2011_hm_1st-.pdf hm rebrnanding djjdjdids

HM 2011 rebranding

1. !Caroline!Ng!!!!!!!!!!!!!!!!Candice!Lim!!!!!!!!!!!!!!!!!!Peh!Che!Min!!!!!!!!!!!!!!!!!Tobias!Chen!!!!!!!!!!!!!!!!!!!
F . O . C . A . L
H&M:%Bolder.Bigger.!Be8er!

2. H&M’S Identity: Our winning proposition
Analysis Stage Implementation Conclusion Runway Backstage
Winning Proposition
Affordable Chic Fast Fashion Inclusive
Objec+ve%
1. “Sustainable growth with High Impact strategic
initiatives whilst keeping things Simple”
2. 10-15% growth in number of stores per year

3. Challenges Ahead
Analysis Stage Implementation Conclusion Runway Backstage
Stagnating growth in Europe
Diverse consumer preferences
Intense Competition
Increase in raw material prices
Talent attraction & retention
Challenges
1%
2%
4%
5%
3%
Key%Issues%
1. Prioritizing growth options
2. Maximizing shareholder’s value
3. Managing cost to support growth

4. Criteria to evaluate growth options
Analysis Stage Implementation Conclusion Runway Backstage
Degree of
Complexity
High Impact
(x2)
Growth
Potential
Competition
• Simple
• Congruent with
core business &
expertise
• Cost effective
• Sales
• Impact on brand
• Expertise
• Future potential
• Scalability
• Cost-benefit
analysis
• Similarity
• Clustering effect
• Economies of
scale

5. Evaluating Growth Opportunities
Analysis Stage Implementation Conclusion Runway Backstage
Growth Options
Degree of
Complexity
High Impact
(x2)
Growth
Potential
Competition
Favorable)
Unfavorable)
Improve day to
day performance
Expand online
channels
Geographic
expansion
Expand product
category (Home)
Brand Expansion

6. Recommendations:Project Runway
Analysis Stage Implementation Conclusion Runway Backstage
Set the Stage Strut the Runway
Managing
Backstage
1. Increase no.
of customers
- Focus on male
segment
2. Increase sales
per customer
- Increase
accessories segment
1. Geographic
Expansion
-Asia Pacific
2. Online Channel
-Advertise on
‘taobao’
- H&M online
wardrobe
1. Secure new
suppliers
-South East Asia
2. H&M’s talents
- Increase efficiency
of sales people
- Management
associate programme

7. Recommendations: Project Runway
Analysis Stage Implementation Conclusion Runway Backstage
Set the Stage Strut the Runway
Managing
Backstage
1. Increase no. of
customers
- Focus on male
segment
2. Increase sales
per customer
- Increase
accessories segment
1. Geographic
Expansion
-Asia Pacific
2. Online Channel
- Store on Taobao
Mall
- H&M online
wardrobe iphone app
1. Secure new
suppliers
-South East Asia
2. H&M’s talents
- Increase efficiency
of sales people
- Management
associate programme

8. Recommendations: Project Runway
Analysis Stage Implementation Conclusion Runway Backstage
Set the Stage Strut the Runway
Managing
Backstage
1. Increase no.
of customers
- Focus on male
segment
2. Increase sales
per customer
- Increase
accessories segment
1. Geographic
Expansion
-Asia Pacific
2. Online Channel
-Advertise on
‘taobao’
- H&M online
wardrobe
1. Secure new
suppliers
-South East Asia
2. H&M’s talents
- Increase efficiency
of sales people
- Management
associate programme

9. H&M: Project Runway
Set the Stage Strut the Runway
Managing
Backstage

10. Backstage%–%Make%it%Happen%
Analysis Stage Implementation Conclusion Runway Backstage
Increase number of
customers
Increase sales per
customer
Grow existing segments

