One of crucial elements in success of clothes retailing is how the company use their distribution channel decision and strategies. This essay will study on Hennes & Mauritz’s (H&M) , the Swedish-owned globally famous fashion retailing and research on how they deal and rely on their distribution channel partners. Unlike their competitors such as Uniqlo, Forever21, ZARA or GAP ,H&M has implemented a unique and efficient distribution channel strategy to increase their level of competitiveness and cost effectiveness.
First off , clear understanding of H&M product philosophy and strategy will assist us to have better comprehension about H&M distribution channel decision. Similarly to ZARA or other fashion retailers ,H&M has already selected their target ,segment of their fashion consumers market. In 2004 , H&M declared their philosophy that said “Fashion and quality at the best price” H&M aggressively compete with competitors by making varieties and differentiations on their product expanding product range from updated basic and down-to-earth style to cutting-edge high fashion trends.
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In general, Distribution channel are the 4th P of the 4P’s, meaning that Marketers need to find or create the place or channel for transferring of physical delivering the final product to the market and easily access and available for target customers. A distribution channel refers to the type of middleman or linkage between producers and customers. A one-channel distribution network involves only the retailer between producer and consumer. Direct distribution occurs when the producer directly supplies the product to the buyer.
To select the distribution channel that ‘s suitable for company , There are many factors to take into considerations, including the type of product. While not all clothing retailers use direct distribution models, H&M and its competitors in the low- and mid-range clothing market use this model to maintain low costs and a fast time to market . Additionally ,Like their competitors H&M product edge by providing affordable fashion lines similar to its competitors, but , what difference is that H&M also focused on “fast turnaround” from design to production to retail sales.
H&M suggest that fashion industry is heavily influence by time-to-market factors, meaning that timing is crucial that fashion company need to follow and quickly update with the rapid change of fashion trend, that this makes the fashion industry quite unique and difficult. But it could not stop H&M, Unbelievably, They are able to minimize the duration time between designing the clothes to the hand of the customer. They have 21 productions office worldwide located in many fashion capital of the world with energetic in-house designer-team.
The designer team are in charge of keeping the company updates in fashion by forecasting trend, finding inspiration in local fashion styles “what’s hot, what’s not” or even attempting to make H&M the world’s trend setter. Within only three weeks to six months, H&M directs a rapid-response manufacturing process to utilize on design trends constantly then moves designs through production and eventually into its retail sales channel .
The company takes advantages of low cost labour in Turkey and China to keep production cost low and takes only month from initial design to deliver final products to its retail store. H&M rapidly redefines its distribution decision in accordance with rapid changing retail market conditions and production conditions in its worldwide manufacturing centers . This flexible adaptation guaranty that the company are able to improve the productions flow performance.
H&M stores are able to receive new shipments daily by implementing the integrated direct distribution channel resulting in increasing on the company’s competitiveness , giving the company further control over responses to supply and demand shifts . The company estimates that each store receives between 500 and 1,000 new items daily, with total sales of over 550 million items annually company-wide. For example, if a particular fashion proves exceptionally popular to men in the U. S. but not in Europe, the company can shift inventory in that product from European stores to meet demand in the U. S. The channel also enables H&M to respond to market segment changes. When its $39 pants line proved too upscale for inner city malls, H&M used its integrated channel to shift that inventory to suburban locations and rotate new inventory into the mall stores In conclusions, H&M’s key factors of success and advancement undoubtly rely on efficient distribution channels.
H&M has built effective cooperation with its supply chain and retail distribution channels and implement to their marketing strategy. As the company expands more heavily into global market, its effective and unique distribution channel will be a critical factors of its success. Reference 1. http://heroinandmoss. blogspot. com/p/h-promotion-strategy. html 2. http://www. ryerson. ca/~rmichon/mkt731/reading/Industry%20Reports/H&M. pdf 3. http://www. researchandmarkets. com/reports/568624/profile_of_handm_a_pioneer_of_fast_fashion. pdf