Marketing Strategies

H&M

Hot & Mod

by Abram D. Sauer

January 14, 2002 issue

There was a time before time when Air Jordans were the thing to have no matter how long the drive or how ridiculous the mark-up. This was also a time when Big K was not yet "Big" and carried, as I imagine they still do, very creative Ni'kee Jordan knock-offs for a fraction of the price. Ni'kee's were as knocked-off as knock-offs could be knocked off, yet in the florescent light, they appeared almost creepy; the Jordan's grotesquely deformed brother kept under the stairs out of shame. I would not wear them despite my mother's insistence that they looked "just the same."

At that time before time I did not buy my own clothing and did not understand what "too damn much" meant. Oh, how times have changed! "Too damn much" means a lot to me now, as I imagine it does to many others out there, just trying to stay dapper enough to get a date while being able to afford something better than a cardboard box to take said date back to. Thank goodness then for Hennes & Mauritz.

Hennes & Mauritz, better known to budget mods as H&M, is an apparel company dealing worldwide -- though mostly in Europe -- in women's, men's and children's clothing as well as cosmetics. Working toward the goal of "giving the customer unbeatable value through the combination of fashion, quality and price" (though mostly fashion and price), it is no surprise that the conglomerate is homed in Sweden: HQ of all things affordably trendy or trendily affordable such as Ikea, Ericsson, and to some extent, ABBA.

Hennes (Swedish for "hers") was founded in 1947 by Erling Persson following a post-WWII trip to the States during which time the novelties trader was much impressed by efficient, high-volume outfits like Macy's and Barney's. Steffan Persson, descendant of the foresighted Erling, maintains a majority control of the company.

In the 1960s the company added the hunting, outdoor gear and menswear store Mauritz, scrapping the hunting and the outdoor but keeping the men. Expanding through Europe, H&M entered and prospered in neighboring Finland, Norway and Denmark, moving later, and profitably, to the UK, France, Austria, Switzerland and Germany. It is in these outside countries that H&M reaps more than 80% of its US$ 3 billion-plus in sales (2000, E 3.36B), making it Sweden's third largest company in terms of stock market valuation.

Currently, in 14 countries, H&M claims over 30,000 employees and operates 730 stores...no...731...no...732....no.... The point here is that H&M is expanding at an ambitiously frenzied pace, planning 100 store openings a year, including many in new, untested markets such as Spain and the notoriously fashion-fickle (though some would say fashion-bankrupt) US.

A great deal of H&M's success can be attributed to the ability of its in-house designers, paradigms of piggy-backer style, to quickly recognize trends and act, churning out designs that look very much like what other more cavalier, more chic - more expensive - designers are releasing. This may sound a little seedy from a fashionista standpoint, but do H&M loyalists care? No. In fact, some matter-of-factly pleasure in thinking they got one up on the Big Boys of chichi.

A run through an H&M warehouse (their "stores" aren't small - two 30,000-plus square-footers in space-deprived Manhattan alone) reveals racks full of moderately priced garments that look uncannily similar to what brands such as Guess?, Diesel, Zara and Banana Republic are carrying.

My own research, conducted very scientifically around the office, revealed five of my co-workers (four female, one male) with swashbuckling tales of great deals found and loyalties sworn: "I get all of my work clothes there because they're cheap and have a bit more style than Gap," (male). "I stop there every day on my way home to see what's new," (female). The latter point is an important draw of H&M's retail strategy. With fresher product than most New York delis, H&M stores get new merchandise daily. Yes, D-A-I-L-Y. Much of this new stock comes through a rotation system between stores experiencing runs on certain lines. Sources report that H&M turns over its entire inventory a whopping eight times a year.

Clichй teaches us that you've gotta' spend money to make money and industry observers agree that H&M has gotta' spend millions of dollars to build brand recognition in the US if it is to flourish. This is especially complicated for two reasons. First, though H&M sells clothing