11. Backstage%–%Make%it%Happen%
Analysis Stage Implementation Conclusion Runway Backstage
H&M MEN
1.  The Fashion
Fraternity
2. Guest
Designers
CAGR: 3% (2005-2010)
Market Value 322.3Bn USD
H&M ACCESSORIES
1. Greater Variety of Designs
2. Integration with Apparel
CAGR: 4.6% (2010 Inc.)
Increase number of
customers
Increase sales per
customer

12. SeAng%the%Stage%–%H&M%MEN%%
Analysis Stage Implementation Conclusion Runway Backstage
Purchasing Behaviour Process
Need
Recognition
Information
Search
Evaluation of
Alternatives
Purchase
Decision
Purchase
Evaluation
Look Good
Online Self- reliant
Creatures of Habit Comfort, Price, Quality
Brick & Mortar Rationalization
Less reliance on information sharing
H&M’s Men Accessories
1% 2%

13. SeAng%the%Stage%–%H&M%MEN%%
Analysis Stage Implementation Conclusion Runway Backstage
Purchasing Behaviour Process
Need
Recognition
Information
Search
Evaluation of
Alternatives
Purchase
Decision
Purchase
Evaluation
Look Good
Online Self- reliant
Creatures of Habit Comfort, Price, Quality
Brick & Mortar Rationalization
Less reliance on information sharing
H&M’s Men Accessories
1% 2%
Increase
advertising to
men
Cater personal
space for men
Male consumer
preferences
1% 2% 3%
Financial risks Market Size Acceptance
Pilot Testing: Flagship stores in Beijing & Shanghai

14. SeAng%the%Stage%–%H&M%MEN%%
Analysis Stage Implementation Conclusion Runway Backstage
H&M’s Men Accessories
1% 2%
Information
Search
Personal
Space
The Fashion Fraternity
‘H BB’
Internet/Mobile: Chinese
forums
Shanghai & Beijing

15. SeAng%the%Stage%–%H&M%MEN%%
Analysis Stage Implementation Conclusion Runway Backstage
H&M’s Men Accessories
1% 2%
Information
Search
Personal
Space
The Fashion Fraternity
‘H BB’
Internet/Mobile: Chinese
forums
Shanghai & Beijing
Newly Affluent middle class
Trendy males seeking fashion tips

16. SeAng%the%Stage%–%H&M%MEN%%
Analysis Stage Implementation Conclusion Runway Backstage
H&M’s Men Accessories
1% 2%
Information
Search
Personal
Space
The Fashion Fraternity
‘H BB’
Internet/Mobile: Chinese
forums
Shanghai & Beijing
Baidu: Year 2010
• China: 64.02 billion
queries
• WAP and PDA based
mobile search
• Exclusive forums for
males – ‘y??’

17. SeAng%the%Stage%–%H&M%MEN%%
Analysis Stage Implementation Conclusion Runway Backstage
H&M’s Men Accessories
1% 2%
Information
Search
Personal
Space
Brick & Mortar
Beijing Shanghai
Personal%
Lounge%
Music%
Entertain%
(Fuᶔball)/%
Magazines%
Key%Takeaways%
1. Pilot)market)in)Shanghai)&)Beijing)–)12)months)
2. Interna>onal)roll?out)of)improved)H&M)man)in)year)2012)
3. Target)60)stores)by)Year)2013))

18. SeAng%the%Stage%–%H&M%MEN%%
Analysis Stage Implementation Conclusion Runway Backstage
H&M’s Men Accessories
1% 2%
H&M ACCESSORIES
HELPING%YOU%FIND…%%

19. SeAng%the%Stage%–%H&M%MEN%%
Analysis Stage Implementation Conclusion Runway Backstage
H&M’s Men Accessories
1% 2%
Sales)/sqm)
0.5%)to)Grp)revenues)
H&M ACCESSORIES

20. SeAng%the%Stage%–%H&M%MEN%%
Analysis Stage Implementation Conclusion Runway Backstage
H&M’s Men Accessories
1% 2%
Integrating accessories with apparel
Do it your way

