub, the
services are still cheaper and can help companies gain a competitive advantage.
Also, Bulgaria is considered to have the third highest speed of Internet
1,611KBps(Pando Networks, 2011) which again gives a competitive advantage
and can be a plus for any apparel company that might decide to move some of
its operation in Bulgaria. Even though Bulgaria offers great conditions for using
its IT sector and fast internet, only 14.4% of regular internet users aged 16 74
have made online purchases in 2011 which means the e-market in Bulgaria is still
underdeveloped. Also investment in research and development (R&D) in Bulgaria
is among the lowest in the EU at 0.53% of GDP in 2009, i.e. around 4 times less
than the EU average. The very low level of private R&D investment in the
economy (0.16% of GDP) is particularly worrying and can be attributed to the
prevalence of low technology sectors in the economy. A substantial increase in
R&D spending will be instrumental for raising economic competitiveness and the
government has set a national target of 1.5% of GDP for 2020. However, a 4G
network is soon to be released in Bulgaria which makes a country a good place
for investment especially for fast-moving industries like the apparel.
WHAT ENVIRONMENTAL FACTORS INFLUENCE THE INDUSTRY
Some of the more important environmental factors for the apparel industry are
the weather and climate change, environmental regulations, recycling, renewable
energy and support for it. The weather and climate change are especially
important for the apparel industry since unfavorable weather conditions could
decrease the harvest of cotton and the global distribution of cotton. Raw
materials and their availability is also important for the clothes producers.
Environmental regulations, especially in developed countries can play a bad role
and make production costlier and slower whereas developing countries and the
lack of regulations can seriously damage the environment even though it would
provide cheaper and faster production. Furthermore, support or opposition to
green energy and recycling can be a game changer for apparel companies. Some
countries, like the EU members demand and support the use of renewable energy
and recycled materials thus investing in such practices in the European market
would be essential. On the other hand, investing in renewable energy in countries
where green and eco policies are not a topic of importance, might put prices up
and affect sales and profits. Bulgaria, as part of the EU has strict green and
recycling policies so an apparel industry looking to operate in Bulgaria will have

to calculate the cost of producing under EU energy efficiency and green

legislation.
CONCLUSION:
In conclusion, the key drivers for change in the coming years would be
technology. The better the CRM system or inventory tracking, the better the
supply will be. The more an apparel industry knows about its clients through its
CRM, the better consumer experience it will be able to bring. Technology may be
one of the most important factors since economic, political, and environmental
factors would affect every apparel retailer regardless when the technology is the
only element that can be fully controlled by the companies and it will become a
major game-changer.

FIVE FORCES FRAMEWORK

WHAT DOES THE BARGAINING POWER OF SUPPLIERS IN THE INDUSTRY
LOOK LIKE?
Large number of substitute inputs; When there is a large number of
substitute inputs, suppliers have less bargaining leverage over producers.
This is due to competition among substitutes. This is an easy qualitative
factor to overcome, so the investment will not have to spend much time
trying to overcome this issue.
High competition among suppliers; This is positive for the clothing
industry, because it reduces the prices of products; The high competition
among suppliers has a positive impact for companies.
Diverse distribution channel-The more diverse distribution channels
become the less bargaining power a single distributor will have. This
affects the industry positively
Low cost of switching suppliers the easier it is to switch suppliers, the less
bargaining power they have.
Volume is critical to suppliers-When suppliers are reliant on high volumes,
they have less bargaining power, because a producer can threaten to cut
volumes and hurt the suppliers profits.
High supplier power when the product is unique;
WHAT DOES THE THREAT OF NEW ENTRANTS WITHIN THE INDUSTRY
LOOK LIKE?
Strong brand names are important-If strong brands are critical to compete,
then new competitors will have to improve their brand value in order to
effectively compete.
Customers are loyal to existing brands-It takes time and money to build a
brand. When companies need to spend resources building a brand, they
have fewer resources to compete in the marketplace.
Industry requires economies of scale-Economies of scale help producers to
lower their cost by producing the next unit of output at lower costs. When
new competitors enter the market, they will have a higher cost of
production, because they have smaller economies of scale.
One trend that started over a decade ago has been a decreasing number
of independent retailers. Walk through any mall and you'll notice that a
majority of them are chain stores. While the barriers to start up a store are

not impossible to overcome, the ability to establish favorable supply

contracts, leases and be competitive is becoming virtually impossible.
Their vertical structure and centralized buying gives chain stores a
competitive advantage over independent retailers.
The Clothing industry has huge capital requirements for plant &
machineries, land, raw material and advertisement endorsing and startup
losses.
Government policies are friendly for the industry
Conclusion: Relatively easy entry if your finances are good.
WHAT DOES THE BARGAINING POWER OF CUSTOMERS IN THE INDUSTRY
LOOK LIKE?
The product is important to the customers -When customers cherish
particular products they end up paying more for that one product.
Large number of customers-When there are large numbers of customers,
no one customer tends to have bargaining leverage, which helps the
industry.
WHAT DOES THE BARGAINING THREAT OF SUBSTITUTES WITHIN THE
INDUSTRY LOOK LIKE?
The tendency in retail is not to specialize in one good or service, but to
deal in a wide range of products and services. This means that what one
store offers you will likely find at another store. Retailers offering products
that are unique have a distinct or absolute advantage over their
competitors.
There is not really a substitute for clothes, so rivalry is intense. However,
there is a substitute to retail chains and its e-commerce. Many companies
have their own websites which they use for selling their products.

