The first Hennes store opened at Sweden and it contained women clothing only at that time. They started expansion from 1952. In 1968 Mauritz joined the company and thus named it H&M, sale of men clothing started from then. Now they hold about 2000 stores in 38 different countries and consist of six different brands H&M, Cheap Monday, COS, Weekday, Monki and other stories. It is one of the largest importers of organic cotton in the world. This is one of the very few companies in the world who have women working as managers on 75% of the positions and 50% women representation in board. One interesting fact about H&M is if you want to make a purchase then visit the stores on either Monday or Thursday as that’s the day when they receive new inventories on website its Thursday 8am when merchandise is updated. (Lo, 2013). It is the second in line in becoming the world’s largest retailer, following Zara.
H & M has been under pressure by the international community for opening stores in Israel because Israel does not respect international laws. H&M denied taking any political or religious stance but Israeli officials stated that by opening a store H&M is helping them economically to establish peace in the region. The stores were also opened on controversial sites from where Palestinians were expelled, brutally killed and wiped off so they can never return again. 24 organizations protested against this action of H&M and many even boycotted them.
Second incident which made H&M controversial is the fact that they used to get their products made from Bangladesh due to cheap labor and cotton; most of the factories in Bangladesh are not socially responsible with safety rules being ignored completely. In 2006 alone there were 1100 deaths due to fire cases in Bangladesh and H&M used to source their merchandize from one of these factories. This made them realize that exploitation of underdeveloped market is destroying their image and leading to decrease in sales. Another such incident happened in Cambodian factory too. After that media started condemning them so they signed fire protection treaty according to which they will only work with factories who have proper equipment and safety measures implemented. (Nieuwhof, 2010)
They ensure best prices through efficient procurement by buying in bulk and from markets that offer the best rates, in house designing, and efficient inventory management system. Besides being able to maintain competitive pricing strategy, H&M is exposed to economic shocks due to expansion in so many countries. Interest rates, inflation and currency rates fluctuations make it difficult for an MNC to operate while maintaining a stable pricing scheme. Also taxes, import duties and other import laws changes in different countries make it difficult to source at the catalogue price. (H&M)
It has catered to women participation in economic activities issue by employing more women than men in its offices and at board levels, thus providing women the equal chance to showcase their talent in an industry which concerns them the most. Secondly it has started working with International Labor Organization to provide better wages and ensure proper hygienic working conditions that are safe to work in. the idea is to help develop the third world markets by introducing them to modernized procedures of working and in the process secure profits, but ensuring that workers are not exploited.
H&M has realized that access to safe and clean drinking water is the most pressing issue in developing countries; therefore it has formed coalition with UN agencies and helped around 150,000 people until now in Pakistan, India and Bangladesh to access hygienic drinking water. H&M has also embarked upon the journey to save electricity in its retail outlets. Recycling of unwanted and wasted clothes and use of organic cotton in its products shows H&Ms efforts for safer and better world.
For H&M it is very important to stay updated as the world is changing as it is in the business of fashion and new trends are coming up every season, plus it is in the catalogue business which means that it stays one season ahead of what is offered in stores for example if it is summer then sourcing of winter collection would be in process due to the lead time for products. Considering the complexity involved in clothing business it has to embrace new technologies as they pave their path in this world in order to keep up with the current demand. Designs have to rapidly change and be in line with the fashion industry.
H&M is a giant in retailing therefore it is always in spotlight one way or the other, it has to be really careful in whatever actions it takes. It makes sure that from whichever country it is souring its merchandize, there are no environmental hazards involved in the making of these products. The factories are following environmental law; there is no illegal dumping in the water.
Legal / Law
It makes compulsory to all its suppliers to follow the national laws of the countries in which they operate, and if any of H&M’s requirements are in conflict with the national law then they must be informed. No child labor is allowed in the manufacturing of company’s goods, in this case also national law will be followed. It will be ensured that the factory has safety and emergency exits, fire alarms, fire extinguishers and other relevant equipments. Other basic laws will be implemented regarding the hiring employee on his/her own free will and not making any forced contract, also not hiring any criminal. There will be equal employment opportunity for all genders, cast, race, culture and religion. All employees will be given wages, benefits and leaves that they are entitled to according to their position in the company. H&M also performs regular financial audits to maintain transparency in operations and business.
(n.d.). Retrieved December 09, 2015, from H&M: http://about.hm.com/en/About/Corporate-Governance/Other/Risk-management.html
Lo, D. (2013, March 21). Did You Know H&M is the Biggest User of Organic Cotton in the World + Other Fun Facts. Retrieved December 09, 2015, from Livingly: http://www.livingly.com/Shopping+News/articles/vnJF-jUcwyO/Know+H+Biggest+User+Organic+Cotton+World+Other
Nieuwhof, A. (2010, March 31). Swedish fashion chain H&M under pressure. Retrieved December 09, 2015, from The Electronic Intifada: https://electronicintifada.net/content/swedish-fashion-chain-hm-under-pressure/8759