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Presentation by Georgetown University - Runner Ups in the CBS Case Competition 2011.

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Presentation by Georgetown University - Runner Ups in the CBS Case Competition 2011. Congratulations to Christine Chung, Yvonne Chiang, Qian Wu and Keenan Timko for doing a great job. Presented at the Finals March 4, 2011.

This presentation form part of CBS Case Competition. Views, opinions and suggestions expressed in these presentations are the sole work of the case study writers, and are not neccessarily shared by H&M

Visit www.casecompetition.com to see more.

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Presentation by Georgetown University - Runner Ups in the CBS Case Competition 2011.

  1. 1. Getting Dressed! for the Future! Yu-Ching Chiang! Christine Chung! Keenan Timko! Melissa Wu!Simply Stylish… Simply You.
  2. 2. Situational Analysis of H&M! Strengths! Weaknesses! • High penetration rate! • Stagnating growth • Broad appeal! in mature regions! • High brand value! • Local competition in • Mix of brand core with new markets! fast-fashion ! • Retaining & attracting the right people! Opportunities! Threats! • Expanding product • Increasing raw categories! materials prices! • Channel expansion! • New competitors! • Expansion into • Different consumer emerging markets! preferences! • Supply chain optimization!Situation  SSSY Implementation  Financials  Risks  Alternatives !
  3. 3. Identifying the Problem! Market •  Encourage existing customers to buy more! •  Maintain position in markets with low growth Saturation! rates!Technological •  Expand the number of channels to purchase products! Trends! •  Need to address social networking opportunities! Situation  SSSY Implementation  Financials  Risks  Alternatives !
  4. 4. Defining the Objective•  To create opportunities for profitable and sustainable long-term growth ! – Maintain our 10-15% annual growth target for number of stores per year! – To increase market share in low-growth regions! Situation  SSSY Implementation  Financials  Risks  Alternatives !
  5. 5. To Improve Position In Low-Growth Regions ! European & American markets generate 90% of total sales. Market shares have been falling in Western Europe from 29%  25% during 2005-2010 Situation  SSSY Implementation  Financials  Risks  Alternatives !
  6. 6. Situation  SSSY Implementation  Financials  Risks  Alternatives !
  7. 7. Situation  SSSY Implementation  Financials  Risks  Alternatives !
  8. 8. Fashion Forward : Increasing H&Mʼs Online Presence North American Online Store! H&M Club! H&M Mobile Application! Situation  SSSY Implementation  Financials  Risks  Alternatives !
  9. 9. Tapping  into  the  E-­‐commerce  Space  •  Rise  of  e-­‐commerce  and  m-­‐commerce   – Fastest  rising  pla8orm:  35%  •  Convenience  is  key  •  Key  demographic  for  m-­‐commerce:  25-­‐34  yr  olds   U.S.  Smartphone  Users  by  Age   64%  of  Smart  Phone  Users  are  18-­‐44  Years  Old   5%  10%   18-­‐24   13%   25-­‐34   18%   29%   35-­‐44   45-­‐54   25%   55-­‐64   65+   Situation  SSSY Implementation  Financials  Risks  Alternatives !
  10. 10. Fastest  Growing  Pla8orm:  Mobile   Situation  SSSY Implementation  Financials  Risks  Alternatives !
  11. 11. Bringing Online Store to America•  Already present in Western Europe!•  Integrate with H&M Fashion Studio!•  Recent e-commerce trends! Situation  SSSY Implementation  Financials  Risks  Alternatives !
  12. 12. Apparel  is  biggest  category  in  online  sales,     growing  at  high  rates   2013  Forcasted  Online  Sales  for  Selected  Categories  (USA;  $B)   Furniture   3.7   SporXng  Goods   3.9   Jewelry   5.5   Books   7.1   Office  products   7.4   OTC  medicines   9.6   Toy  and  video  games   10.4   Consumer  electronics   19.2   Appliances  home  improvement   30.3   Computers  and  accessories   36  Apparel  accessories  and  footwear   40.3   0   5   10   15   20   25   30   35   40   45   2009-2013 CAGR for Apparel accessories and footwear is +11%. Situation  SSSY Implementation  Financials  Risks  Alternatives !