WHAT DOES THE COMPETITIVE RIVALRY WITHIN THE INDUSTRY LOOK

LIKE?
Direct competition. High. It is the main factor in the industry. In the modern
market it is really hard to attract new customers. Advertizing costs a lot
and furthermore, it is hard to create really attractive advertizing, to create
something really new. There are a lot of brands existing in the market.
They try to differentiate themselves in order to find their niche and
decrease competition, but nonetheless in every niche there are 3-5 direct
competitors of different size, but in some locations there are only 1-2 firms
and so these locations are quite attractive to the new entrants.
Competition primarily based on the customer image that firm created and
quality, price is the second thing (I mean +-15% of the price, of course
difference in several times makes sense). E-commerce also forces
competition because it seriously increases availability of the product in any
location.1
Fast industry growth rate (Clothing Industry)-When industries are growing
revenue quickly, they are less likely to compete, because the total industry

1http://improject2012.blogspot.com/2012/03/porters-five-forcesanalysis.html

size is also growing. The only way to grow in slow growth industries is to
steal market-share from competitors.
Exit barriers are low (Clothing Industry)-When exit barriers are low, weak
firms are more likely to leave the market, which will increase the profits for
the remaining firms
Large industry size (Clothing Industry)-Large industries allow multiple firms
and produces to prosper without having to steal market share from each
other.
Retailers always face stiff competition. The slow market growth for the
retail market means that firms must fight each other for market share.
More recently, they have tried to reduce the cutthroat pricing competition
by offering frequent flier points, memberships and other special services to
try and gain the customer's loyalty. 2
TOP INDUSTRY PLAYERS
COUNTRIES
Textile production is more capital intensive than clothing manufacturing and
therefore tends to have higher exit barriers and longer establishment lead
times.The cost structure of the industry and the capital intensity of the
manufacturing approach means that minimum orders are relatively large.
Manufacturers have limited ability to swiftly adjust production to consumer
tastes. The capital intensity of textile manufacturing has risen significantly over
the past 20 years, as has firm concentration. However capital intensity is still
generally much less than that of manufacturing as a whole. For clothing, China is
the biggest exporter, followed by the European Union (including intra-EU trade)
with a 35% share of world garments exports. Overall, Asia accounted for 57% of
world clothing exports in 2010. The major importers of clothing are the EU and
the US, with Japan trailing in third place. Over the past two decades or so, China
has gained a dominant position in textile and apparel manufacturing at the
expense of manufacturers in more developed countries those based in nations
such as U.S. and Canada in particular have suffered a long period of decline. To
consumers in Europe and North America however, the dominance of China as an
exporter of low cost but competitive quality goods as meant lower ination, lower
costs of living and higher living standards. Long the manufacturing base for the
developed world, Chinese businesses are now being squeezed from many angles.
Costs, particularly wages, are rising quickly while the appreciation of the Yuan
has reduced protability. Though shipping costs are well their highs, factor in the
impact of rising oil prices on freight costs, and China appears to be fast losing its
competitive advantage.

COMPANIES
H&M - Hennes&Mauritz AB (H&M) is a Swedish multinational retailclothing company, known for its fast-fashion clothing for men, women,
teenagers and children. H&M exists in 55 countries with 3,500 stores
and as of 2013 employed around 116,000 people. The branding
consultancy Interbrand ranked the company as the twenty-first most-

2http://www.investopedia.com/features/industryhandbook/retail.asp

valuable global brand in 2009 and 2010,[63] making it the highestranked retailer in the survey. Its worth is estimated at $1216 billion.
The full company name Hennes&Mauritz was rebranded to H&M to
simplify worldwide perception of the brand.
The company offers different concepts for women, men, teenagers and
children and includes everything from modern basics to high fashion.
The collections are supplemented by matching accessories, nightwear,
underwear and cosmetics. However H&M does not have factories of its
own but has a multitude of designers and buyers and works with
around 700 independent suppliers to produce clothing collections for
almost everyone, all at affordable prices. H&M lives by its business
concept, fashion and quality at the best price.
Although global in reach, H&M also recognizes the power of local.
Whereas other firms provide a ubiquitous retail experience with the
same product range in San Francisco, Paris and Tokyo, H&M thrives on
tailoring the ever-changing product mix to local tastes and buying
preferences. This is attributed to the companys fast feedback from
each store into a central IT and logistics operation that pushes the right
products out from its Hamburg distribution hub. In a world where
product innovation is the apparent differentiator, H&M also gains from
expertise in process innovation.
H&M uses various tactics like supplier collaboration, workflow
optimization, real-time feedback mechanisms to achieve stunning
business results. H&M also has a world-class IT infrastructure, which is
key to its success. Each store is connected with corporate logistics and
procurement systems and the central H&M warehouse. The IT systems
also reach as far as the design and product development teams, so
executives have visibility into the entire process, from product design to
sales. This leads to more effective management across all channels. 3
Zara - Zara is a Spanish clothing and accessories retailer based in
Arteixo, Galicia, and founded in 1975 by Amancio Ortega and
RosalaMera. Zara is a vertically integrated retailer. Unlike similar
apparel retailers, Zara controls most of the steps on the supply-chain,
designing, manufacturing, and distributing its products. There are over
2000 Zara stores located across 88 countries. Some Zara stores
operate as Lefties stores instead of Zara, a brand for low-cost fashion.
Information and communications technology is at the heart of Zara's
business. Four critical information related areas that give Zara its speed
include:
Collecting information on consumer needs: trend into information
flows daily, and is fed into a database at head office. Designers check
the database for these dispatches as well as daily sales numbers, using
the information to create new lines and modify existing ones thus,
designers have access to real-time information when deciding with the
commercial team on the fabric, cut, and price points of a new garment.
Standardization of product information different or incomplete
specifications and varying product information availability typically add

