H&M's Latvian Market Entry Strategy

H&M has decided to enter Latvian
clothes market. Which strategies and

action parameters should company use
in connection with the entry into the
Latvian market?
Anna Atgze
International Marketing and Sales

4th semester 2012
4mfe0212
Final Thesis
H&M has decided to enter Latvian clothes market. Which strategies and action
parameters should company use in connection with the entry into the Latvian
market?
Author: Anna Atgze

Supervisor: Morten Friis Frederiksen
Delivery date: 1.06.2012
Title Page
Title of the Project:
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Company (if relevant):
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Supervisor:
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Programme:
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Cpr:
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Class:
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Hand-in Date:
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Signature:
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Table of Contents
1.
Preface................................................................................................................................................... 5
2.
Introduction .......................................................................................................................................... 5
3.
Problem statement ............................................................................................................................... 5

3.1
Problem statement formulation ................................................................................................... 5
4.
Delimitation ........................................................................................................................................... 5
5.
Methodology ......................................................................................................................................... 6
6.
About H&M ........................................................................................................................................... 7
7.
6.1
H&M in years................................................................................................................................. 7
6.2
Sustainable H&M........................................................................................................................... 8
Analysis .................................................................................................................................................. 9
7.1
Economic environment ................................................................................................................. 9
7.1.1
Gross domestic product ........................................................................................................ 9
7.1.2
Buying Power.......................................................................................................................10
7.1.3
Unemployment ...................................................................................................................10
7.1.4
Salaries ................................................................................................................................10
7.1.5
Export/Import......................................................................................................................11
7.1.6
Population ...........................................................................................................................11
7.2
Questionnaire ..............................................................................................................................14
7.2.1
7.3
Competitors analysis ...................................................................................................................22
7.3.1
7.4
Porters Five Competitive Forces .........................................................................................22
Value Chain..................................................................................................................................25
7.4.1
Inbound logistics .................................................................................................................25
7.4.2
Operations ...........................................................................................................................25
7.4.3
Outbound logistics ..............................................................................................................26
7.4.4
Marketing and sales ............................................................................................................27
7.4.5
Service .................................................................................................................................27
7.5
8.
Questionnaire analysis ........................................................................................................14
SWOT analysis for ZARA and H&M..............................................................................................28
Marketing and Strategy.......................................................................................................................31

8.1
Segmentation& Targeting ...........................................................................................................31
8.2
Positioning strategy .....................................................................................................................33
8.2.1
8.3
Marketing Mix .....................................................................................................................33
Cultural Background and negotiation techniques.......................................................................37
8.3.1
Latvian culture .....................................................................................................................37

3
8.3.2
9.
Comparison of Latvian and Swedish cultures .....................................................................38
Conclusion ...........................................................................................................................................41
10.
Bibliography ....................................................................................................................................42
11.
Attachments ....................................................................................................................................45
Attachment 1 (Questionnaire) ................................................................................................................45

Attachment 2...........................................................................................................................................49
Attachment 3 (Respondents ZIP code map) ...........................................................................................50
Attachment 4 (Markets) ..........................................................................................................................55
1. Preface
Before starting my project I would like to thank all the respondents of my questionnaire
who helped me in getting their opinion. Also I am very thankful to my supervisor Morten Friis
Frederiksen for good comments and advices.
2. Introduction
When I came to university in one of the first lectures teacher told the phrase which is
always present in my head. He told that our role is to become more attentive and each time we
travel we shall notice what is missing in the country, what new you can bring into it.
Since I started living in Aalborg I found out that the thing I really like to do is shopping,
because prices on clothes are much lower than in Riga, but it doesnt affect negatively design or
quality of the product. One of such shops is H&M.
When I was in Latvia I noticed that H&M does not exist yet on the Latvian market. To
find out the plans of the company I checked their webpage and noticed information that H&M is
actually planning to enter Latvian market in autumn 2012.
That made me interested in suggesting the market entry strategy from perspective of the
Latvian citizen.
The project will be divided into 2 main parts, analysis and strategy itself using the
relevant models.
3. Problem statement
3.1
Problem statement formulation

H&M has decided to enter Latvian clothes market. Which strategies and action
parameters should company use in connection with the entry into the Latvian market?
4. Delimitation
As the main location of all the big shopping malls is in Riga, for the entry strategy will be
chosen just this city.
To limit the number of shopping malls in which H&M store will be located, I will choose
only one, which will be the most preferred in Riga. This information I plan to get from the
questionnaire.
Due to mistake in the questionnaire in the report analysis of clothes section for pregnant
women is absent.
H&M has also the H&M Home products, but in the project will be analyzed only clothes
and accessories of the H&M.
5. Methodology
To understand the company and product I am going to write about, I will use the
secondary data such as homepage of H&M, articles that can be found in internet and DATA
monitor, so I could have the information from different sources.
One of the first project making phases will be the questionnaire. It will help me to
understand the wishes of consumers, to find the most suitable shopping malls and define our
competitors.
To get more knowledge about H&M operations, value chain will be done as well.
For the competitor analysis I will use Porters Five Forces and I would like to make the
SWOT analysis for H&M so I could see what our stronger sides that we can use are and what are
the weaknesses that can be solved. As well will be done SWOT analysis for ZARA, but not to
show it in depth, but to emphasize the differences in between companies.
As the part of the strategy segmentation and targeting analysis will be done as well, for
showing who is H&Ms core customer that we shall be orientated on.
Another analysis that will be done is a Marketing mix that will help me to choose the
right strategy for promotion, pricing and etc.
For promotion settling AIDA model will be used.
The economic background shall be investigated as well so I could have more sense of
the size of potential market.
For settling better negotiation strategy, the cultural aspects shall be considered as well.
6. About H&M
6.1
H&M in years
H&M, or using its full name Hennes & Mauritz, is a Swedish global retail-clothing
company, which was founded in 19471 by Erling Persson. The first store was opened in Vsters,
Sweden where was sold womens clothing. In the next years stores were opened in Stockholm
(1952) and in Norway (1964).
In the year 1968 the founder buys the hunting and fishing equipment store Mauritz
Widforss. Since then the company is known as Hennes & Mauritz. At the same year sales of
mens and childrens clothing begin.
Next store which was opened was in London, UK in year 1976, which was the first store
outside Scandinavia. Later start sales of cosmetics (1977).
From year 1980 till 2000 were made several changes as open of stores in Germany and
Netherlands, acquirement of the mail order company Rowells, open of the new store in France.
Adverts in newspapers and magazines are complemented by billboards using famous models and
e-commerce begins as well. In year 2000 was opened the first US store on Fifth Avenue in New
York, as well were opened stores in Spain.
In the next years H&M opens in more European markets.
Year 2004 brings H&M initiation for designer collaboration starting with Karl Lagerfeld.
Collaborations in subsequent years include those with Stella McCartney, Viktor & Rolf,
Madonna, and Roberto Cavalli, Comme des Garcons, Matthew Williamson, Jimmy Choo, Sonia
Rykel, Lanvin, Versace, Marni and David Beckham.
A major expansion of online and catalogue sales begins with the Netherlands as the first
market outside Scandinavia. The first stores in the Middle East open via a franchise arrangement.
In the subsequent years were opened many stores in Asia and in Europe, appeared new
store such as H&M Home and a new store concept COS2 is launched, but lets look on year
2012.
In that year H&M plans to open in Bulgaria, Latvia, Malaysia, and Mexico and via
franchise in Thailand. COS is planned to open in Hong Kong, Italy, Finland and via franchise in
Kuwait. As well will be introduced e-commerce in the US3.
1
http://about.hm.com/content/dam/hm/about/documents/en/Investor%20Relations/HM_Words_and_pictures_2
011_en.pdf (15.05.2012)
http://about.hm.com/content/hm/AboutSection/en/About/Facts-About-HM.html#cm-menu(15.05.2012)
2
http://www.cosstores.com/About
3
011_en.pdf (main source in paragraph H&M in years)
Generally speaking, we can tell that in recent years H&M has expanded quite
substantially, with having 2,500 stores which are located in 44 markets, without taking into
consideration improvements that are planned on year 2012.
6.2
Sustainable H&M
Vision of H&M is H&Ms business operations aim to be run in a way that is
economically, socially and environmentally sustainable.