21. SeAng%the%Stage%–%H&M%MEN%%
Analysis Stage Implementation Conclusion Runway Backstage
H&M’s Men Accessories
1% 2%
Integrating accessories with apparel
Trend,)Modern,)
Classic,)Everyday)
Mamma,)Divided,)&)
denim,)L.U.G.G)

22. H&M: Project Runway
Set the Stage Strut the Runway
Managing
Backstage

23. Strengthen%exis+ng%forts%while%expanding%new%markets%
250)new)stores)in)2011)
Aggressive)pursuit)of)
Asia?Pacific)
Increase)dominance)in)
W)Europe)and)N)America)
Analysis Stage Implementation Conclusion Runway Backstage

24. Untapped)markets)
Asia%Pacific)
Middle)East))
&)Africa)
Eastern)Europe)
South)America)
Market)Size)Ease)of)Entry)
Growth)
)Poten>al)
Compe>>on)
Favorable) Unfavorable)
Iden+fying%KEY%new%markets%
Posi>ve))
Spillovers)
Analysis Stage Implementation Conclusion Runway Backstage

25. Emerging)markets)
Asia;Pacific!
Middle)East))
&)Africa)
Eastern)Europe)
South)America)
Market)Size)Ease)of)Entry)
Growth)
)Poten>al)
Compe>>on)
Favorable) Unfavorable)
Where%to%expand%in%2011%
Posi>ve))
Spillovers)
High)sales)
High)CAG)
Dominant)Chinese)market)
Ranked)3
rd
)in)value)sales)behind)North)America)and)Europe)
CAG)of)13%)from)2010?2013E)
71%)of)total)Asiapac)sales)
Source:)Euromonitor)
Analysis Stage Implementation Conclusion Runway Backstage

26. Emerging)markets)
Asia%Pacific)
Middle)East))
&)Africa)
Eastern)Europe)
South)America)
Market)Size)Ease)of)Entry)
Growth)
)Poten>al)
Compe>>on)
Favorable) Unfavorable)
Where%to%expand%in%2011%
Posi>ve))
Spillovers)
Aggressive)greenfield)expansion)–)large)poten>al,)large)growth)
Franchise)mode)–)cultural)and)legal)constraints)
Sizeable)market)near)H&M)stronghold)
Lucra>ve)market)to)enter)in)the)future)
Analysis Stage Implementation Conclusion Runway Backstage

27. Strengthen%exis+ng%forts%while%expanding%new%markets%
Asia?Pacific:))
25%)
Eastern)Europe:))
10%)
MENA:))
10%)
N)America:))
15%)
250)new)stores)in)2011)
Western)Europe:)
45%)
S)America)
Analysis Stage Implementation Conclusion Runway Backstage

28. Asiapac:%Focus%on%China%
Southeast)Asia)
Source:)Euromonitor)
Singapore,%%
Indonesia,%Malaysia%
North)Asia)
China,%Japan,%%
South%Korea,%Taiwan%
1
2
Analysis Stage Implementation Conclusion Runway Backstage

29. Much%poten+al%for%growth%in%China%
169)
71.252)
0) 50) 100)150)200)
China)
Germany)
CF)Market)Share)(USD)billions))in)2009)
Large%poten+al%
for%growth%in%
Chinese%market%
Source:)Euromonitor,)H&M)
Analysis Stage Implementation Conclusion Runway Backstage

30. Domina+ng%the%Chinese%stage%
Source:)H&M)
42)stores,)
concentrated)in)
Eastern)China)
Analysis Stage Implementation Conclusion Runway Backstage

31. Domina+ng%the%Chinese%stage%
4.5%)popula>on)
4%)of)GDP)
44.5%)popula>on)
32%)of)GDP)
51%)popula>on)
64%)of)GDP)
42)stores,)
concentrated)in)
Eastern)China)
Source:)Ogilvy)
Analysis Stage Implementation Conclusion Runway Backstage