3http://www.forbes.com/sites/gregpetro/2012/11/05/the-future-of-fashion-retailing-thehm-approach-part-3-of-3/http://www.forbes.com/companies/hm/

several weeks to a typical retailer's product design and approval

process, but Zara warehouses the product information with common
definitions, allowing it to quickly and accurately prepare designs, with
clear cut manufacturing instructions.
Product information and inventory management being able to
manage thousands of fabric and trim specifications, design
specifications as well as their physical inventory, gives Zara's team the
capability to design a garment with available stocks, rather than having
to order and wait for the material to come in.
Calvin Klein - The company is headquartered in Midtown Manhattan,
New York City and is currently owned by Phillips-Van Heusen. The most
visible brand names in the Calvin Klein portfolio include: Calvin Klein
Collection (black label, upscale top-end designer line) Calvin Klein,
Calvin Klein Sport, Calvin Klein Jeans, , Calvin Klein Underwear,
One of the well implemented systems which CK is using is the Systech
s successfully developed, designed, implemented and supported an
end-to-end Business Intelligence Solution for division of Warnaco. The
data warehouse was necessary for CK to acquire more visibility into the
complete value chain leading to an increase in overall efficiency.The
entire solution involved the following phases: understanding user
requirements, designing the data warehouse, mapping data warehouse
to OLTP, development and implementation of the load process,
configuring front-end tools to the data warehouse, testing, training& go
live and on-going support.Calvin Klein is now able to make strategic as
well as operational decisions based on the information provided by the
data warehouse implemented by Systech.
Benetton Benetton is the Europes largest clothing manufacturer and
the worlds largest consumer of wool in the garment sector. Today, the
group is present in 120 countries, having 9 factories in different parts of
the world and over 5,000 sales outlets generating a total turnover of
2.0 billion Euros, net of retail sales. It is a company with a strong Italian
character whose style, design expertise and passionare clearly seen in
the United Colors of Benetton and the more fashion-oriented Sisley
brands, in The Hip Site, the brand for teenagers, and in sportswear
brands Playlife and Killer Loop. The development of Benettons
commercial organization has been supported by a major program of
investment in megastores, some of which are run directly by the group,
per its plan to control distribution, others by long-standing partners.
These stores are characterized by their generous dimensions, their
prestigious locations in historic and commercial centres and by the high
quality of customer services they offer. As in the case of the commercial
network, a constant commitment to innovation, acrucial factor for
development, has always characterized the groups business
organization.
Benetton operates in a highly competitive, mature industry
characterized by a fickle consumer base demanding an increasing
variety of products. The market is volatile and risky. Competitive
activity can render one's product fines unfashionable overnight. Product
life cycles are planned to be short to maintain consumer interest. The
successful marketer needs the vision and the skills to manage diversity.
Benetton has learned how to rapidly and constantly adapt to changing

consumer tastes while gaining efficiency through economies of scale. It

has done this by clearly understanding the role of logistics in supporting
the core business strategy. The linchpin of this support is information
systems technology. Information technology links the market place with
the manufacturing process. Electronic Data Interchange (EDI) allows
Benetton's agents in each country to regularly transmit orders to
Benetton's head office. This knowledge of the market updated every 24
hours allows Benetton to carefully track and react to demand by
manufacturing only those garment styles, colors and sizes required.
Communications technology has allowed Benetton to "eliminate the
filters between the customer and production" and to link the customer
directly to the factory. But the rapid transfer of information by and of
itself is not the key factor for success. The key factor is how to use the
information technology to integrate the supply chain and maximize the
value output.45
INDUSTRY INFORMATION DISSEMINATION
HOW DOES THE INDUSTRY GET INFORMATION OUT TO MEMBERS &
PUBLIC
The industry uses various channels to present information to members and the
public. Fashion shows or fashion weeks (Milan, Tokyo, Parisetc) are one great way
to do it but unfortunately this reaches a smaller group of people. This is why the
industry has started using mostly the internet, social media and bloggers to
learn new information or to share new information. Especially helpful are some
website listed bellow that provide both free and paid-for research of the market
and share news on newest technologies and developments on the industry. Not

only commercial website, but associations of different kinds are usually those
that facilitate the most R&D for the industry as well as lobby for the industry in
the national governments.

ASSOCIATIONS:
INTERNATIONAL FABRICS ASSOCIATIONS (IFAI)
4DADES DEL PROJECTETtoldelProjecte:BenettonandZarainformationsystems: a
comparativeanalysis, FerranSabateCarriga

5http://www.benettongroup.com/group/profile/company-vision

IFAI is a trade association comprised of member companies representing the

global specialty fabrics and advanced textiles marketplace. We invest more than
$8 million each year to advance the fabrics industry and support member
companies. IFAI Divisions offer seminars, workshops, educational programs,
conferences, publications, marketing tools, standards development and more.
The Divisions work with members to provide sourcing solutions and referrals
throughout the sales and production cycle. IFAIs award-winning magazines and
websites deliver timely industry information to help you stay informed about your
marketplace.
The American Apparel and Footwear Association (AAFA) was established August
2000 through a merger of the American Apparel Manufacturers Association
(AAMA), Footwear Industry America (FIA) and the Fashion Association (TFA). The
national trade associations combined membership currently accounts for more
than $225 billion in annual U.S sales.
THE AMERICAN APPAREL PRODUCERSNETWORK (AAPN) is an
international group of companies that produces for the American
market. Since 1981, a private sector, non-profit, members-only, business network
of over 600 company owners and senior executives organized industrially
worldwide to produce apparel for the US market from North America, Mexico,
Caribbean, Central America, South America, Europe, North Africa, South Asia, and
Southeast Asia.
Figure 1 AAFA