H&Ms business concept is to offer fashion and quality at the best price. While making
the qualitative product, company cares that it also would be environmentally safe. To ensure the
best quality at the given price, H&M team always finds ways for improvement. One of such
ways can be well built communication4 also with people who are not working in H&M, for
example suppliers and stakeholders.5
The main strategy of H&M is to have sustainable fashion future, which means that
operations, which are done, shall be run economically, social and environmentally sustainable
way.
Company believes that this goal can be achieved if they follow their seven strategic, longterm commitments6:
1. Provide fashion for conscious customers
2. Choose and reward responsible partners
3. Be ethical
4. Be climate smart
5. Reduce, reuse, recycle,
6. Use natural resources responsibility
7. Strengthen communities.
From those strategies we can see, that H&M really cares of environment as 3 points out
of 7 shows that its important for them to be energy-efficient, inspire others to reduce total CO2
emissions, aim for zero waste to landfills and conserve water, soil, air and species.
http://about.hm.com/content/hm/AboutSection/en/About/Sustainability/HMConscious/stakeholderengagement.
html#cm-menu
5
http://about.hm.com/content/hm/AboutSection/en/About/Sustainability/HMConscious/Vision-andPolicy.html#cm-menu
6
http://about.hm.com/content/hm/AboutSection/en/About/Sustainability/HMConscious/Strategy.html#cm-menu
7. Analysis
To see how much potential is in the market, I would like to make the analysis in which
there will be investigated such factors as economic background of the country, opinion of the
potential customers, competitor analysis and value chain.
7.1
Economic environment
Before H&M Company enters a Latvian market, I would like to make the economic
analysis to define how strong and stable the country is at the presence and what can be the future
predictions.
7.1.1
Gross domestic product
First of all we would like to investigate the percentage of gross domestic product and the
changes of it during the last years.
Figure 1: GDP real growth rate (%)
Figure 1: http://balticexport.com/?article=latvijas-ekonomika&lang=lv
Analyzing this chart we see that the GDP level slowly started falling since year 2006 to
year 2007, but the biggest drop we see later in a year 2009 when result reached -18. If we look at
the forecasts, we see that in year 2012 the GDP will increase on 4.0. It was influenced by the big
financial crisis in years 2008 and 20097.
According to Central Statistical Bureau several sectors influence the GDP growth: trade
(share in GDP structure - 16%) - by 7.3%, manufacturing (14.7%) - 14.6%, transport and storage
sector (13, 1%) - 8.1%. Accommodation services increased by 27.6% and catering services - by
20.9%.8
So looking at this chart we see that Latvia after the crisis is slowly recovering its
economic situation.
7
http://en.wikipedia.org/wiki/2007%E2%80%932012_global_financial_crisis#cite_note-6 based on ^ "World
Economic Outlook: Crisis and Recovery, April 2009" (PDF). Retrieved May 1, 2010.
8
http://balticexport.com/?article=latvijas-ekonomika&lang=lv
7.1.2
Buying Power
The one of important factors to know before entering a new market is estimating the
buying power of the potential customers. To compare I am going to take H&M biggest European
markets, such as Germany, France and UK.9
According to Eurostat in 2010, the Gross Domestic Product per capita in Latvia,
expressed in purchasing power standards (PPSi) was 51%, which is twice smaller then than the
average level in EU27 and being the third lowest in the list. In comparison to it we can look at
Germany, which 118%, France 108% and United Kingdom 112%10. This is one of the
parameters that show that Latvia economy wise is quite a small market with no high buying
power.
Now lets look at some economic indicators:
7.1.3
Unemployment11
The amount of economically active inhabitants of Latvia consists of 1.14 million people
in the end of year 2010, what is 64.5% of the total number of population. From economically
active in the beginning of the same year 18.7% are unemployed. In beginning of year 2011
54% of unemployed were women and 46% - men. Biggest amount of unemployed were aged
from 45 till 54 (27%).
The rate of unemployment started growing since year 2008 peaking in March 2010 with
the level of 20.4% unemployed from the population of the working age, but already in the
second quarter of year 2011 it declined till 16.2%. One of the reasons of decline can be that
people gave up on searching and as the consequence being no more registered in the sector of
searching. The biggest reason surely is the recovery of country competitiveness with an increase
in labor productivity and decrease of the governmental expenses.
In year 2010 there was an assumption that unemployment rate decrease will get stopped,
so for forcing it decline again there were invested 14.7 million Euro from ESF project and 0,33
million of governmental money for helping for the unemployment to get a new qualification as it
was considered that growth of employment will be dependent on that. 24% of the ones who
finished those courses got employed.
7.1.4
Salaries
In comparison to year 2009 in year 2010 average gross monthly payment declined from
656 Euro to 633 Euro.
9
http://about.hm.com/content/hm/AboutSection/en/About/Facts-About-HM/About-HM/Sales-Markets.html#cmmenu ( visited 24.05.2012)

10
http://epp.eurostat.ec.europa.eu/cache/ITY_PUBLIC/2-13122011-BP/EN/2-13122011-BP-EN.PDF ( 24/05/2012)
11
Main source used - http://balticexport.com/?article=latvijas-darba-tirgus&lang=ru (24/05/2012)
10
The difference between gross and net monthly salary is around 29% that is the biggest in
the Baltics. In Estonia and Lithuania it is 20% and 22% relatively.12
Minimal salary is 284.6 Euro.
7.1.5
Export/Import
Another important factor that would be interesting to look at is Export/ Import level. We
can notice a positive tendency as from year 2005 to year 2010 the export has grown on 2.5
points13 which is quite good, but at the same time we see that import is always higher than the
export, but doesnt have much of a growth ratio, so we can assume that maybe the account
balance in next 5 - 10 years will grow.
One of the reasons of the export growth is the increase in labor productivity.
7.1.6
Population
Such factor that shall be analyzed is a demographic structure as it shows us more

information on the population as well. Moreover it is also one of the market research points that
are getting analyzed by H&M team itself.14
First I would like to look at the number of population itself:
Figure 2: Population in Latvia
Figure 2: http://www.indexmundi.com/g/g.aspx?v=21&c=lg&l=en
As we see since year 2000 the total number of Latvian inhabitants decreased on around 8
9 %, which is quite a big number. The reasons can be many, for example, crisis that caused
migration of people to other countries for searching a better place and of course a combination of
birth and death rates, which upon we are going to look now.
12
http://balticexport.com/?article=latvijas-darba-tirgus&lang=ru
14
http://about.hm.com/content/hm/AboutSection/en/About/Facts-About-HM/About-HM/ExpansionStrategy.html#cm-menu
13
11
Figure 3: Birth rate in Latvia
Figure 4: Death rate in Latvia
If we compare these 2 charts we see that obviously one of the reasons of population
decrease is aging of the nation with having a death rate higher than the birth rate. Nevertheless
we see that from year 2000, when death rate was almost twice higher than the birthrate, already
in year 2011 we have improvements, where on every ~14 dead people we have ~10 newly born.
12
That gives a hope that population decrease will stop that can be provided for example with the
safer economic environment, so that there would be more stable birth rate growth.
Summary:
The economic analysis of country shows that Latvian market had the bad times, but we
can make an assumption that the situation is improving, what makes in attractive for H&M to
open its stores in the country.
13
7.2
Questionnaire
To understand more potential customers of H&M, their needs and interests, I decided to
make a questionnaire, which would help me to see the tendencies and build the market entry
strategy.
The questionnaire consisted of 18 questions, which you can see in Attachment 1.
Originally it was sent in Russian, but for project was translated in English for the readers. As the
spreading place were used such social media as one.lv (Latvian social portal) and Facebook.
During the week it was sent to over the 50 people, but in the end got 34 respondents. It is not a
big number, but due to lack of time I preferred to anyway use received data, for seeing the
preference tendencies.
7.2.1
Questionnaire analysis
As the main analysis tool Pivot Tables were used.

First dependency I was interested in is to find how many people from those who know
about H&M are planning to buy in there:
Figure 5: How many from people who know about H&M will go for shopping in
there
Count of
Number
Know H&M
No
Yes
Grand Total
Will
buy
Grand
No Yes Total
8
1
9
4 21
25
12 22
34
Figure 5: self-made
As we see, from people who knew about this company, (number of who is 25), 21 of
them are planning to do their shopping in H&M stores in Latvia. This is a good indicator as it is
84% of knowing about H&M respondents.
To see what our main age and gender audience is, lets look on the next tables:
Figure 6: Preference on consumption according to gender
Count of Number
Gender
Female
Male
Grand Total
Will
buy
No Yes
4
19
8
3
12
22
Grand
Total
23
11
34
Figure 6: self-made
14
Analyzing the table, we see that women in general were the ones who were interested in
the topic and have a good percentage of the ones who wish to buy H&M products 83%. If we
look at the men, they on the contrary were not so interested - only 11 respondents, from who
only 3 are planning to do their shopping in H&M stores.
Figure 7: Comparison of how many people who know about H&M will go for
shopping in there.
Count of
Number
Know
H&M
Age
14
15
19
20
21
22
23
26
34
35
36
37
39
40
Grand
Total
No
2
3
1
1
1
1
Count of
Number
Grand
Yes Total
1
1
4
7
2
2
1
1
1
1
2
1
1
1
1
4
9
5
2
2
1
2
1
1
3
1
1
25
34
Age
14
15
19
20
21
22
23
26
34
35
36
37
39
40
Grand
Total
Will
buy
Grand
No Yes Total
1
1
4
4
5
3
2
2
2
1
2
1
1
1
2
1
1
12
22
1
1
4
9
5
2
2
1
2
1
1
3
1
1
34
Figure 7: self-made
As we see in general people who were interested in topic are aged 14 40, but the biggest
mass of respondents lies in age 19 23, 34 and 37.
Now it would be interesting to see how many people of that age live in Latvia:
Figure 8: Percentage of Latvian population in different age sectors
15
Figure 8: Self made15

Generally looking people aged from 14 40 are approximately 35% of population (I took
age range from 15 to 39), which is 70405416 people.
Roughly telling, we can see that around 35 37% of Latvian population is potential
buyers of H&M products. Another angle we can look upon is 14% percent of children aged 0
14 who for clothes would be bought by parents, so with unifying those 2 groups we see that
H&M potential focus group in Latvia consists of ~49% of its inhabitants.
Paying attention precisely on respondents of the questionnaire, who were answering the
most, we can look at the following table:
15
Information used from http://data.csb.gov.lv/Dialog/varval.asp?ma=TSG1101&ti=TSG11%2D01%2E+LATVIJAS+PAST%C2V%CEGO+IEDZ%CEVOT%C2JU+DZIMUMA+UN+VECUMA+SAST%C2VS

+2011%2EGADA+1%2E+MART%C2&path=../DATABASE/tautassk_11/2011.gada%20tautas%20skait%EE%F0anas%2
0gal%EEgie%20rezult%E2ti/&lang=16
16
http://data.csb.gov.lv/Dialog/varval.asp?ma=TSG1101&ti=TSG11%2D01%2E+LATVIJAS+PAST%C2V%CEGO+IEDZ%CEVOT%C2JU+DZIMUMA+UN+VECUMA+SAST%C2VS
16
Figure 9: Comparison of number of population in different age sectors
Figure 9: self-made17
Speaking about children, lets see how many people, who have youngsters aged 0-9 year
old, will be interested in clothes sector for children.
Figure 10: people, who have youngsters aged 0-9 year old and interested in clothes
sector for children
Count of
Number
Interested in
sector children
Not interested
Interested
Grand Total
Number of
children in
family aged 0-9
Dont have a
child
22
4
26
One
child
Two
of children
that
of that
Grand
age
age Pregnant Total
2
1
1
26
2
2
8
4
3
1
34
Figure 10: self-made

Looking at the table, we see that there are 4 people interested in children clothes sector,
but dont have children in their family. From 4 people who have one child of that age 2 will be
interested and from 3 families where they have 2 children, two will be interested in buying
clothes for them in H&M.
17
17
From families who have children aged 10 18, 2 people will be interested (see
Attachment 2).
Now I would like to see what the shopping mall preference in Latvia is. The main
location of the stores is in Riga and closest areas18 to it.
Figure 11: Shopping mall preference
Which shopping malls do you prefer?