  13. 13. Accumulating H&M Points•  Transfer  spending  into  rewards  •  Exclusive  deals  for  club  members   – H&M  Sweepstakes   – H&M  Shopping  Sprees  •  Perks  for  points   – New  arrivals   – Into  physical  stores   Situation  SSSY Implementation  Financials  Risks  Alternatives !
  14. 14. Integrating with Smart Phones•  Interoperable mobile applications!•  Coupon codes!•  Rewards program!•  Fashion Studio! Situation  SSSY Implementation  Financials  Risks  Alternatives !
  15. 15. Dollar Spent Becomes Redeemable Points  •  Every $200 dollars spent = $5 rewards!•  H&M Sweepstakes every year! –  Chance to meet guest designers! •  Ex: Matthew Williamson! –  Fashion show tickets! •  Ex: Copenhagen Fashion Week!•  H&M Shopping Sprees! –  Regional; every 20 stores/raffle! –  4 times/year, $300 each person!•  Monthly perks can include freebies! –  Articles under $5! Situation  SSSY Implementation  Financials  Risks  Alternatives !
  16. 16. Benefits of ion Forward Attractive for price-sensitive consumers! Inexpensive to implement! Increase multi-channel platform!Situation  SSSY Implementation  Financials  Risks  Alternatives !
  17. 17. Situation  SSSY Implementation  Financials  Risks  Alternatives !
  18. 18. :  Establishing  a  Way  of  Life  •  A lifestyle brand through category expansion ! – Embody H&Mʼs values and aspirations! – Leverage the creative talents of fashion- forward guest designers! H&M   Apparel   ?   Home   Situation  SSSY Implementation  Financials  Risks  Alternatives !
  19. 19. Establishing  a  Lifestyle  Brand:  Home  •  A larger furnishing and home décor section of the store! – Significant opportunity ! – One-stop shop! – Includes bedding, curtains, candles, and other home accessories and textiles! Situation  SSSY Implementation  Financials  Risks  Alternatives !
  20. 20. Establishing  a  Lifestyle  Brand:  H&M  Home   •  Sales  as  point-­‐of-­‐purchase  and   online  ordering   – Use  of  in-­‐store  displays  for   design  ideas  and  templates  from   noted  designers   – Store  as  point  of  purchase     – Opportunity  for  online  ordering   for  delivery   Situation  SSSY Implementation  Financials  Risks  Alternatives !
  21. 21. Sample  Site    Situation  SSSY Implementation  Financials  Risks  Alternatives !
  22. 22. The  Talent  Behind  the  Talent  •  Leverage  creaXve  talent  of  well-­‐known   designers  and  stylists     – The  style  geniuses  behind  the  actors,  singers,  and   fashionistas   – Promotes  being  your  own  trendseaer   Situation  SSSY Implementation  Financials  Risks  Alternatives !
  23. 23. Recognizing  the  Unheralded  Genius  •  The  unheralded  hero   behind  the  famous   ones     – Resonate  with  creaXve,   edgy,  and  street-­‐smart   H&M  customers   – “live  an  H&M  lifestyle”   – Mold  the  “H&M  Man”   &  “H&M  Woman”   Situation  SSSY Implementation  Financials  Risks  Alternatives !
  24. 24. Example  Lifestyle  Themes   •  OrganiChic! Core •  Urban Sophistication ! Themes! •  Effortless Edge ! Fast-­‐ Fashion   •  Forties Fox! Themes     •  Pastel Pretty!Situation  SSSY Implementation  Financials  Risks  Alternatives !
  25. 25. Benefits  of      Lifestyle   Brand  enhancement  and   differenXaXon   Product  category  extensions   DetecXon  of  popular  consumer   trends  Situation  SSSY Implementation  Financials  Risks  Alternatives !
  26. 26. Situation  SSSY Implementation  Financials  Risks  Alternatives !
  27. 27. Value  ProposiXon  of     MulX-­‐ channel   IntegraXon   Reinforcing   AcXviXes   ConsolidaXon  of   Brand  Image  and   Loyalty    Situation  SSSY Implementation  Financials  Risks  Alternatives !
  28. 28. Defining a Target Market ! Age   Gender   LocaXon     MoXvaXon  • 15-­‐35  year   • Female   • US   • Cost-­‐ olds   • Western   conscious   Europe   • Convenience   • Scalable  CreaXng  trendy  H&M  women  with  different  lifestyles     Situation  SSSY Implementation  Financials  Risks  Alternatives !
  29. 29. Market  Segment  Overview    Situation  SSSY Implementation  Financials  Risks  Alternatives !
  30. 30. Comparing with Competitors !Online  Store   X   X   X  Rewards  Program   X   X  Home  TexXle  Line   X   X  Guest  Designers   X   X  Mobile  ApplicaXon   X   X   X   Situation  SSSY Implementation  Financials  Risks  Alternatives !
  31. 31. PromoXng  Situation  SSSY Implementation  Financials  Risks  Alternatives !