THE ASSOCIATION OF THE AUSTRIAN CLOTHING INDUSTRY is an independent

organization within the Austrian Economic Chamber. The association acts on
behalf of the interests of its member in contact with national and EU authorities,
within the Austrian Economic Chamber, versus unions, up-and down-stream parts
of the textile chain and other national and international professional associations.
Providing an extensive range of services the Association of the Austrian Clothing
Industry strengthens the competitiveness of its member companies. Members of
the association of the
Austrian Clothing
Industry are also
related industries like
the bedding industry,
industrial laundries
and dry cleaners,
industrial
manufacturers of
buttons and flags as
well as automotive
textile companies.
THE ASSOCIATION
OF TEXTILE
CLOTHING AND
LEATHER INDUSTRY (ATOK) is the foremost enterprise association in the Czech
Republics textile, apparel and leather sector the mouthpiece of Czech producers
towards the countrys public and government institutions and organizations
abroad and important platform for dialogue and formulation of social attitudes

and needs of Czech textile manufacturers.

THE APPAREL BRITISH COLUMBIA ASSOCIATION is a self-sustaining, memberdriven association with the mandate to enhance and strengthen the viability of
the British Columbia apparel industry in a competitive and global environment
through advocacy, marketing, education, mentorship, liaison and the setting of
ethical standards.
THE CLOTHING MANUFACTURERS ASSOCIATION OF INDIA (CMAI) is the oldest
and one of the most representative associations of the Apparel Industry in India.
With a Membership of over 20 000 manufacturers and retailers, the Association
has branches in Pune, Bangalore and New Delhi. Established over 40 years ago,
the Clothing Manufacturers Association of India has been acting as catalyst of
change, collaborating with the Government in matters of policies that impact the
future of the Apparel Industry. It has been representing the industry on the
matters of Sales Tax, Octroi, Entry Tax, VAR etc. for the Domestic Sector and on
the matters relating to Export Policy, procedures etc. for the Export Sector. The
CMAI also acts as a Guide for its Members on meeting various Government
Regulations.
THE CONFEDERATION OF NATIONAL ASSOCIATIONS OF TANNERS AND
DRESSERS OF THE EUROPEAN COMMUNITY (COTANCE) is the representative
body of the European Leather Industry. It is a non-profit organization established
in order to promote the interests of the European tanning industry at
international level. Apart from representing European tanners and dressers, it
also has the mission of promoting European leather both in the European and
international markets. COTANCE is the only qualified interlocutor representing the
views of the European Tanning Industry. It has gained a wide recognition both
internally and externally as the reference body for the European leather industry.
THE BULGARIAN ASSOCIATION OF APPAREL AND TEXTILE PRODUCERS AND
EXPORTERS (BAATPE) is a business to business web site for the apparel industry
of Bulgaria. It is associated with Italian website ItalianModa.com which promotes
Bulgarian apparel and Textile Exports.

EUROPEAN TECHNOLOGY PLATFORM FOR THE FUTURE OF TEXTILES AND

CLOTHING
The European Technology Platform for the Future of Textiles and Clothing pursues
the following key objectives in order to help Europe stay competitive on the world
clothing market. It aims to create an organization of an effective European-wide
expert network involving industry, research organizations, public authorities,
financial institutions and other stakeholders to join forces and coordinate their
efforts in the field of research, development and innovation to the benefit of the
European Textile and Clothing Industry. It aims to develop structures and

measures to improve the overall research, development and innovation

framework conditions of this industrial sector focusing specifically but not
exclusively on the removal of financial, educational, legal, and regulatory
obstacles.The European Technology Platform for the Future of Textiles and
Clothing aims to allocate of its resources to the most promising fields of R&D and
innovation action to ensure long-term industry competitiveness to the benefit of
economic growth, jobs and sustainable development in Europe.

BUSINESS OF FASHION
The Business of Fashion has gained a global following as an essential daily
resource for fashion creatives, executives and entrepreneurs in over 200
countries. It is frequently described as indispensable, required reading and
an addiction. Founded in 2007 by Imran Amed, a fashion business advisor,
writer and digital entrepreneur, The Business of Fashion began as a project of
passion, aiming to fill the void for an informed, analytical and opinionated point
of view on the fashion business. Today, the website has grown to leverage a
network of savvy writers and fashion insiders in style capitals around the world,
delivering fashion business intelligence on emerging designers, disruptive
technologies and global brands that are making their mark on the industry at a
time of unprecedented change.

JUST-IN-STYLE
Just-style.com is the online news, insight and research portal for the apparel and
textile industry. Since 1999, just-style has provided independent, authoritative
and forward-thinking textile industry information. The media identifies and
evaluates the clothing industry's major milestones and trends, and is recognized
by the apparel sector as
the essential business tool
Figure 2 Business of Fashion
for clothing professionals
worldwide. Apparel and
textile executives can pay a membership fee and receive exclusive apparel and
textile content. Also, the website offers paid research reports about the apparel
and textile industry. Just-in-style also offers extensive information on the new
technologies that emerge
in the clothing industry
and have specific rubrics
dedicated to the largest
clothing giants like H&M,
Nike, GAP, Zara, etc.
Figure 3 Just-in-Style

WOMEN WEAR DAILY

For more than a 100 years,
Womens Wear Daily
(WWD), a property of
Fairchild Fashion Media,
has been the daily media
of record for senior
executives in the global
womens and mens
fashion, retail and beauty
communities and a
consumer media that
covers the market. Often
referred to as the fashion
bible, WWD provides a
balance of timely, credible
business news and key
fashion trends to a
dedicated readership of retailers, designers,
manufacturers, marketers, financiers, Wall Street
Figure 4 WWD
analysts, international moguls, media executives, ad
agencies, trend-makers and socialites. As an increasingly
complex marketplace heightens the need for information and competitive
intelligence, WWD delivers with frequency, integrity, independence, spirited
coverage and a long tradition that demands staffers get the story and get it first.