Answers
Galleria Riga
Spice
Alfa
Galerija Centrs
Mols
Riga Plaza
Domina Shopping
Azur
Podium&ELKOR
Olympia
SKY &More
ORIGO
STOCKMANN
Graph
Sum
8.53
21.71
5.43
16.28
6.2
7.75
8.53
0.78
3.1
2.33
1.55
8.53
9.3
Total answers:
||||||||
|||||||||||||||||||||
|||||
||||||||||||||||
||||||
|||||||
||||||||
|||
||
|
||||||||
|||||||||
11
28
7
21
8
10
11
1
4
3
2
11
12
34

As we see in the top 6 list preferred shopping malls there are: Spice (21,71%), Galerija
centrs (16,28%), STOCKMANN (9,3%) and then on the same level (8,53%) Galleria Riga,
Domina Shopping and ORIGO. The less preferred are such shopping malls as Azur (0,78%),
SKY&More (1,55%) and Olympia (2,33%).
Another interesting point to explore is shopping mall preference of people who have
different monthly expenditure on shopping:
Figure 12: Monthly expenditure and shopping malls
20 - 50 Ls
51 - 70 Ls
71 - 100 Ls
101 - 150 Ls
151 - 200 Ls
more than 200
Ls
Spice
10
2
6
3
1
-
Galerija
centrs
7
3
4
2
1
Galleria
STOCKMANN Riga
4
4
2
2
2
3
1
1
1
Figure 12: self-made based on Pivot tables
18
http://www.concordia.lv/rus/yurmala/riga-shopping-rige-yurmale.php
18
ORIGO
5
1
1
-
Domina
5
3
1
1
According to that table we can say that there is the biggest amount of people who spend
per month 20 50 Ls and their preferred shopping malls are such as Spice and Galerija centrs.
Generally telling those malls are preferred among people who dont spend more than 150 Ls per
month, others who spend more than that amount of money visit STOCKMANN and Galleria
Riga, where are located more expensive stores19.
To check if the choice was influenced by any external factors lets look at the ZIP code of
people who have chosen Spice as the preferred shopping mall. For better understanding of ZIP
codes location you can see a map in Attachment 3.
Figure 13: Location of people who prefer to visit Spice
Count of
Number
Zip-code
1067
1003
1015
1029
1045
1057
1058
1064
1067
1069
1084
2010
2101
2137
5418
Grand
Total
Shop in
Spice
Grand
No Yes Total
1
1
1
1
2
2
1 13
14
1
1
2
1
1
1
1
2
1
1
1
1
1
1
1
1
1
1
2
2
2
2
1
1
2
6
28
34

As we see this choice is subjective, because main group of people live in area with ZIPcode of LV-1029. Looking at the postal address of Spice (Lielirbes iela 29, Riga, LV-1046)20
and looking at the map21 we see that in between LV-1029 and LV-1046 it is a very short
distance.
Now lets look at such store as Galerija Centrs.
19
http://www.stockmann.lv/portal/87
http://galleriariga.lv/en/shopping-in-riga
20
http://www.spice.lv/public/30034.html
21
http://maps.google.ru/maps?hl=ru&tab=wl
19
Figure 14: Location of people who prefer to visit Galerija Centrs

Count of
Number
Shop in
Galerija
Centrs
Zip-code
1067
1003
1015
1029
1045
1057
1058
1064
1067
1069
1084
2010
2101
2137
5418
Grand
Total
Grand
No Yes Total
1
1
1
1
2
2
5
9
14
2
2
1
1
2
2
1
1
1
1
1
1
1
1
1
1
2
2
2
2
1
1
2
13
21
34

Now we see that amount of people from that area became smaller, because the destination
is not so short anymore. Galerija Centrs is located in the Old City and it is more far from
Zolitude (LV-1029)22. As this shopping mall has the preference of more respondents with more
varied ZIP-codes it means that it is the most popular among the others.
In the questionnaire also was given a question on preferred stores and here is the result:
Figure 15: Preferred stores in Latvia
Which of the following brands do you prefer for shopping? (Only

four answers)
Answers
ZARA
Mango
Vero Moda
New Yorker
Bik Bok
City Men&Women
Monton
Oasis
22
Graph
Sum
25
19.23
5.77
10.58
4.81
3.85
18.27
2.88
|||||||||||||||||||||||||
|||||||||||||||||||
|||||
||||||||||
||||
|||
||||||||||||||||||
||
26
20
6
11
5
4
19
3
http://ru.wikipedia.org/wiki/%D0%97%D0%BE%D0%BB%D0%B8%D1%82%D1%83%D0%B4%D0%B5
20
Bershka
9.62
Total
answers:
|||||||||
10
34

The top-preferred store is ZARA, which has 25% of the total preference, then goes
Mango(19,23%) and Monton(18,27%).
Summary:
From the questionnaire we found out that 2/3 of the respondents already know about
H&M, and main group who is interested in doing their shopping in there are female part from
different age sectors.
Two most preferred shopping malls are Spice and Galerija Centrs. The H&Ms main
competitor in Riga is going to be ZARA as the biggest amount of respondents voted for it as for
the most favored.
21
7.3
Competitors analysis
To make more detailed competitive analysis I would like to first make a research on the
fast fashion industry in general and see the level of its attractiveness in the long run. For this
purpose I will use Porters Five Competitive forces.
7.3.1
7.3.1.1
Porters Five Competitive Forces

Threat of intense segment rivalry
Before starting the analysis I would like to define what the Fast Fashion is itself. The
main idea is to follow the fashionable trends, which were presented at the catwalks, Fashion
Weeks and move it to the stores in the fastest time. It includes in itself fast designing and
manufacturing in the most possibly cheap way, so that consumer could get stylish clothes at the
lower price.23
Looking at the market, we can see that there is quite a list of fast-fashion companies,
consisting of Zara, Peacocks, H&M, Gap, Topshop and etc. 24It gives a specific way of intensity
as they shall be faster and better among the others. For example it takes Hennes & Mauritz AB
and Inditex SA only two weeks for updating accessory designs and putting them into the stores.25
Another point that gives the intensity of competitiveness is that customer has a good
ability to switch from one brand to another without any losses, so companies shall work hard to
stay or become preferred.
7.3.1.2
Threat of new entrants
There can be three ways of the barrier distribution: low entry and exit barrier, low entry
barrier and high exit barrier, high entry barrier and low exit barrier. The last one is naturally
preferred as then only few new firms can enter the industry, and poorly performing firms can
easily exit.26
Looking at the fashion industry, specifically on the fast fashion, we can assume that it is
the case when it is low entry and low exit barriers.
It makes easy to exit this industry for such companies as, for example, H&M that doesnt
own any store or manufactory, but only rents it, and so it has no problems in staying with a lots
of expensive equipment, which has no more use. To get rid of big amount of clothes is no
problem as well with setting big sales in the stores.
23
http://en.wikipedia.org/wiki/Fast_fashion#cite_note-3
http://en.wikipedia.org/wiki/Fast_fashion#cite_note-3 List of fast fashion brands
25
http://www.bloomberg.com/news/2010-09-30/h-m-zara-set-pace-as-fast-fashion-mentality-spreads-to-luxurycompanies.html
26
Philip Kotler (2009): Dealing with competition Competitive Forces, 304 - 305
24
22
But to see if there are existing high or low entry barriers we shall look at the following
factors27:
Advertising and customer loyalty sometimes existing companies can use it as a

tool for complication for new companies, who cannot afford having as expensive
or as creative commercials that already exist at the present firms. This can build
barriers in creating a new brand, which shall be slightly different from what is
already given in the market. To enter the fast fashion industry it is important to
offer something new to the customers and deserve their loyalty which can be hard.
Capital for starting a new business it is most likely that you would need to have
a good capital and investors, but it can be done with a good business plan
consisting of fresh ideas. Another helpful tool is a loan. I dont think that there
can arise a problem of capital with building a new fast fashion brand.
Control of resources there is no monopoly in fast fashion industry, so there is no