32. Opportuni+es%for%growth%in%2
nd
%and%3
rd
%+er%ci+es%
42)stores,)
concentrated)in)
Eastern)China)
Source:)Ogilvy)
Rapidly)emerging)
middle)class)in)2
nd
)
and)3
rd
)>er)ci>es)
Analysis Stage Implementation Conclusion Runway Backstage

33. Effec+ve%way%to%reach%out%to%Chinese%masses%
Source:)Ogilvy)
Analysis Stage Implementation Conclusion Runway Backstage

34. Leveraging%on%the%Chinese%eacommerce%trend%
Analysis Stage Implementation Conclusion Runway Backstage

35. Efficient%expansion%via%Taobao.com%
• )370)million)users)
• )50)million)unique)visitors)daily)
• )Low)capital)investment)
• )Aggregated)distribu>on)centers)
Cri+cal%mass%
Efficient%expansion%
Analysis Stage Implementation Conclusion Runway Backstage

36. Efficient%expansion%via%Taobao.com%
Cri+cal%mass%
Efficient%expansion%
UNIQLO%SUCCESS%STORY%
• )2)million)RMB)sales)daily))
• )Exceeded)retail)store)sales)in)just)4)days)
Analysis Stage Implementation Conclusion Runway Backstage

37. H&M%on%Taobao%Mall%
?S?U)
Analysis Stage Implementation Conclusion Runway Backstage

38. Maximising%the%macommerce%plaform%
The%current%
H&M%applica+on%
Source:)Forrester)Research,)
)ABI)Research,)Modus)Associates)
Basic%%
features%
Limited%
geographic%
reach%
The%poten+al%
In%macommerce%
Smartphone%
penetra+on%
Poten+al%in%
mobile%
Mashopping%
takeup%
Analysis Stage Implementation Conclusion Runway Backstage

39. Maximising%the%macommerce%plaform%
The%current%
H&M%applica+on%
Basic%%
features%
Limited%
geographic%
reach%
The%poten+al%
inmacommerce%
Analysis Stage Implementation Conclusion Runway Backstage
My
Wardrobe

40. H&M:%cheap%chic,%24/7,%everywhere%
My
Wardrobe
New%Retail%Channel%
Network%Effect%
Brand%Saliency%
Analysis Stage Implementation Conclusion Runway Backstage

41. Increasing%visibility%24/7,%onatheago%
My
Wardrobe
Brand%Saliency%
New%Retail%Channel%
Network%Effect%
• )Create)your)oueit)using)H&M)
Catalogue)items))
• )May)also)use)your)personal)
items)
Analysis Stage Implementation Conclusion Runway Backstage

42. Increasing%visibility%24/7,%onatheago%
Brand%Saliency%
New%Retail%Channel%
Network%Effect%
My
Wardrobe
#)02)out)of)107)oueits)
Buy)it.)
Keep)it.)
• )Create)your)oueit)using)H&M)
Catalogue)items))
• )May)also)use)your)personal)
items)
Analysis Stage Implementation Conclusion Runway Backstage

43. Increasing%visibility%24/7,%onatheago%
Brand%Saliency%
New%Retail%Channel%
Network%Effect%
My
Wardrobe
#)02)out)of)107)oueits)
Buy)it.)
Keep)it.)
Analysis Stage Implementation Conclusion Runway Backstage

44. Leveraging%on%network%effects%
My
Wardrobe
#)02)out)of)107)oueits)
Buy)it.)
Keep)it.)
New%Retail%Channel%
Network%Effect%
Brand%Saliency%
• )Average)of)220)friends)
• )Photo)album)
• )Newsfeed)(and)no>fica>ons))
• )Wall)post)
Analysis Stage Implementation Conclusion Runway Backstage