PAST INDUSTRY TECHNOLOGY/IS/MIS

WHAT WAS TRENDY IN 2013?
MOBILE
Susan Reda, executive editor of STORES Media, writes, The year just concluding
will be remembered as the one in which mobile became embedded into the lives
of consumers
and thus into the
hearts of retail
businesses large
and small.
Mobile developers
agree. According to
a survey by
Appcelerator and
IDC , 93 percent of
mobile developers
anticipate that it is
likely to very
likely that most
retail companies

will have enabled mobile commerce in 2013 as consumers increasingly reach for
their phones and tablets even while shopping in a physical store. Consumer
behavior continues to underscore this transformation. Appcelerator found that
nearly two-thirds of developers also believe that consumers will make more
purchases via their mobile phone than their credit card in 2013.
INTEGRATION
Founder of the direct-to-consumer shoe merchant Sole Society Brett Markinson
tells FORBES the emerging direct-to-consumer E-commerce model recently
being discussed as the Next Big Thing is only the beginning of the evolution
pushing haute couture into the digital age. Building and distributing a successful
brand in the Internet era is about addressing the new behaviors of an evolving
customer base by leveraging the changing landscape and its new dynamics, he
says.
Markinson believes the discussion has to shift from e-commerce vs. offline
commerce to integrated commerce. The consumer does not distinguish. They
want to buy cute, on-trend products at great values wherever they happen to be.
They want to engage with cool brands that understand their interests and
proclivities. The DNA of the web must be an intimate part of the fashion brands of
the future.
Those retailers who find a way to integrate will have a killer brand. Says
Markinson, One needs to be where the customer is, with both your messaging
and your product. If you havent already noticed, consumers today are both
online and offline, and sometimes bothonline while shopping offline. Online they
are sharing, friend validating, researching, learning and developing a point of
view. Offline there is touching, brand comparing and brand associating. All of this
drives the brand of the future. Finding the formula to leverage that online/offline
dynamic is critical.

MORE AND MORE SOCIAL

RichRelevance, a company that powers personalized e-commerce experiences
released some interesting findings about social medias role in retail. Namely,
traffic from Pinterest has doubled in the last year while Facebook saw its share
decline to just 90% (from 95% in 2011).
Rich Relevances chief marketing officer Diane Kegley tells FORBES, We believe
that social is going to have an increasing impact in 2013. We feel that the role of
social media is to generate awareness, not direct sales. While traffic referred from
social networks is low less than .5% according to our data it has grown 30%
year-over-year.
Kegley notes that retailers are getting smarter about how to use the social
channels to generate customer delight. She points out how Target recently
awarded gift cards to a number of customers who were tweeting about them over
the Thanksgiving holiday weekend. Social media is one element in [retailers]
arsenal of developing brand awareness across multiple channels. All of these
elements, including social media, shape or form the way that a consumer hears

about a brand or offering. This contributes not only to awareness, but actual
product decisions.6
CURRENT INDUSTRY TECHNOLOGY TRENDS
TRENDS
Todays media landscape is constantly changing: new cultural influences appear,
innovative technologies changes the way people behave and emerging platforms
make marketing richer and brand experience more inclusive. Here are some
current sightings on whats happening right now in how fashion brands and
retailers starts to embrace digital solutions.7
ARE YOU ON THE LIST?
The macro trend of recognizing loyal consumers and giving back is clear in
several fashion marketing activities.
Aside from offering quality in products, many brands also create impact to the
offerings. Instead of giving the VIP treatment to supermodels & celebrities, focus
are on the actual shoppers. If you treat your fans well, the rest will follow. There
are a clear trend in lots of brands that are offering exclusive access and limited
edition for fans only, thus making them strong ambassadors.
Example: YSL Devoted to Fans. Net-a-porter secret sale for Facebook fans only
GOODBYE SUPERMODELS
The macro trend of using consumers as influencers are also becoming clear in the
fashion industry as consumers are even making their way up on the runways. The
term Idolism will soon be obsolete in describing someones once fanatic
worship of hot shots celebrities. No longer she will be dominated nor intimidated,
she is now her own fashion stylist, designer, and journalist. Fashion brands have
to be aware to stay agile in their marketing strategies as trends is now under the
stewardship of consumers. With easy access to social media platforms, everyone
can be a model and fans have fans too.
Example: Choo247 shoes. Free People display consumers wearing items using
Instagram API
SHOP IN, SHOP OUT
As physical and digital retail space converge the shopping experience finds more
places. Now with the all-pervasive SCREEN CULTURE, everything from bus stops
to TV programs can be an outlet, as consumers armed with smartphones or

6http://www.forbes.com/sites/lydiadishman/2012/12/17/three-importantretail-trends-for-2013/