any specific firm control over the resources.
Cost advantages independent of scale this point can be a good barrier as the best
geographic locations, favorable access to raw materials are most likely to be taken
by already existing competitors.
Economy of scale this barrier appears from the previous point, that if all the
favorable accesses to raw materials are taken, then its hard to be cost efficient
and that is an important point in the fast fashion industry.
Elastic demand the idea of the fast fashion industry is to provide a fashionable
clothes at the lower price, so if at the market will appear a competitor with better
offer, customers will switch their interest to that new company, meaning that
demand cannot build the barrier.
Network effect based on the previous point we can tell that within this industry
it is not a barrier as even if company has the preference of some clients, they can
easily switch, finding a better offer.
Analyzing those points we can see that our assumption was correct and there are low
entry barriers.
7.3.1.3
Threat of substitute products
Analyzing the clothes market we can tell that it has one of the biggest alternative
possibilities. Customer has a big choice in between many store offers in style, price and the
variety of design.
27
http://en.wikipedia.org/wiki/Barriers_to_entry
23
For staying in the market, companies shall always move and follow the needs of the
customers to make them interested in buying, produced by exactly this company, product.
7.3.1.4
Threat of buyers growing bargaining power
Buyers bargaining power grows when they become more concentrated or organized,
when the product represents a significant fraction of the buyers costs, when the product is
undifferentiated, when buyers switching costs are low, when buyers are price sensitive because
of low profits, or when they can integrate upstream. To protect themselves sellers might select
buyers who have the least power to negotiate or switch suppliers. A better defense offer consists
of developing superior offers that strong buyers cannot refuse.28
Looking at the fast fashion buyers we can assume that they are quite powerful in the way
that there is no switching costs and they have a lots of choice at the market, but on the other
hand the buyers are fragmentated, meaning that there is no specific buyer influence on product or
price.29
7.3.1.5
Threat of suppliers growing bargaining power
In the fast fashion industry there is no strong suppliers, because they have no ability to
raise prices or reduce quantity supplied due to big amount of substitutes.
28
29
Philip Kotler (2009): Dealing with competition Competitive Forces, p. 305

http://www.fashioncapital.co.uk/Learning/Students/23319-Porters-Five-Forces.html
24
7.4
Value Chain
To identify H&Ms synthesis of activities of producing, designing, marketing, delivering

and etc. I am going to use value chain, and specifically the primary part of the activities.
7.4.1
Inbound logistics
One of the core values of H&M is sustainability. It is shown in many ways, but one of
them is a production material.
Through the value chain H&M shall be efficient in order to offer fashion and quality at
the best price and such way can be a tendency to avoid the waste at every stage of the value
chain.
All the operational waste that comes from manufacturing, transport, construction and
other sources is aimed to be reused, recycled and reduced in every possible way.30
With the same goal H&M tends to use natural resources responsibly and efficiently which
can be good competitive advantage in the fast fashion industry.31
Being sustainable this company takes care as well about the animal welfare and the
protection of the endangered species. H&M is a Fur Free Alliance listed retailer, so already for
several years H&M is not using genuine fur and since year 2009 was updated product policy32
with stricter requirements on angora wool, merino wool, use of animal skin and feathers and
downs.33
7.4.2
Operations
H&M doesnt own any factories, so the clothes and other products are commissioned
from around 700 independent suppliers, primarily in Asia and Europe and the practical aspects
are getting dealt with the production offices of H&M, which employees are mostly drawn from
the local population. 34 They are ensuring that buyers orders are placed with the right supplier,
the good are produced at the right price and quality and that the suppliers conform to the
companys code of conduct as for working conditions.
30
http://about.hm.com/content/hm/AboutSection/en/About/Sustainability/Commitments/Reduce-ReuseRecycle.html#cm-menu
31
http://about.hm.com/content/hm/AboutSection/en/About/Sustainability/Commitments/Use-ResourcesResponsibly.html#cm-menu
32
http://about.hm.com/content/hm/AboutSection/sv/About/Sustainability/Reporting-andResources/Policies/Product-Policy.html
33
http://about.hm.com/content/hm/AboutSection/sv/About/Sustainability/Commitments/Use-ResourcesResponsibly/Raw-Materials/Animals-and-Wood.html
34
http://about.hm.com/content/hm/AboutSection/en/About/Facts-About-HM/Idea-toStore/Production.html#cm-menu
25
For example, H&M takes care that in their product manufacturing wont be used child
labor35.
The second department is the buying department. It is responsible for customers, fashion
and composition of the range. The collections are created in Sweden by around 100 internal
designers, 50 pattern designers and around 100 buyers. The method of production of the H&M is
customer-driven.
36
As well as it was mentioned in section about H&M, it is known also for
collaboration with well-known designers.

H&M operates with two main collections per year, one in spring and one in autumn, but
within the season there are a number of sub-collections.37 In general, products time-to-market
varies from a couple of weeks to six months, which depends on the product itself. For example
high-volume fashion basics and child wear will take a longer time, than the trend-led garments,
which are produced in smaller volumes.38
7.4.3
Outbound logistics
H&M controls every stage in the logistic chain. Constant IT development is helpful for
the H&M logistics. H&M organisation primarily takes over the stock management, while the
transport is contracted to third parties. A large part of the production first goes through German
transit terminal in Hamburg.39 In every country there is a distribution centre. As soon as goods
are arrived, they are inspected and referred to centralised stock or to the store.
40
Also H&M sustainability tendency is through seen in the transportation, with the
willingness of limited use of natural resources and as few emissions as possible. To follow it,
where it is possible, H&M works with environmentally sound companies and switching to rail or
35
http://about.hm.com/content/hm/AboutSection/en/About/Sustainability/Commitments/ResponsiblePartners/Code-of-Conduct/Stand-Against-Child-Labour.html
36
http://ec.europa.eu/enterprise/archives/e-businesswatch/studies/case_studies/documents/Case%20Studies%202004/CS_SR01_Textile_2-HM.pdf
37
38
http://about.hm.com/content/hm/AboutSection/en/About/Facts-About-HM/Idea-toStore/Production.html#cm-menu
39
http://books.google.ru/books?id=S2SdcqoeOn8C&pg=PA18&lpg=PA18&dq=transit+terminal+in+Hamburg+H%26
M&source=bl&ots=GwZxIQAm56&sig=BAQ8X0a3CqmIk-yqdyGUdJ4H_es&hl=ru&sa=X&ei=ZpHGT9jJ8rIsgatgekR&ved=0CEYQ6AEwAA#v=onepage&q=transit%20terminal%20in%20Hamburg%20H%26M&f=false(29/
05/2012)
40
26
sea vehicles and increasing transport efficiency.41 But of course air and land transport is used as
well (DATA monitor).
7.4.4
Marketing and sales
The main business idea of H&M is fashion and quality at the best price which reaches
the customers through various advertising campaigns each year. H&Ms advertising main idea is
to show different styles.
The centre where the H&Ms advertising campaigns are produced is the marketing
department which is in Sweden. Also they are working in the cooperation with the professionals
from the big fashion hubs of the world. The campaigns are designed to be clear and simple and
aim to inform the customers of what is new at H&M.43
Also through the advertisement can be seen the price of the new products.
Advertisements that we can see in the different markets are quite similar, but the needs of
the local market are considered and adopted.
In the company commercials image of drugs and alcohol is avoided.
Also H&M has special guidelines for the advertising the childrens concepts, for
example, the target audience is parents, not children, so in media are placed advertisements that
are not directly aimed at the children.42
7.4.5
Service
In the H&M service part is included return and refund strategy. There are special
conditions in which the clothes can be returned in the cases when client has saved the original
receipts and when it is lost.
Usually not damaged clothes with the receipt can be returned within the 30 days after the
purchase for a full return. Other conditions are mentioned on the H&M webpage www.hm.com.
43
41
http://about.hm.com/content/hm/AboutSection/en/About/Sustainability/Commitments/ClimateSmart/Transport.html
42
http://about.hm.com/content/hm/AboutSection/en_us/About/Sustainability/Commitments/BeEthical/Responsible-Marketing.html
43
https://www.hm.com/us/customer-service/payments-and-returns
27
7.5
SWOT analysis for ZARA and H&M
Looking at the questionnaire analysis we can see that in the present clothes market H&M
biggest competitor is Spanish fast fashion brand ZARA. To see what can be H&M advantages
over it I decided to make the SWOT analysis for the both of the brands.
ZARA
Strengths
Weaknesses
Well known and trusted by the local
pregnant women
customers
No section, where would be clothes for
Good location: Alfa, Spice, Riga
No much collaboration with well-
Plaza, Separate store (Terbatas street
known designers. For now only with
30)44
John Galliano.48
Designs, produces and distribute
No advertising (only 0.3% of the
clothes themselves45
revenue spent on the advertising
Good style in a low price
campaign)49
Vertically integrated
Time 2 Market: 2 weeks
Target market from 18 to 4046
New items in stores twice a week47
Opportunities
More new stores
More collections with well-known
Threats
Strong competition
designers
44
http://www.zara.com/webapp/wcs/stores/servlet/category/es/en/zara-S2012/11108/Stores
http://edition.cnn.com/BUSINESS/programs/yourbusiness/stories2001/zara/
46
http://wrightunt.files.wordpress.com/2011/12/swotanalysis-wrighttonaya1.pdf
47
48
http://efashiondesign.net/2012/john-galliano-and-zara-collaboration-double-for-the-former-designer-of-dior/
49
http://edition.cnn.com/BUSINESS/programs/yourbusiness/stories2001/zara/(28/05/2012)
45
28
H&M
Strengths
Weaknesses
Time to market from 2 weeks to 6
the Latvian market
months
Target market from 18 to 45
Flexibility no stores and
Not yet known for all the customers in
Easy substitutable product
manufactories owned
Combination of the low price and

