Introduction
SWOT analysis is a strategic planning method that is often applied in product marketing. According to Gürel and Tat (2017), it is used to evaluate the strengths and weaknesses of the internal environment, as well as opportunities and threats of the external environment influencing the businesses. Scientists also emphasize that “strategic management is the process of creating, implementing and evaluating decisions that enable an organization to achieve its objectives” (Gürel & Tat, 2017, p. 994). This paper aims to develop a strategic plan based on a SWOT analysis for the H&M apparel company, providing examples of growth strategies that will help it to reach out to online-sales markets.
Background
The proliferation of online shopping has changed the clothing store businesses significantly. Clothing stores are massively moving to online-sector to maintain a high level of sales and production. Strategic business planning is used while developing growth strategies for market penetration, market development, product development, and related diversification to make this move even more beneficial. When speaking of H&M’s market penetration strategy, one should consider that currently, H&M sells online only on the brand website, localized for several countries.
The effective market penetration strategy is highly beneficial for the competitive advantage of a company. Chandola and Fu (2017) note that “new international strategies involve product innovation and adaptation, pricing tactics along with Integrated Market Communications to target market different from one’s home market” (p. 10). It may require certain efforts and costs for the business, but with the competent use of efforts, they will pay off handsomely.
SWOT Analysis
The external opportunities and threats should be considered when applying the SWOT analysis. Nowadays, the most extensive opportunities for direct sales are provided by social networks – Instagram, Facebook, with their new simplified payment method Libra, and Twitter.
The principal and only potential threat to the company is non-entry into this market. Whereas, the company’s great strength regarding the internal environment is that it already has its pages on social networks. Wherein its weakness is that it is impossible to order or buy goods there. It also makes sense to create brand pages within the local social media in countries where the number of people who use social media exceeds 500 thousand subscribers. Besides, the social media pages should be localized, and presented in the maximum number of languages, just like the company’s brand websites.
At the moment, H&M stores can be found in shopping centers in Europe and North America. Yet, there is an opportunity that online demand for its products will be much higher. Besides, H&M should consider online markets of faraway countries with developed social infrastructure. These are countries like South Africa, Nigeria, Sudan, Morocco, Egypt, Israel, Iran, Iraq, Saudi Arabia, UAE, Oman, China, South Korea, Vietnam, and Japan. The online markets of Brazil, Argentina, and Mexico also have rich potential.
H&M will easily find its niche on Amazon.com, selling in the American and European markets as the delivery services of this platform work only with these territories. Aliexpress.org and Alibaba.com marketplaces should also be discovered since the H&M production is not represented well on these Chinese platforms that attract millions of customers every day. Even though the Swedish brand H&M has its production facilities in China.
Strategies
Presumably, H&M should enter all possible local marketplaces that are having more than 1 million users. According to Alkasim, Hilman, and Bohari (2018), “market development and product development improve the competitive advantage and enhance the performance of manufacturing” (p. 133). Scientists emphasize that manufacturing is the engine of economic growth and development, not only in the developing economies, but in developed countries as well (Alkasim et al., 2018). It is because manufacturing enterprises make a significant contribution to job creation, technology growth, GDP growth, and reduction of poverty.
The key opportunity for market development on the new markets described above is their enormous size and high purchasing capability of potential customers. At the same time, the lack of access to technology among potential buyers is a critical threat to H&M’s online business (Martini, Budhiasa, & Soares, 2017). H&M’s main internal strength is the broad recognition of the brand. That is why the strategy of the market development will be traditional in terms of reaching the audience. The weakness of the H&M brand is the lack of an established scheme for online sales on marketplaces and social media platforms. It also lacks experience in working with a broad and multinational audience.
The H&M brand was established in 1947, and buyers love it for its traditional values. The H&M Group brand family includes H&M, COS (casual), Weekday (casual), Monki (young women casual), H&M HOME (interior brand), & Other Stories (accessories), ARKET (classical), Afound (outlet, online in Sweden). The strategy of eco-friendly product development should be applied to make the brand even more desirable among customers. According to scientists, it will have a positive effect on product development effectiveness, given that there are “increasing levels of municipalities in the business environment” (Katsikeas, Leonidou, & Zeriti, 2016, p.660). However, the importance of eco-friendly focus will weaken in highly complex business conditions.
Diversification of a brand when entering new online markets brings a lot of opportunities. It makes sense to diversify monochrome collections, which some buyers may attribute to the brand’s weaknesses, and develop specific lines for Asian countries like Japan and South Korea that would correlate with the local fashion trends. For countries of South America (Mexico, Brazil, and Argentina) and Africa (Republic of South Africa, Nigeria, Sudan, and Egypt), H&M should provide more diversity in summer clothing.
Moreover, the colors of all the lines could be diversified to become more appropriate for various climatic and environmental conditions. When developing clothing and accessory lines, H&M should also consider that most buyers use technologies such as smartphones, tablets, selfie sticks, smartwatches, shoulder bracelets for running, and action cameras. After all, the sleek design of the H&M brand clothing, as well as the prevailing casual style, combine perfectly with technology.
Conclusion
Thus, a strategic plan based on a SWOT analysis was developed for H&M, and examples of growth strategies that will help the apparel company gain its share of online-sales markets were provided. To summarize it, the key opportunities of online-sales include the enormous size of this market and the high purchasing capacity of its customers. And the main threat of online-sales business is the lack of access to technology among customers. Besides, the critical weakness of the H&M brand is the lack of an established scheme for online sales on marketplaces and social media platforms. It also lacks experience in working with a broad and multinational audience. Wherein, its main strengths are explicit brand recognition and powerful traditions.
References
Alkasim, S. B., Hilman, H., & bin Bohari, A. M. (2018). The mediating effect of competitive strategy on the relationship between market development, product development, and performance of manufacturing-based SMEs in Nigeria. Journal of Business and Retail Management Research, 12(2), 133-143.
Chandola, V. K., & Fu, H. (2017). Market penetration strategy of smartphone companies from China for India market: A multiple-case study. International Journal of Business Marketing and Management, 2(4), 10-16.
Gürel, E., & Tat, M. (2017). SWOT analysis: A theoretical review. Journal of International Social Research, 10(51), 994-1006.
Katsikeas, C. S., Leonidou, C. N., & Zeriti, A. (2016). Eco-friendly product development strategy: Antecedents, outcomes, and contingent effects. Journal of the Academy of Marketing Science, 44(6), 660-684.
Martini, L. B., Budhiasa, S., & Soares, A. (2017). Anticipated effort in modern growth of traditional market development strategy in Bali Indonesia. International Journal of Social Science and Economics Invention, 3(08), 154-158.