45. Complementary%revenue%stream%%
My
Wardrobe
#)02)out)of)107)oueits)
Buy)it.)
Keep)it.)
Network%Effect%
New%Retail%Channel%
Brand%Saliency%
Source:)BCG)
Average)of)150%)increase)in)
sales)voume)
Analysis Stage Implementation Conclusion Runway Backstage

46. 40%)more)likely)to)buy)
20%)higher)expenditure) My
Wardrobe
#)02)out)of)107)oueits)
Buy)it.)
Keep)it.)
Increasing%visibility%24/7,%onatheago%
Network%Effect%
New%Retail%Channel%
Brand%Saliency%
• )Average)of)220)friends)
• )Photo)album)
• )Newsfeed)(and)no>fica>ons))
• )Wall)post)
40%)more)likely)to)buy)
20%)higher)expenditure)
Increased%purchase%frequency%
Source:)Informa>onWeek)
Larger%purchase%sizes%
Case%study:%
Analysis Stage Implementation Conclusion Runway Backstage

47. H&M: Project Runway
Set the Stage Strut the Runway
Managing
Backstage

48. Backstage%–%Make%it%Happen%
Analysis Stage Implementation Conclusion Runway Backstage
Limiting Agents
Cost of Production
Speed to Market
Human Resources
1)
2)
3)

49. Backstage%–%Reducing%Costs%
Analysis Stage Implementation Conclusion Runway Backstage
(1) Soaring Cotton Prices
Source: International Monetary Fund

50. Backstage%–%Reducing%Costs%
Analysis Stage Implementation Conclusion Runway Backstage
(2) Rising Cost of Production in China
Labor Cost
Rental Cost
Other Fixed Cost
Affordable Fashion?

51. Backstage%–%Reducing%Costs%
Analysis Stage Implementation Conclusion Runway Backstage
NhonTrach Industrial Park,
Dong Nai Province
•  Established Textile Cluster
•  Heavy FDI Investments
•  Developed infrastructure
•  Proximity to Saigon
•  Proximity to Ports

52. Analysis Stage Implementation Conclusion Runway Backstage
NhonTrach as production
base for Asia Pacific
• Centralised Production
•  Shipping cost offset by
production cost savings
•  Boosts speed to market
Backstage%–%Increasing%Speed%to%Market%

53. Analysis Stage Implementation Conclusion Runway Backstage
NhonTrach as production
base for Asia Pacific
• Centralised Production
•  Shipping cost offset by
production cost savings
•  Boosts speed to market
Backstage%–%Increasing%Speed%to%Market%

54. Backstage%–%Overcoming%Manpower%Constraints%
Analysis Stage Implementation Conclusion Runway Backstage
Salespersons
  Need to keep up with rapid expansion of physical stores
↑)Number)of)
Salespersons)
1)
↑)Revenue)/)
Salesperson)
2)
Managers
Management Associate Programs
• Targets Business students
• Accelerated program, job rotations,
international experience

55. Financials%
Analysis Stage Implementation Conclusion Runway Backstage
Assumptions
  WACC of 11.2%
  Base growth rate of Sales Revenue (without Runway) at12% per annum
  COGS at 30% of Sales Revenue in 2011, decreases by 0.5% per
annum until 2016, constant thereafter
  Selling expenses at 34% of Sales Revenue in 2011, 35% in 2012~14,
decrease by 0.5% per annum until 33%, constant thereafter
  Aggregated Group tax rate of 25.3%
  Straight-line depreciation of capital expenditures over 5 years

56. Financials%
Analysis Stage Implementation Conclusion Runway Backstage
SEK 23.5 Billion Incremental Profit in 2021
Break-even in 5 Years

57. Financials%
Analysis Stage Implementation Conclusion Runway Backstage
Worst Case Base Case Best Case
SEK 28.4 Billion SEK 35.4 Billion SEK 44.3 Billion