7http://morgenland.se/current-trends-within-fashion-retail/

tablets embrace innovative new applications and technologies to browse your

collection and shop from the subway and all the way home. Consumers browse,
shop and share anywhere with everything from interactive displays, sharable
mirrors, QR enhanced items helping them to a richer brand experience.
Example: Stella Mccartney/Selfridges interactive storefront with cameras.
WHY IS THIS HAPPENING?
Brands need to understand the accelerating shift of power from brands to
consumers. They have to keep up with the fast-changing technology options and
constantly learn to cope with consumers fickle-minds changing-hearts.
Shoppers expect better service, and enjoy all-rounding shopping experience in
both physical and digital space. They are utilizing technology that many fashion
brands are slow to adapt to.
Digital retail has reached critical cost that interactive displays and mobile
connected stores are now able to actualize at much lower cost. Mobile consumer
screen displays like iPad has also bridged the threshold between consumers &
businesses.
As big and strong brands develop their online offerings, integration becomes
intuitive and easier to access. Consumers are able to explore and select their
shopping preferences, and decide how and where they want to put their money
at.
FUTURE INDUSTRY TECHNOLOGY TRENDS AND FORECASTS
In the fashion industry, if you aren't moving forward, chances are you are falling
behind. The world of fashion has the capacity to change faster than ever in the
digital era, and those with an eye on what's happening right now and a feel for
what's coming next are in a powerful position to gain a competitive advantage.
Make no mistake, we still put our pants on one leg at a time. However, everything
else about those pants -- from how they were produced and marketed, to the way
we shop and purchase them -- is changing as a result of modern times.
While it's impossible to say exactly where technology will take fashion in the
coming months and years, we do know it pays for apparel manufacturers and
retailers to remain in touch with what's cutting edge. If you are looking for ways
your business might be impacted by technology, consider these six prominent
tech trends in the fashion industry.
TOP TRENDS IN THE FASHION INDUSTRY
SMARTPHONE COMMERCE
The numbers are in, and by all accounts they confirm the obvious: consumers are
increasingly using their smartphones (perhaps twice as much as last year) to
shop and purchase. According to Branding Brand CEO Chris Mason, "Smartphones
are redefining the way retailers are connecting with consumers, and it's clearly
being reflected in the bottom line."

From mobile-optimized shopping experiences complete with virtual showrooms,

real-time customer service and feedback, social media integration, and
personalized data-driven advertising, fashion retailers are rushing to develop a
mobile experience that meets the demands of todays shoppers.
WEARABLE TECHNOLOGY
Yes, Google Glass and the like have finally hit the market to marginal impact, but
wearable tech (still in its infancy) is breaking through in tangible ways that are
just beginning to resonate with popular culture. We're not just talking about
watches that serve as miniature extensions of computers and smartphones, but
of apparel people actually want to wear, such as the Misfit Shine, which marries
function with fashion as an elegant activity tracker that doubles as jewelry and
transmits data to your iPhone via Bluetooth connectivity.
And that's just the tip of the iceberg. Imagine clothing fitted with solar panels
that charge your mobile devices, smart fabrics that optimize wearer comfort by
adjusting color or texture based on environment, or apparel that purifies the air,
omits fragrances, or transforms appearance in reaction to mood or sound simply
for fashion's sake. It's all coming and more.
3D PRINTING
The future world of George and Jane Jetson is finally at hand, as 3D printing turns
things previously thought to be impossible into reality. We've already seen 3Dprinted couture looks coming down the runway from the likes of Iris Van Herpen
and many others, and this disruptive technology is
opening new doors to designers seeking innovation in both
Smartphone
materials and processes for designing and producing
commerce,
clothing.
What's next? Perhaps see it, buy it, print it shopping, in
which a consumer spots a must-have article of clothing,
completes the checkout transaction in a matter of
seconds, and sits back to watch as their personal 3D
printer whips up a custom fitted version right in the
comfort of his own home.
FASHION SHOWS AS TECH EVENTS

Wearable
technology, 3D
printing, Online
designing are
among the top
trends to follow in
the clothing
industry for the
future.

The runway has always been about creating a spectacle

and pushing the cutting edge, but today more than ever
before, designers and production companies are utilizing
technology to elevate events to new heights. From models coming down the
runways appearing submerged in pools of water thanks to holographic
projections, to viewing the action remotely in 360-degree panorama, fashion
shows are as much a technological extravaganza as they are a forum to unveil
the latest creations out of New York, London, Paris, and Milan.

That's not even mentioning what's going on behind the scenes and in the crowd.
Bloggers and retailers broadcast live from events, and guests plug into social
media to voice their impressions and influence purchasing decisions of buyers
and shoppers in real-time around the world.

DESIGNING FOR ONLINE

In an environment where you can't touch and feel, how do you best create
fashion that captures the fancy of consumers? One part of the equation is in the
way you present and market your brand, and the other has more to do with the
visual aspects of the product itself.
As a direct result of an ever-increasing amount of virtual browsing, visually
impactful prints and richly textured fabrics are coming to the forefront of
emerging fashion - and for good reason. 3D printing and software tools provide
tech-savvy designers the room to run wild with creativity when it comes to colors,
patterns, and daring new perspectives. Plus, retailers are also able to use
technology to collect data metrics and interact and observe shoppers on social
channels as a means of reading public sentiment and identifying emerging
trends. This allows them to make strategic adjustments for greater consumer
success.8
TECH IN THE PHYSICAL SPACE
From proximity marketing, to contactless checkout and everything in between, instore shopping is being revolutionized through innovations that are both creative
and functional. By adding technological elements and capabilities to the physical
location, retailers can cultivate a more satisfying experience that meets the
heightened expectations of modern shoppers.
Features such as virtual fitting rooms where you can "try on" fashions without
ever undressing, visual signage social media tickers that tally "likes" of individual
articles of clothing, and scannable QR codes that trigger detailed product
information and carefully crafted marketing displays on handheld devices are just
a few ways retailers are using tech to engage shoppers in brick and mortar
locations.
WHAT ELSE TO WATCH?

8http://apparel.edgl.com/news/top-6-tech-trends-in-the-fashionindustry94135

Figure 5 Apparel software trends 2015: What else to watch?