good quality
Sustainable
Informative advertisement
Good communication in between

departments, suppliers and
stakeholders
Media strategy adopted to local

requirements and conditions
After-purchase service
Collaboration with the well-known

designers
New items in store daily50
Resource efficiency51
Opportunities
Threats
Establishment of the new stores in
Intense competition
the new market in Latvia, Riga
Lack of interest from local customers
Become a top-preferred fast-fashion
No place for rent in the preferred
store among the customers
shopping area
Get a strong group of the loyal
Errors in operations
customers in Riga
Analyzing these figures we can see that both companies are targeting same group of
people, e.g. men, women, teens and children, who are interested in the low price products, with
50
http://www.themarketingsite.com/live/content.php?Item_ID=8560
51
29
approximately same main age group from 18 to 40 (45). It means that the range of the clothes
offered is alike. Good competitiveness point for H&M clothes for the pregnant women and size
+, that are not offered in ZARA stores.
Another point that H&M can win from, is the informative advertisement they use, such
as, for example, billboards, where is given information on the new clothes at the store and the
price of it, while ZARA strategy is no advertisement and they attention attracting points are store
windows.52
There are several threats that can be met at the Latvian market, such as strong
competition from the already existing companies, lack of interest from the local customers, after
H&M will be no more new at the market and no favored rented place in the store. As the risk,
not necessarily connected with Riga, can be mentioned errors in production or delivery time
operations.
At the same time H&M has a lots of opportunities, such as successful enter to Latvian
market and with the good marketing and promotional strategy, becoming a top preferred fastfashion company among the customers. As the consequence, H&M will get an amount of the
loyal customers in Riga.
52
http://fashiongear.fibre2fashion.com/brand-story/zara/advertisements.asp
30
8. Marketing and Strategy

8.1
Segmentation& Targeting
A market segment consists of a group of customers who share a similar set of needs and
wants.53
H & M Hennes & Mauritz is engaged in designing and retailing of fashion apparel and
accessories. The group offers a range of apparel, cosmetics, footwear and accessories for men,
women, children and teenagers through its retail and online stores, and through catalogue
sales.54
The way that H&M segments its customers is demographics. The first segment are
children, which consists of several sub-segments, such as newborn (0 6 months), baby (2 18
months) and then children aged from 18 months to 8 years and from 9 to 14 years.55
Then are going groups of teenage boys and girls aged 14 to 18. Next segment are men
and women aged 18 to 45.56 57 For women there are also special sub-segments such as maternity
wear and size+ clothes.
H&M target market is the low price and high fashion end of the clothing sector. It has a
strong following among women, particularly the under 25s58, who make the majority of its
customers.59
In Riga, Latvia it would be relevant as well to mainly target the women, as they buy
clothes not only for themselves, but for children and men as well. As the women are aged 18 to
45, lets look how many of them are in Riga. For the comparison we will also take amount of
men. As in Riga statistical data basis I couldnt pick such variable as age selection strictly from
18, I had to pick a bit earlier age, which will include teenagers as well.
53
Kotler and Keller, Marketing Management, 2009, p.336

http://360.datamonitor.com/Product?pid=F7E41ECA-902F-483F-B72C-A7FAEA92122E
55
http://www.hm.com/gb/
56
http://www.mobilemarketer.com/cms/news/advertising/2506.html
57
http://www.tellermate.com/media/51355/us%20tellermate%20case%20study_h+m.pdf
54
58
http://www.researchandmarkets.com/Samples/Product/25929/Profile%20of%20Hennes%20and%20Mauritz%20%20A%20Pioneer%20of%20Fast%20Fashion%20-%20Products.pdf (27/05/2012)
59
http://www.researchandmarkets.com/reports/568624/profile_of_h_and_m_a_pioneer_of_fast_fashion
31
Figure 16: Male and female groups in Riga in different age sectors. Data is from
year 2011.
Figure 16: self-made in Excel60

Looking at the table we see that in the adult age groups, from 20 in Riga there are more
women than men, giving us one more ground in targeting this audience, especially aged from 25
to 29 as it is the biggest group.
In the teen group there are more boys than girls and as H&M adjusts marketing strategy
for the local conditions and interests, this information shall be used in the promotional strategy.
60
http://data.csb.gov.lv/Dialog/varval.asp?ma=IS0160&ti=ISG16%2E+V%CERIE%D0U+UN+SIEVIE%D0U+VECUMA+ST
RUKT%DBRA+STATISTISKAJOS+RE%CCIONOS+GADA+S%C2KUM%C2+%28pa++5+gadu+vecuma+grup%E2m%29&pa
th=../DATABASE/Iedzsoc/Ikgad%E7jie%20statistikas%20dati/Iedz%EEvot%E2ji/&lang=16 (27/05/2012)
32
8.2
Positioning strategy
8.2.1
Marketing Mix
8.2.1.1
Product
The product that is going to be provided by H&M in Latvia covers a big segment of
customers and their needs. H&M designers are working on collections for men, women, youth
and children. As well in the offer are such products as cosmetics and accessories.
Style of the clothes is much differentiated. In stores is offered range of the clothes as for
the daily life, as for the big occasion. All the needs are taken into consideration in the different
customer groups. For women it is offered and the standard range if clothes and the maternity
wear. The H&M Kids department offers clothes made of soft on the skin, but designed to
withstand lively plays so it is made of washing material that can be washed in the high
temperatures and harsh.61
The factor that H&M also looks in their clothes is Green Fashion, which means
environmentally friendly production, with creating a Conscious Collection without a need on
compromising on price or design.62
Range of the clothes that is sent to the markets varies and the choice is made according to
what the customers are looking for while inspiring new styles and fashion expressions. Also the
previous seasons sales provide the reason to choose. The size of a store, the country where its
located and whether it is in a big city or smaller town are also taken into account: high-fashion
garments produced in limited quantities are sold mainly in big cities while modern basics are
ordered in larger volumes and distributed to more stores.63
One of the data that shows the size of Latvian market is the buying power that we looked
upon in economic analysis part, but as well we can look at The Global Competitiveness Report
2010 11. For the comparison we will take H&M biggest markets, such as Germany, France,
UK and US. Figures see in Attachment 4. Another variable that determines a size of the market
is amount of the stores located in the country64 Germany (393), France (168), US (234)65, UK
(215).
61
http://about.hm.com/content/hm/AboutSection/en/About/Facts-About-HM/Brands-and-Collections/HMCollections.html#cm-menu
62
http://about.hm.com/content/hm/AboutSection/en/About/Sustainability/Commitments/ConsciousCustomers.html#cm-menu
63
http://about.hm.com/content/hm/AboutSection/en/About/Facts-About-HM/Idea-to-Store/Planning-theRange.html
64
http://about.hm.com/content/hm/AboutSection/en/About/Facts-About-HM/About-HM/SalesMarkets/Europe.html (28/05/12)
65
http://about.hm.com/content/hm/AboutSection/en/About/Facts-About-HM/About-HM/Sales-Markets/NorthAmerica.html (28/05/12)
33
Looking at the Latvian market we see that it is not belonging to the number of big
countries and markets, meaning that on the shelves of the stores will be found the modern basics.
8.2.1.2
Price
As we know H&M is the fashion and quality at the best price, the price that can be
affordable for the biggest amount of customers.
The best price can be ensured by:
having few middlemen
having a broad, in-depth knowledge of design, fashion and textiles
buying the right products from the right markets
being cost-conscious at every stage66
After our questionnaire analysis, we have seen that mainly people spend 20 50 Ls (~
200 500 DKK) per month, which is not a big amount of money, meaning that H&M with its
pricing politics will be interesting for Latvian market.
8.2.1.3
Place
H&M store choice strategy is to be located in the best business locations, whether in a big
city or a small-town shopping center. Also H&M doesnt own any store premises, which makes
way for flexibility and adaptability.67
Entering Latvian market it will be the best to place the stores in the capital city in Riga.
There are located around 13 shopping malls.68
After making questionnaire analysis, we see that in preference are such stores as Spice,
Galerija Centrs and STOCKMANN. Each of those stores has their advantages, which makes
them attractive for placing H&M stores in there, but the preferred one would be Galerija Centrs.
Its one of the most popular shopping malls and it is located in the Old City the one of
the most visited places by tourists and in general. Its surrounded by banks, universities, hotels
and etc., which is fulfilling H&M requirements.
Another benefit of it is the size in Galerija Centrs are 4 stores of shops and cafes, and a
5th floor with a SPA center.
Also Galerija Centrs there is a lots of glass, which gives opportunity to put different
styles of display windows for the companies and for H&M it is an a version of communication
with the customers. In H&M stores displays, both in windows and inside the stores, are changed
66
http://about.hm.com/content/hm/AboutSection/en/About/Facts-About-HM/About-HM/Business-Concept-andGrowth.html#cm-menu
67
68
34
frequently. As well store displays can be used as an inspirational tool for the clients as you can
see different clothes and accessories combinations.69
8.2.1.4
Promotion
For setting the promotion strategy of H&M in Riga, I will base it on already existing
strategies on the other markets and of course add ideas of mine.
First I would like to think of the ways of advertising at the grand opening day. Before the
store will be opened, there shall be commercials that will let people know about H&M and make
them interested in visiting a new store.
For designing the pre-opening commercial we will use AIDA model:
Attention:
Some peoples attention will be taken with reconstruction works of some store space
covered with building material with H&M logo on it, but the big mass of people attention can be
taken with big billboards placed on the streets of Riga and radio-commercial can be used as well.
Interest:
The interest will be also arisen with the billboards, but more certainly with the contents of
them. Usually on the billboards are offered the clothes models that are present at the store for
men and women with the prices of it. People will be interested with the good-looking style and
the low price.
Desire:
To arise people desire, H&M gives special offers for the first 200 300 people who were
in the queue in the grand opening day.70 For example at the grand opening at the Tampas
International Plaza for the first 250 customers in line there were given free t-shirt and shopping
passes valued between $10 and $300.71 This was mentioned in some stores, information on what
I have found and I think that it can be used in Latvian market as well.
The information about it can be spread through flyers, in radio commercials and another
option of making an event on Facebook as it was done in Singapore.72
Action:
69
http://about.hm.com/content/hm/AboutSection/en/About/Facts-About-HM/Idea-to-Store/Meeting-theCustomer.html
70
http://azstarnet.com/business/local/article_6d915324-a666-11df-890f-001cc4c002e0.html
71
http://www.tampabay.com/blogs/divas/content/freebies-hm-grand-opening
72
https://www.facebook.com/events/181707705235195/
35
The desire part shall have a consequence of people willing to visit the store and shop in it
not only in the grand opening day. To have such an outcome the assortment of the clothes will
have its influence.
After the grand-opening day there shall be planned the standard promotional ways that
will keep customers attention during the year.
For example, in H&M the store itself is also a way of promotion as people can get
inspiration from clothes and accessories combinations that are presented on the mannequins.
Also it can be used as a communication channel each visit should offer the customers an
inviting and inspiring experience. As well in the store are given H&M Magazine which is
distributed through all H&M stores, offers readers a mix of fashion, inspiration and the latest
lifestyle trends. It is published four times a year and is also available on H&M website.73
Living in Denmark I noticed that H&M uses billboards quite often to show whats new
can be found in the stores and how much it costs. Same strategy can be used in Riga as it is quite
smart solution.
They shall be located at the places that target customers are visiting the most. It shall be
varied according to different age and gender groups.
As the promotional campaign is not targeting children we will start from teenagers.
Teenagers aged from 14 - 18 (boys and girls) the most typical visited places in this age
are school, cafes and cinemas and the last 2 points are due to the age specific the dating period
already started and caf and cinema are the most standard places of dating, so the billboards can
be placed near of them.
Youngsters aged from 19 25 (male and female) the most typical visited places in this
age are colleges, universities, cafes, cinemas, night clubs and public transport stops, so it can be
the places where the billboards shall be placed.
Adults aged 26 45 (male and female) to previous places mentioned, adult group adds
such places as the parking lots and banks.
Pregnant women there is no special age settlement for the pregnancy period, but the
definite place that women visit at these times are special hospitals where they are getting
checked on the condition of a lady and baby, so the billboards with maternity clothes can be
placed near of the big hospitals.
The general place where billboards can be placed as well, are airports as the big amount
of people in different age group passes there daily.
73
http://about.hm.com/content/hm/AboutSection/en/About/Facts-About-HM/Brands-and-Collections/HMGroup/The-HM-Brand.html
36
8.3
Cultural Background and negotiation techniques