  32. 32. Combining  H&M  Lifestyle  and  Fashion   Studio   Situation  SSSY Implementation  Financials  Risks  Alternatives !
  33. 33. CreaXng  Your  Own  Lifestyle  Situation  SSSY Implementation  Financials  Risks  Alternatives !
  34. 34. Implementing Forward!Situation  SSSY Implementation  Financials  Risks  Alternatives !
  35. 35. Implementing Lifestyle!Situation  SSSY Implementation  Financials  Risks  Alternatives !
  36. 36. Projected Net Income from! Situation  SSSY Implementation  Financials  Risks  Alternatives !
  37. 37. Managing Potential Challenges RISK   SOLUTION  B2C  Supply   Chain   Replicate  Stockholm  model  TransiXon  Storeroom   One-­‐room  displays,  order-­‐in-­‐Space  Cost   store,  and  buy  online  opXons  High-­‐capital   Gradual  rollout,  then  ship  from   Outlay   one  distribuXon  center   Situation  SSSY Implementation  Financials  Risks  Alternatives !
  38. 38. Alternative 1:
 Human Resources Initiative!1) Training programs for employees up for promotions!2) Campus ambassadors to attract new talent!•  Rationale! – showcase “H&M spirit” on campuses to attract young new capital! – Maintain employee morale and prepare internal employees for administrative roles! Situation  SSSY Implementation  Financials  Risks  Alternatives !
  39. 39. Alternative 2:
 Vertically Integrate the Supply Chain!•  Outsourcing production to independent suppliers  In-house production facilities!•  Rationale: ! – Shorter lead time from creation-to-shelf! – Increased quality control! – Unique consumer feedback system that detects popular trends! Situation  SSSY Implementation  Financials  Risks  Alternatives !
  40. 40. Methodology Used to Assess OptionsDecision   Strategic   Simply  Stylish,   AlternaPve   AlternaPve  2:  Variable   Importance   Simply  You   1:Human   VerPcal   Resources   IntegraPon  Profitability   35%   9   6   5  Strategic  Fit   20%   8   7   4  Growth   20%   7   7   6  Opportunity  Scalability   15%   9   8   6  Sustainability   10%   8   8   5  Total:   100%   8.3   6.9   5.2   Situation  SSSY Implementation  Financials  Risks  Alternatives!
  41. 41. Your Winning Strategy! MulX-­‐channel   IntegraXon   Reinforcing   AcXviXes   ConsolidaXon   of  Brand   Image  and   Loyalty    
  42. 42. Appendix !•  Key  Industry  Trends  •  H&M’s  Strengths  •  Threats  &  Weaknesses  •  Successful  Rewards  Program  •  ROI  on  Talent  Endorsements  
  43. 43. Key  Growth-­‐Driving  Industry  Trends   Brand   building  and   differenXaXon   Driving   growth   Brand  and   offer   MulX-­‐Channel   extensions   Situation  SSSY Implementation  Financials  Risks  Alternatives !
  44. 44. Identifying Strengths! High   penetraXon   rate   Mix  of  brand   core  with  fast-­‐ Broad  appeal   fashion     Supply  chain   High  brand   pracXce   value  Situation  SSSY Implementation  Financials  Risks  Alternatives !
  45. 45. Addressing Threats & Weaknesses ! Weaknesses   • StagnaXng  growth  in  mature  regions   • Local  compeXXon  in  new  markets   • Retaining  and  aaracXng  competent  people  in  organizaXons   • Low  customer  loyalty   • Low  switching  costs   • High  degree  of  product  differenXaXon   Threats   • Increasing  raw  materials  prices   • New  compeXtors   • Different  consumer  preferences   • LogisXcal  challenges  (entry  into  new  high-­‐growth  markets)   Situation  SSSY Implementation  Financials  Risks  Alternatives !
  46. 46. Creating a Successful Rewards Program! •  Focused  on  making  loyal  customers  even  more   loyal.     •  Focused  not  just  on  transacXons  but  on  core   strategic  values.     •  Focused  on  the  individual   •  Enabled  by  new  technologies   •  The  human  touch.     Situation  SSSY Implementation  Financials  Risks  Alternatives !
  47. 47. ROI  on  Talent  Endorsements  •  European  companies  pursued  talent  to   endorse  their  brand  -­‐>  successful  ROI   – Past  success  of  Jimmy  Choo’s  work  with  Project   Pep  AIDS  FoundaXon  20x  ROI  and  drove  in-­‐store   sales  33%   – Jamie  Oliver  Sainsburys:  ROI  of  27:1;  £1.12  billion   in  incremental  revenue     Situation  SSSY Implementation  Financials  Risks  Alternatives !

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