OMNICHANNEL RETAILING
As expected, retailers embracing multiple channels to serve customers will be
some of the most successful ones in 2015.Omnichannel retailing has begun to
pay off for a lot of companies. Consider Macys, which just started marketing its
mobile and online-to-offline services more aggressively after the success of its
initial omnichannel tests.
According toMedia Post, the retailer has found that click-and-collect not only
serves as a convenient option for customers, but it also increases spending.
Macys told the publication: We love this kind of sale, because [the customer has]
already made her decision, she knows where to go in the store, and when she
gets there, she almost always buys something else spending about 125% of
her intended order. In addition to click-and-collect, Macys will continue to invest
in omnichannel through more robust order fulfillment strategies (all Macys
locations can now ship directly to someones home) and better mobile
experiences (customers can now manage their points and offers via mobile.) 9

ORGANIZATIONAL CONSULTING RECOMMENDATION

TECHNOLOGY USED BY H&M
IT is a crucial tool along the entire value chain. Individual stores are connected
with the logistics and procurement departments and the central warehouse. From
central departments, it is possible to follow sales of individual items, thus feeding
an intelligent procuring system. The company relies on IT integration between
the central office and the production offices. Communication between

9http://www.just-style.com/management-briefing/what-else-towatch_id124815.aspx

departments takes place electronically, including design and product

development.10
Retailer H&M has an employee-scheduling system designed to improve its use of
staff resources and maximize time spent by staff on the shop floor. Employees
use smart cards that they swipe in the beginning and at the end of their shift.
This helps to reduce administration by recording shifts electronically and helps
improve sales by scheduling shifts to coincide with the busiest times in stores.
This system is linked to H&Ms electronic point of sale (Epos) applications, which
forecasts demand for products, because it deemed that historic sales information
would be adequate for planning shift patterns. The scheduling application is also
linked to H&M's human resources and payroll systems, which lets the retailer
control staff costs more accurately. The Workforce Management application
comes from the software supplier WorkPlace Systems and is hosted at a data
center in Stockholm. The WorkPlace application estimates how many employees
are needed throughout the week by tracking an individual store's sales. H&M has
integrated WorkPlace with its Epos systems, but the company said the process
had been made more complicated because they had to standardize its Epos
software across Europe.11

DESCRIPTION OF IT IN SCM
H&M can make a great success in the SCM and rapid QR (quick response) market
attributed to their ICT (Information and Communication Technologies) system. It
designs an information feedback mechanism, which is a closed-loop process from
popular forecast, design, production, products feedback and sales. It can make
different parts of process information become wholly transparent. For example,
all the H&M stores uses ICT system platform to know sales information and then
allocate products to each H&M stores, whereas purchasing and logistics
department know the sales and stock data for each goods, later on, it can be
replenished product in time (Jingxian, 2000).
H&M used ICT system to develop SCM such as for the design department to know
which style of product is popular according to the sales record; Logistics
Department gather data about stock information and then supply on sales
product; Purchasing Department can be planned to produce much hot sales
production in time according to sales record. ICT information system connects
each of H&M department and then make each department comminute
information many highly efficient and smoothly. All the information can be
transmitted by each branch store. These stores use Point-of-sale information
system to collect sales record after that return to H&M headquarters so that

10TheEuropeanE-business Market watch.

11http://www.computerweekly.com/feature/HM-targets-staff-productivity-gain-withEurope-wide-scheduling-toolTheFuture Of FashionRetailing -- The H&M Approach (Part 3 of

3)www.forbes.com

share information to each department (Ming and Lin, 2008). To summarize, H&M
make their production management, supply and retail integrate much closer
because of using ICT information system. 12

SWOT
A WEAKNESS AND AN OPPORTUNITY
Some of the major weaknesses that H&M is experiencing these days are the lack
of an e-commerce in the countries of operation. A successful execution in Chinese
e-commerce would be one of the most important initiatives and with time could
pay large dividends. China's total online sales are expected to rise to $356.1
billion in 2016 from $169.4 billion in 2014, according to research firm Forrester
Research. U.S. online retail sales are forecast to reach $327 billion from $226
billion over the same period. In contrast to H&M, U.S. retailer Gap Inc. announced
in 2014 that it would be boosting online sales efforts in China, after its initial ecommerce efforts gained steam. Other foreign retailers have launched through
Chinese e-commerce giant Alibaba. Alibaba runs online mall Tmall, which has
more than 2,000 foreign brands and controls 45% of online business-to-consumer
retail sales in China, according to Euromonitor International. This means that ecommerce is both a field of weakness and a field for an opportunity for H&M. If
H&M does not start to invest in e-commerce in the emerging markets it might
quickly be outrun by other competitors like GAP who have seen the opportunity. 13

A THREAT: ZARA
ZARA is one of the main competitors for H&M and Zaras intricate and welldeveloped technology use model can be considered a threat to H&M. As such it
can considered thread. ZARA stands apart from its competitors on that only 0.5%
of its total revenues are used on IT (Information Technology) and its IT
compromises just 0.5% of Zaras total workforce. But how a successful company
can run with only such a small IT force? Or better yet, how can Zara run so
smoothly in todays advanced technology? The answer to that is Hybrid Model
Information. Information from stores to headquarters relies on combined human
intelligence input and information technology, such as their PDA devices (Zaras
business model, 2011). Store managers input the requested order of whatthe
store needs and in return another group of commercials decide whether to
allocate the inventory on that particular store or send it to retails where theres a
greater movement of goods. Such decisions are based on calculations from an
application that tracks theoretical inventory of each SKU available. Inside the
factories, IT is used for the production of goods such as large computer-controlled