For H&M to enter a Latvian market shall be done a strategy making, analysis, but at the
practical phase, a lots of negotiation will be done as well. As H&M is a Swedish company and
its team is mainly consisting of Swedish people74 and Swedish office is responsible for
expansion75 we shall compare these two cultures and see how easy it will be to find a common
language for them and what negotiation strategy to choose.
8.3.1
Latvian culture
First I would like investigate the Latvian culture as it is important, while entering a new
country, to see its cultural background. It shows what the normative, interests, communication
habits have people and this knowledge helps to avoid unneeded misunderstandings.
As the main source of the Latvian culture analysis the book When the Cultures Collide
will be used.
As we know before 1991 Latvia was occupied by Russians and of course were under the
process of Russification, but it made them care even more about their cultural independence,
save traditions, language and values:
Figure 17: Values of Latvians
Figure 17: When Cultures Collide, p.363

Being Latvian myself I can tell that I agree with every value which is mentioned here.
Even in my generation, which is still more globalized, are saved most of the values even such as
old-fashion politeness (especially in official speech and towards older generations).
Speaking of leadership and status, people have tendency to not wish to be a leader, but
will respectful towards firm, confident knowledgeable leadership. But to show your status is
important it can be done with the dress you wear, financial security and a car you have.
In the physical communication it would be expected a greeting with hug/kiss towards
family and friends, but with strangers reserve is expected.
74
http://about.hm.com/content/hm/AboutSection/en/About/Investor-Relations/The-Share/Insiders.html
75
http://about.hm.com/content/hm/AboutSection/en/About/Facts-About-HM/About-HM/Organisation.html#cmmenu
37
Speaking of the time concept in Latvia, in the book When Cultures Collide there is
such a paragraph, which very well defines what you shall expect on that matter:
Latvians are usually punctual for actual appointments, but are sometimes slow to
respond. Occasionally there is a feeling of If not today, then tomorrow. Why rush?
Communication pattern is quite important to understand. Latvians speech is serious,
precise and well thought before say. Rhetoric is very important and I can tell that living in Riga I
noticed that Russians, who are living in Latvia speak Russian more grammatically correct and
polite than Russians who are actually living in Russia.
Politeness is also a good characteristic of Latvians and even in original Latvian you can
hardly find any swearing words. So they would expect their interlocutor to follow that rules as
well.
Also in communication for Latvians it is important to be treated as intellectual equals and
some tact can be required to let them know when they may be wrong.
Latvians are good listeners and unlikely to interrupt, but the negative side that you will
hear not so much feedback, so if you wish to hear anything specific you shall take initiative in
your hands and ask of what your interest is about.
They may seem cold on the first meetings, but as soon they have trust to person they are
negotiating with, Latvians become more warm and open-hearted. Before making decision its
more likely that they would like to have their time and think. Not easy persuade or convince so
people shall have a good argumentation, to reach their goal.
No matter that Latvians tend to save their cultural values some Soviet influence had its
place to be. You can see it in distrust of lawyers, bankers and etc. Also as the consequence in
companies there is a tendency to use the top-down system.
8.3.2
Comparison of Latvian and Swedish cultures
Now I would like to analyse those 2 countries and see what similarities and differences
they have.
For it I will use Hoffstede model and its five dimensions:
-
Power distance
Figure 18: Power distanceii
Figure 18:
38
http://www.v4ce.net/members/huettinger/documents/NationCulturalValuesoftheBalticStates.pdf
Uncertainty avoidance
Figure 19: Uncertainty avoidanceiii
Figure 19:
Individualism
Figure 20: Individualismiv
Figure 20:
Masculinityv
Figure 21: Masculinity
Figure 21:
Longterm orientationvi
Figure 22: Long term orientation

