H&M on the Japanese market (2007)

Résumé du document

Hennes & Mauritz AB, better known as H&M, one of the inexpensive clothing fashion brand's leaders, established an expansion strategy, above all towards the East. They opened a lot of new stores in the best location, on shopping streets and in shopping centers in the United States (Beverly Center in Los Angeles) and in Canada (Center Rockland in Montreal). The Swedish firm also decided to develop itself in the Middle East, and in Asia. After China with Hong Kong and Shanghai, a contract has been signed to open its first store in Japan, sometime during the year 2008. The Japanese are known for being very fashionable people, but further information is needed to conclude if H&M's business is likely to be successful in the Japanese market. This report will focus on a macro environmental analysis and will be a more market-specific analysis, mainly through the SLEPT and 12C frameworks, before going onto a further assessment of the main challenges for the company in this market.

Extraits

[...] Some details differ according to the markets as well, such as the beginning and the duration of the season. Logistic issues (delivery dates, volumes) therefore have to be calculated contingent on these factors. The weather is defined by the company as an influencing factor as well, as the collection is designed on the basis of normal weather conditions, but Tokyo is in an area of cool temperate, even if a bit of tropical influence (CIA The world factbook). The collection should thus be adapted to Japanese weather. [...]

[...] The time is now to expansion for the Swedish brand, notably to the East, with the critical step of the Japanese market. H&M owns a lot of key factors of success, but the main stake will be its adaptation to Japanese culture, and minimising the gap with its already existing and integrated competitors. H&M is able to find its place on this market, but has to adopt an adapted strategy in every dimension, for the market entry for example. It has furthermore a crucial advantage through its collaboration with Madonna, which should permit to the Swedish brand to implant successfully in this new market. [...]

[...] As H&M is expanding in on-line shopping in some countries, like Germany in 2007 Annual Report 2006), it could as well study the opportunity of bringing on-line selling in Japan, which would be likely to be a success. Legal environment The Japanese judicial system is mostly inspired by European countries' civil law, such as France and Germany. The government, called National Diet, divided between the House of Councillors (242 members) and the House of Representatives (480 members), has the legislation power. Japan is a member of the United Nations, the G8, the APEC, and the ASEAN “Plus Three”. (Wikipedia) Political environment : Japan is a stable country. [...]

[...] H&M's best implanted competitor on the Japanese market (with 703 stores (Wikipedia)) is Uniqlo, the leader in term of sales and profit in the clothing retail business. The domestic company has a great knowledge of Japanese environment and culture. The Japanese brand just launched a new innovative store concept with customized shirts, in Harajuku, one of Tokyo's most important shopping district, where the opening of H&M will occur in 2008!!! Consumption : H&M is late in the Japanese market, considering that one of its worldwide's most serious competitor, the Spanish group Inditex, has a strong presence there since ten years, with now 28 Zara stores. [...]

[...] That is one of the reasons why Japanese consumers have an important purchasing power. The Japanese trade balance is positive, with $590,3 billion of exports and $524,1 billion of imports. An important characteristic of the the market is the guarantee of lifetime employment for a large part of the labour force. The average income per household was $ in 2000. Moreover, the Gini index, informing on the distribution of family income, rather tends to average equality, with an index of 38,1 whereas the lowest worldwide is situated at 25 and the highest around 50. [...]