12Reportby UPPSALA UniversityforInformation Technology in Supply

ChainManagementatapparelindustry

13http://www.wsj.com/articles/SB10001424052702303779504579465820064974

910

cutting equipment that cuts fabric in pattern using the most of all the fabric
available. Distribution Centers (DC) use much of automation and computerization
as well. Orders that come into the DC are process by computers which locates
the products in the warehouse and supplies such orders. Applications used in the
DC were created by the IT department exclusively for the use of Zara.
Another threat for H&M and the apparel industry as a whole is that there has
been little technological change within the industry except regarding improved
logistics capabilities and communication technologies. Advancement in logistics
capabilities allows firms to better utilize inventories and reduce waste throughout
their global supply chains. The change is driven by improved communication
capabilities allowing greater and speedier diffusion of information within
organizations. Improvements and changes in communication technologies also
open different avenues through which to communicate with customers. The
continued popularity of blogging, hauling and other forms of social interaction
between customers or potential customers can act to attract customers or build
customer loyalty. It also offers more marketing channels through which
companies can communicate with consumers. While usage of traditional
marketing media, such as magazines remains strong, product placement and
direct customer interaction are becoming more prevalent.

A WEAKNESS: LACK OF SECURITY

Figure 6 H&M Website Warning

There are some problems which H&M admits they meet. There was a distribution
of fake gift cards through a fake Facebook and Instagram pages of the clothing
stores. This showed H&Ms low security and protection of data, which is definitely
a weakness that can turn into a potential threat. Also, another issue were the so
called phishing emails. They were generated to send messages from fake H&M
emails asking for detailed information of a customers credit card or home
address which also shows the low security of H&Ms data about clients and
distributors and is an area in which H&M should invest.

A STRENGTH: CONTROL OVER DEMAND

A strength that H&M has is the WorkPlace system integrated in stores. With it,
H&M has the ability to track the busiest times in stores and respond to those
times with more employees and a better customer experience. With this system
in place, H&M improves the customer experience and also removes the possibility
of disappointed customers that could not be taken care of because of busy times
and employees. Furthermore, H&M has a good item-tracking system and is quick
to respond to any influx of buyers. The company has ready inventories and has
learned to have new collections come out often in order to keep clothes fresh and
make clients feel that they is always something new in its stores.
Table 1 SWOT Analysis

Strengths
Frequent stacking of new collections
Workplace system
Item tracking
Opportunities
E-commerce
Logistics improvements

Weaknesses
No security of the system
E-commerce
Threats
ZARAs use of technology
E-commerce in developing countries

RECOMMENDATIONS AND BENCHMARKS

E-COMMERCE
One of the first and main recommendations for H&M would be expanding its ecommerce, especially in developing countries like China, India, Brazil, where the
purchasing power might not be that high but the population is large enough to
cover the costs of opening an online business. H&M needs to move fast in order
to stay on track since some of its major competitors like GAP have already
opened an online store in China.
SECURITY ISSUES
Another main recommendation for H&M would be securing their network in order
to avoid hacking and the use of clients personal data by hackers. A more secure
system will bring more trust in clients and for sure higher revenues in future. A
suggestion from us is that H&M creates personalized client cards with a unique ID
so that the brand can keep track of buying patterns of individuals in which H&M
store do they shop the most, what do they shop, etc. This can give H&M more
sophisticated data on what clothes to offer in which store and also gives an
opportunity to create a closer relationship with the individual client by sending
personalized birthday cards, sending a weekly newsletter or offering more
models to the client that would suite his/hers style and buying habits. From our
research we saw that companies like ZARA have very sophisticated and

intelligent ERPs systems which is something H&M lacks. In order to have better
supply, communication between stores and track of sales on specific markets
H&M can implement a better ERP solution.

ONLINE STORE
Finally an opportunity that we see in Bulgaria is developing an online H&M store.
Most of all an online H&M store can give away information about buyers habits.
By closely looking at the purchases across Bulgaria, H&M can target the next city
or town that it can open a store in. Generally, we suggest that H&M invests more
in e-commerce since this is the future of shopping and makes sure that it stays
on track with orders and stacking of products since its competitors have become
experts in finding the extremely precise information on supply and demand needs
and meeting these needs.

Refferences:
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http://www.just-style.com/hot-issues/apparel-software-trends-the-outlookfor-2015_id893.aspx
http://www.ifai.com/
http://www.textile-platform.eu/vision/
http://www.businessoffashion.com/about
Report: PEST Analysis of Bulgaria, Prepared by BICA (Balkans Investment
Consulting Agency) April, 2012
Report: BULGARIAN NATIONAL PESTLE AND SWOT ANALYSIS, Prepared by
Regional ICT Foresight exercise for SEE countries, November 23 2011
Report: The apparel industry and the economic crisis How is the crisis affecting
apparel production and garment workers?, Prepared by the Maquila Solidarity
Network, June 24 2009
http://improject2012.blogspot.com/2012/03/porters-five-forces-analysis.html
http://www.investopedia.com/features/industryhandbook/retail.asp
http://www.forbes.com/sites/gregpetro/2012/11/05/the-future-of-fashion-retailingthe-hm-approach-part-3-of-3/
http://www.forbes.com/companies/hm/
http://www.benettongroup.com/group/profile/company-vision
http://www.forbes.com/sites/lydiadishman/2012/12/17/three-important-retailtrends-for-2013/
http://morgenland.se/current-trends-within-fashion-retail/
http://apparel.edgl.com/news/top-6-tech-trends-in-the-fashion-industry94135
http://www.just-style.com/management-briefing/what-else-towatch_id124815.aspx
http://www.computerweekly.com/feature/HM-targets-staff-productivity-gain-withEurope-wide-scheduling-tool
http://www.wsj.com/articles/SB1000142405270230377950457946582006497491
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