In late 2012, I wrote a three-part series on Uniqlo, Zara and H&M. All three fashion leaders were already well-established internationally and had initiated strategies for penetrating the U.S. retail market. In my 2015 update, I have been assessing their progress and what it means for investors.
Having already taken a look at where Uniqlo and Zara are today in parts 1 and 2 of this “revisit,” I’m now examining H&M, which can be seen as a hybrid between the fast fashion model of Zara and the long-view approach of Uniqlo. This combination has proven itself to be a winning approach, to the delight of H&M and its investors.
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And with its quick and nimble supply chain, smart pricing, an expanding product line and optimized mix of great stores and e-commerce, H&M continues to look like a pretty safe bet for retail investors.
The best of both worlds
H&M releases two main collections each year: one for the spring and one for the fall. But throughout the year, the company releases many sub-collections that allow it to jump on new trends that appear during any season. It breaks down like this: the primary collections are the long-lead items with more enduring looks (a la Uniqlo), while the sub-collections are trend chasers with short lead times (a la Zara).
This hybrid approach gives H&M the ability to be deliberate with its heavy-hitters, while allowing it to be agile enough to score quick wins with the trendy items. Either way, the key to success here is that H&M takes very few, if any, chances when it releases a new product. They have a strong focus on using the reams of customer data they have, using it to nail exactly what it is consumers want from each item and delivering it at the right times.
Both the long-lead time and fast fashion offerings rely on an agile supply chain to be delivered at prices that customers will pay. Through complete IT integration between its partners/suppliers and core offices, the entire organization can quickly get on board to quickly produce clothing that is on-trend.