39
Figure 22:
As we see pretty much in all the data numbers is equal, meaning that negotiation
between H&M and needed representatives from Latvia will be smooth and there will be few
points where they wouldnt be able to find agreement.
The biggest difference is such factor as uncertainty avoidance, where people from
Sweden are not afraid to not follow the rules strictly and are more flexible76, when Latvians are
more concerned in system and are not so relaxed.
So it means that, as I mentioned above, if H&M manager would like to bring changes in
the way certain company used to act, he will have to find a good argument on why.
Another point is a power distance index, meaning that with Latvian old-fashioned
politeness, they would prefer a polite tone of conversation and letters written in official way.
Many old-fashioned courtesies still exist: shaking hands on meeting, introductions, no first
names unless mutually agreed upon.77
If a man will open a door for women and let her go first it is not an intention to show her
on women weakness, but simple politeness gesture. Similar can happen if negotiation preferred
to be in informal atmosphere, such as restaurant, if negation is between Latvian man and
Swedish woman, man might offer to pay for the meal as it is a matter of pride. If it is same
gender people most likely that each will pay for him- herself.
76
77
http://geert-hofstede.com/sweden.html
When Cultures Collide, p. 366
40
9. Conclusion
For choosing better entry strategy I had to consider such parameters as economic and
demographic situation in the country, potential customers opinion and preferences,
competitiveness level of the industry and to define the main competitor and find out its strengths
and weaknesses.
On this analysis the strategy was based, which is following:
As we know from H&M webpage the store that is going to be open in Latvia will be not
franchised but controlled straight by H&M itself. The city where store will be placed is Riga as
the best location of the shopping malls.
One of the strategies of H&M is placing store in the best business location, and so the
shopping mall Galerija Centrs is chosen as the first mall where the H&M store will be opened.
The choice was based on the preference of questionnaire respondents and the fact that GC is
located in Old City what the favoured place of tourists and local citizens is.
To settle the better communication technique, was made the comparison of Swedish and
Latvian cultures, that showed the low level of the differences, meaning that there will be no
misunderstandings.
The product range that will be sent to the store in Riga is defined by the size of the
market and as our analysis showed that according to economic indexes Latvian market is small,
in the stores will be found the basic collection that is updated with new items every day. One of
the core aspects as that it is the low priced product.
As the marketing and demographic research showed, the main target group are women
aged 18 to 45, with the main focus on the age from 25 to 29.
Looking at our main competitor ZARA, we see that H&M advantage on Latvian market
is wider clothes range offered, with having such sections as size + and clothes for pregnant
women, and advertisements.
For attracting new customers attention there will be good offers at the grand opening day,
such as free t-shirts and shopping passes valued from 10$ to 300$ for the first 250 customers.
The information on that offer will be spread through flyers, radio commercials, and Facebook.
As the routine advertisement, store display windows will be attracting point, such as
H&M Magazine and billboards with the information on new clothes and its prices will be used as
well.
41
10. Bibliography
011_en.pdf (15.05.2012)
http://about.hm.com/content/hm/AboutSection/en/About/Facts-About-HM.html#cm-menu(15.05.2012)
http://www.cosstores.com/About
011_en.pdf (main source in paragraph H&M in years)
http://about.hm.com/content/hm/AboutSection/en/About/Sustainability/HMConscious/stakeholderengagement.
html#cm-menu
http://about.hm.com/content/hm/AboutSection/en/About/Sustainability/HMConscious/Vision-andPolicy.html#cm-menu
http://about.hm.com/content/hm/AboutSection/en/About/Sustainability/HMConscious/Strategy.html#cm-menu
http://en.wikipedia.org/wiki/2007%E2%80%932012_global_financial_crisis#cite_note-6 based on ^ "World
Economic Outlook: Crisis and Recovery, April 2009" (PDF).
http://about.hm.com/content/hm/AboutSection/en/About/Facts-About-HM/About-HM/Sales-Markets.html#cmmenu (visited 24.05.2012)
http://epp.eurostat.ec.europa.eu/cache/ITY_PUBLIC/2-13122011-BP/EN/2-13122011-BP-EN.PDF (24/05/2012)
Main source used - http://balticexport.com/?article=latvijas-darba-tirgus&lang=ru (24/05/2012)
http://balticexport.com/?article=latvijas-darba-tirgus&lang=ru
Information used from http://data.csb.gov.lv/Dialog/varval.asp?ma=TSG1101&ti=TSG11%2D01%2E+LATVIJAS+PAST%C2V%CEGO+IEDZ%CEVOT%C2JU+DZIMUMA+UN+VECUMA+SAST%C2VS
http://www.stockmann.lv/portal/87
http://galleriariga.lv/en/shopping-in-riga
http://www.spice.lv/public/30034.html
http://maps.google.ru/maps?hl=ru&tab=wl
http://ru.wikipedia.org/wiki/%D0%97%D0%BE%D0%BB%D0%B8%D1%82%D1%83%D0%B4%D0%B5
http://en.wikipedia.org/wiki/Fast_fashion#cite_note-3
http://en.wikipedia.org/wiki/Fast_fashion#cite_note-3 List of fast fashion brands
Philip Kotler (2009): Dealing with competition Competitive Forces, 304 305
http://en.wikipedia.org/wiki/Barriers_to_entry
Philip Kotler (2009): Dealing with competition Competitive Forces, p. 305
http://www.fashioncapital.co.uk/Learning/Students/23319-Porters-Five-Forces.html
http://about.hm.com/content/hm/AboutSection/en/About/Sustainability/Commitments/Reduce-ReuseRecycle.html#cm-menu
http://about.hm.com/content/hm/AboutSection/sv/About/Sustainability/Reporting-andResources/Policies/Product-Policy.html
http://about.hm.com/content/hm/AboutSection/sv/About/Sustainability/Commitments/Use-ResourcesResponsibly/Raw-Materials/Animals-and-Wood.html
42
http://about.hm.com/content/hm/AboutSection/en/About/Facts-About-HM/Idea-to-Store/Production.html#cmmenu
http://about.hm.com/content/hm/AboutSection/en/About/Sustainability/Commitments/ResponsiblePartners/Code-of-Conduct/Stand-Against-Child-Labour.html
http://about.hm.com/content/hm/AboutSection/en/About/Facts-About-HM/Idea-to-Store/Production.html#cmmenu
http://about.hm.com/content/hm/AboutSection/en/About/Sustainability/Commitments/ClimateSmart/Transport.html
DATA Monitor Company Profile H&M Hennes & Mauritz AB
http://about.hm.com/content/hm/AboutSection/en_us/About/Sustainability/Commitments/BeEthical/Responsible-Marketing.html
https://www.hm.com/us/customer-service/payments-and-returns
http://www.zara.com/webapp/wcs/stores/servlet/category/es/en/zara-S2012/11108/Stores
http://edition.cnn.com/BUSINESS/programs/yourbusiness/stories2001/zara/
http://wrightunt.files.wordpress.com/2011/12/swotanalysis-wrighttonaya1.pdf
http://efashiondesign.net/2012/john-galliano-and-zara-collaboration-double-for-the-former-designer-of-dior/
http://edition.cnn.com/BUSINESS/programs/yourbusiness/stories2001/zara/(28/05/2012)
http://www.themarketingsite.com/live/content.php?Item_ID=8560
http://fashiongear.fibre2fashion.com/brand-story/zara/advertisements.asp
Kotler and Keller, Marketing Management, 2009, p.336
http://360.datamonitor.com/Product?pid=F7E41ECA-902F-483F-B72C-A7FAEA92122E
http://www.hm.com/gb/
http://www.mobilemarketer.com/cms/news/advertising/2506.html
http://www.tellermate.com/media/51355/us%20tellermate%20case%20study_h+m.pdf
http://www.researchandmarkets.com/Samples/Product/25929/Profile%20of%20Hennes%20and%20Mauritz%20%20A%20Pioneer%20of%20Fast%20Fashion%20-%20Products.pdf (27/05/2012)
http://www.researchandmarkets.com/reports/568624/profile_of_h_and_m_a_pioneer_of_fast_fashion
(27/05/2012)
http://data.csb.gov.lv/Dialog/varval.asp?ma=IS0160&ti=ISG16%2E+V%CERIE%D0U+UN+SIEVIE%D0U+VECUMA+ST
RUKT%DBRA+STATISTISKAJOS+RE%CCIONOS+GADA+S%C2KUM%C2+%28pa++5+gadu+vecuma+grup%E2m%29&pa
th=../DATABASE/Iedzsoc/Ikgad%E7jie%20statistikas%20dati/Iedz%EEvot%E2ji/&lang=16 (27/05/2012)
http://about.hm.com/content/hm/AboutSection/en/About/Facts-About-HM/Brands-and-Collections/HMCollections.html#cm-menu
http://about.hm.com/content/hm/AboutSection/en/About/Sustainability/Commitments/ConsciousCustomers.html#cm-menu
http://about.hm.com/content/hm/AboutSection/en/About/Facts-About-HM/Idea-to-Store/Planning-theRange.html
http://about.hm.com/content/hm/AboutSection/en/About/Facts-About-HM/About-HM/SalesMarkets/Europe.html (28/05/12)
http://about.hm.com/content/hm/AboutSection/en/About/Facts-About-HM/About-HM/Sales-Markets/NorthAmerica.html (28/05/12)
http://about.hm.com/content/hm/AboutSection/en/About/Facts-About-HM/About-HM/Business-Concept-andGrowth.html#cm-menu
43
http://about.hm.com/content/hm/AboutSection/en/About/Facts-About-HM/Idea-to-Store/Meeting-theCustomer.html
http://azstarnet.com/business/local/article_6d915324-a666-11df-890f-001cc4c002e0.html
http://www.tampabay.com/blogs/divas/content/freebies-hm-grand-opening
https://www.facebook.com/events/181707705235195/
http://about.hm.com/content/hm/AboutSection/en/About/Facts-About-HM/Brands-and-Collections/HMGroup/The-HM-Brand.html
http://about.hm.com/content/hm/AboutSection/en/About/Investor-Relations/The-Share/Insiders.html
http://about.hm.com/content/hm/AboutSection/en/About/Facts-About-HM/AboutHM/Organisation.html#cm-menu
http://geert-hofstede.com/sweden.html
When Cultures Collide, p. 366
44
11. Attachments
Attachment 1 (Questionnaire)
Questionnaire
Welcome
You have been selected to participate in this survey.
The questionnaire is a part of the project concerning market analysis, the marketing student at
University College Nordjylland in Aalborg, Denmark, is going to do in the spring of 2012.
The subject of the questionnaire is the shopping, and it will take 5-10 minutes to fill it out.
Thank you, and regards,
Anna Atgaze
University College Nordjylland
Do you know clothing brand H&M?

(1)
Yes
(2)
No
Have you ever bought products of that brand?

(1)
Yes
(2)
No
Would you start making your shopping in H&M if it would appear in Latvia (Riga)?
(1)
Yes
(2)
No
Which of the store sections you will be interested in?

(1)
Women
(2)
Men
(3)
Kids
(4)
Size +
Which of the following brands do you prefer now for shopping? (Only four answers)
(1)
ZARA
(2)
Mango
45
(3)
Vero Moda
(4)
New Yorker
(5)
Bik Bok
(6)
City Men&Women
(7)
Monton
(8)
Oasis
(8)
Bershka
Which shopping malls you prefer?

(1)
Galleria Riga
(2)
Spice
(3)
Alfa
(4)
Galerija Centrs
(5)
Mols
(6)
Riga Plaza
(7)
Domina Shopping
(8)
Azur
(9)
Podium&ELKOR
(10)
Olympia
(11)
SKY&More
(12)
ORIGO
(13)
STOCKMANN
How often do you make shopping?

(1)
Almost every day
(2)
Once a week
(3)
Once every second week
(4)
Once every month
(5)
Once in a season (spring, summer, autumn, winter)
(6)
Even rarer than that
How much in average do you spend on the clothes per month?

(1)
None
(2)
Around 20 - 50 Ls
46
(3)
Around 51 - 70 Ls
(4)
Around 71 100 Ls
(5)
Around 101 150 Ls
(6)
Around 151 200 Ls
(7)
More
Now there will be a series of statements about various subjects. For each statement you are
asked to indicate, whether you agree or disagree. Please select the degree of agreement that
corresponds
to
your
own
personal
view
of
the
statement.
Agree
completely
I often buy luxury goods

I prefer to buy environmentfriendly products
The modern technology is taking
away power from humans
I dont mind paying more for a
good quality product
The male head of the household
should decide things at home
Agree
Agree
Disagree
somewhat
somewhat
Disagree
Disagree
completely
(1)
(2)
(3)
(4)
(5)
(6)
(1)
(2)
(3)
(4)
(5)
(6)
(1)
(2)
(3)
(4)
(5)
(6)
(1)
(2)
(3)
(4)
(5)
(6)
(1)
(2)
(3)
(4)
(5)
(6)
Now there will be a series of statements about various subjects related shopping and designing your
own clothes combinations. For each statement you are asked to indicate, whether you agree or
disagree. Please select the degree of agreement that corresponds to your own personal view of the
statement.
Agree
completely
I like to be creative in the clothes
Agree
Neither agree
nor disagree
Disagree
Disagree
completely
(1)
(2)
(3)
(5)
(6)
I buy a lots of accessories
(1)
(2)
(3)
(5)
(6)
It is important for me that the
(1)
(2)
(3)
(5)
(6)
I wear
47
Agree
completely
Agree
Neither agree
nor disagree
Disagree
Disagree
completely
clothes I wear are made of

natural or organic material
I like prefer to shop abroad
(1)
(2)
(3)
(5)
(6)
(1)
(2)
(3)
(5)
(6)
(1)
(2)
(3)
(5)
(6)
(1)
(2)
(3)
(5)
(6)
I like to know what I'm buying, so

I often ask questions in the
shops
When shopping I look for the
goods with the lowest price
I like when in the shops are used
modern technologies
At last we want to ask you some more general questions.

What is your gender?
(1)
Male
(2)
Female
What is your age?

__________
What is your marital status?
(1)
Single
(2)
Married/Living with boy- or girlfriend
How many children are living with you of ages between 0 and 9 years?
(1)
(2)
(3)
(4)
3 or more
(5)
Waiting for baby
48
How many children are living with you of ages between 10 and 18 years?
(1)
(2)
(3)
(4)
3 or more
What is your zip-code?

__________
What is your occupation?
(1)
Unskilled worker
(2)
Skilled worker
(3)
Functionary or civil servant
(4)
Own business
(5)
Undergoing education
(6)
Retired
(7)
Unemployed
(8)
Not working
What is your educational level?

(1)
Public school
(2)
Trade school
(3)
High school
(4)
Business school
(5)
Technical school
(6)
Short academic
(7)
Long academic
The survey is now done!

Thank you for your time.
Attachment 2
Figure I: Number of children in family aged 10 - 18
49
Count of Number
Number of
children in
family aged 10 18
Interested in
sector children
Not interested
Interested
Grand Total
Dont have
children of that
age
23
6
29
Have
one
child
of
that
age
3
1
4
Have 3
or more
children
of that
age
1
1
Figure I: self-made
Attachment 3 (Respondents ZIP code map)

Source: Google Maps
Figure I: LV-1045
Figure II: LV-1057
50
Grand
Total
26
8
34
Figure III: LV-1064 (Green A Galerija Centrs)
Figure IV: LV-1069
Figure V: LV-1084
51
Figure VI: LV-2010
Figure VII: LV-2101
Figure VIII: LV-2137
Figure IX: LV-5418 (B)
52
Figure X: LV-1003
Figure XI: LV-1015
Figure XII: LV-1029
53
Figure XIII: LV-1058
Figure XIV: LV-1067
54
Attachment 4 (Markets)
Market size according to The Global Competitiveness Report 2010-11
Figure I: Germany
55
Figure II: France
Figure III: United States
Figure IV: United Kingdom
56
Figure V: Latvia
57
The Purchasing Power Standard (PPS) is an artificial currency unit that eliminates price level differences between
countries. Thus one PPS buys the same volume of goods and services in all countries. This unit allows meaningful
volume comparisons of economic indicators across countries. Aggregates expressed in PPS are derived by dividing
aggregates in current prices and national currency by the respective Purchasing Power Parity (PPP). The level of
uncertainty associated with the basic price and national accounts data, and the methods used for compiling PPPs
imply that differences between countries that have indices within a close range should not be over-interpreted.
ii
This dimension expresses the degree to which the less powerful members of a society accept and expect
that power is distributed unequally. The fundamental issue here is how a society handles inequalities
among people. People in societies exhibiting a large degree of power distance accept a hierarchical order
in which everybody has a place and which needs no further justification. In societies with low power
distance, people strive to equalise the distribution of power and demand justification for inequalities of
power (http://geert-hofstede.com/dimensions.html) (30/05/2012)
iii
The uncertainty avoidance dimension expresses the degree to which the members of a society feel
uncomfortable with uncertainty and ambiguity. The fundamental issue here is how a society deals with
the fact that the future can never be known: should we try to control the future or just let it happen?
Countries exhibiting strong UAI maintain rigid codes of belief and behaviour and are intolerant of
unorthodox behaviour and ideas. Weak UAI societies maintain a more relaxed attitude in which practice
counts more than principles.( http://geert-hofstede.com/dimensions.html)(30/05/2012)
iv
The high side of this dimension, called Individualism, can be defined as a preference for a loosely-knit
social framework in which individuals are expected to take care of themselves and their immediate
families only. Its opposite, Collectivism, represents a preference for a tightly-knit framework in society in
which individuals can expect their relatives or members of a particular in-group to look after them in
exchange for unquestioning loyalty. A society's position on this dimension is reflected in whether
peoples
self-image
is
defined
in
terms
of
I
or
we.
(http://geerthofstede.com/dimensions.html)(30/05/2012)
The masculinity side of this dimension represents a preference in society for achievement, heroism,
assertiveness and material reward for success. Society at large is more competitive. Its opposite,
femininity, stands for a preference for cooperation, modesty, caring for the weak and quality of life.
Society at large is more consensus-oriented. (http://geert-hofstede.com/dimensions.html)(30/05/2012)
The long-term orientation dimension can be interpreted as dealing with societys search for virtue.
Societies with a short-term orientation generally have a strong concern with establishing the absolute
Truth. They are normative in their thinking. They exhibit great respect for traditions, a relatively small
propensity to save for the future, and a focus on achieving quick results. In societies with a long-term
orientation, people believe that truth depends very much on situation, context and time. They show an
ability to adapt traditions to changed conditions, a strong propensity to save and invest, thriftiness and
perseverance in achieving results. (http://geert-hofstede.com/dimensions.html)(30/05/2012)
vi
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H&M has decided to enter Latvian

clothes market. Which strategies and

International Marketing and Sales

Author: Anna Atgze

Delivery date: 1.06.2012

Title of the Project:

Company (if relevant):

Problem statement ............................................................................................................................... 5

Problem statement formulation ................................................................................................... 5

About H&M ........................................................................................................................................... 7

Economic environment ................................................................................................................. 9

Gross domestic product ........................................................................................................ 9

Competitors analysis ...................................................................................................................22

Porters Five Competitive Forces .........................................................................................22

Inbound logistics .................................................................................................................25

Outbound logistics ..............................................................................................................26

Marketing and sales ............................................................................................................27

Questionnaire analysis ........................................................................................................14

SWOT analysis for ZARA and H&M..............................................................................................28

Marketing and Strategy.......................................................................................................................31

Segmentation& Targeting ...........................................................................................................31

Positioning strategy .....................................................................................................................33

Marketing Mix .....................................................................................................................33

Cultural Background and negotiation techniques.......................................................................37

Latvian culture .....................................................................................................................37

Comparison of Latvian and Swedish cultures .....................................................................38

Attachment 1 (Questionnaire) ................................................................................................................45

Problem statement formulation

economically, socially and environmentally sustainable.

Gross domestic product

http://en.wikipedia.org/wiki/2007%E2%80%932012_global_financial_crisis#cite_note-6 based on ^ "World

http://about.hm.com/content/hm/AboutSection/en/About/Facts-About-HM/About-HM/Sales-Markets.html#cmmenu ( visited 24.05.2012)

Such factor that shall be analyzed is a demographic structure as it shows us more

Figure 3: Birth rate in Latvia

Figure 4: Death rate in Latvia

As the main analysis tool Pivot Tables were used.

Figure 8: Self made15

Information used from http://data.csb.gov.lv/Dialog/varval.asp?ma=TSG1101&ti=TSG11%2D01%2E+LATVIJAS+PAST%C2V%CEGO+IEDZ%CEVOT%C2JU+DZIMUMA+UN+VECUMA+SAST%C2VS

Figure 9: Comparison of number of population in different age sectors

Figure 10: self-made

Which shopping malls do you prefer?

Figure 11: self-made

Figure 12: self-made based on Pivot tables

Figure 13: self-made

Figure 14: Location of people who prefer to visit Galerija Centrs

Figure 14: self-made

Which of the following brands do you prefer for shopping? (Only

Figure 15: self-made

Porters Five Competitive Forces

Threat of new entrants

Advertising and customer loyalty sometimes existing companies can use it as a

Control of resources there is no monopoly in fast fashion industry, so there is no

Threat of substitute products

Threat of buyers growing bargaining power

Threat of suppliers growing bargaining power

Philip Kotler (2009): Dealing with competition Competitive Forces, p. 305

To identify H&Ms synthesis of activities of producing, designing, marketing, delivering

As well as it was mentioned in section about H&M, it is known also for

collaboration with well-known designers.

Marketing and sales

SWOT analysis for ZARA and H&M

Well known and trusted by the local

No section, where would be clothes for