58. Implementa+on%Timeline%
Analysis Stage Implementation Conclusion Runway Backstage
Project%Runway%
2011) 2013)2012) 2014) 2015)
Pilot)1)
2)
Interna>onal)roll)out)
Set.%Stage%
1. Pilot)H&M)Man)project)
in)Shanghai)and)Beijing))
2. Increase)accessories)
market)

59. Implementa+on%Timeline%
Analysis Stage Implementation Conclusion Runway Backstage
3)
4)
Interna>onal)expansion)with)a)focus)in)Asia)Pacific)
1)
2)
Project%Runway%
2011) 2013)2012) 2014) 2015)
Set.%Stage%
1. Pilot)H&M)Man)project)
in)Shanghai)and)Beijing))
2. Increase)accessories)
market)
Strut%.%Runway%
1. Geographic)expansion)
2. H&M)applica>on)
Interna>onal)roll)out)

60. Implementa+on%Timeline%
Analysis Stage Implementation Conclusion Runway Backstage
3)
4)
Interna>onal)expansion)with)a)focus)in)Asia)Pacific)
Develop)
1)
2)
Project%Runway%
Set.%Stage%
1. Pilot)H&M)Man)project)
in)Shanghai)and)Beijing))
2. Increase)accessories)
market)
Strut%.%Runway%
1. Geographic)expansion)
2. H&M)applica>on)
2011) 2013)2012) 2014) 2015)
Manage.%Backstage%
1. Suppliers)
2. Strengthen)HR
Support functions ongoing through fiscal
years
Interna>onal)roll)out)

61. Conclusion%
Priori>zing)
growth)op>ons)
Sustainable%growth%with)High%Impact%strategic)
ini>a>ves)whilst)keeping)things)Simple%
Cri+cal%Issues%
Objec+ve%
Managing)costs)
Recrui>ng)and)
retaining)talents)
Analysis Stage Implementation Conclusion Runway Backstage
Set.)Stage%Recommenda+on% Strut.)Runway% Backstage%
Benefits%
Sustainable)
growth)
High)Impact)) Simple)

62. Conclusion%
Priori>zing)
growth)op>ons)
Sustainable%growth%with)High%Impact%strategic)
ini>a>ves)whilst)keeping)things)Simple%
Cri+cal%Issues%
Objec+ve%
Managing)costs)
Recrui>ng)and)
retaining)talents)
Analysis Stage Implementation Conclusion Runway Backstage
Set.)Stage%Recommenda+on% Strut.)Runway% Backstage%
Benefits% NPV:%35.4bn%SEK%over%10%year%

63. !Caroline!Ng!!!!!!!!!!!!!!!!Candice!Lim!!!!!!!!!!!!!!!!!!Peh!Che!Min!!!!!!!!!!!!!!!!!Tobias!Chen!!!!!!!!!!!!!!!!!!!
F . O . C . A . L
H&M:%Bolder.Bigger.!Be8er!

64. !Caroline!Ng!!!!!!!!!!!!!!!!Candice!Lim!!!!!!!!!!!!!!!!!!Peh!Che!Min!!!!!!!!!!!!!!!!!Tobias!Chen!!!!!!!!!!!!!!!!!!!
F . O . C . A . L
Complementary%Slides!

65. Financials%
Analysis Stage Implementation Conclusion Runway Backstage

66. Financials%
Analysis Stage Implementation Conclusion Runway Backstage

67. Jus+fica+on%for%Addi+onal%1.6%%CAGR%
Analysis Stage Implementation Conclusion Runway Backstage
Equivalent of 1.6% of Sales Revenue in 2011

68. Prioritizing Options for Growth
Op+on%1:%%
Day%to%day%
performance%
• Increase)sales)per)square)feet)
))%)Fashion)credibility)(Guest)designers))
))%)DifferenCaCon)
))%)Cost)effecCve)
))%)Untapped)segments)
• Increase)store)traffic)
)))%Revenues)
))%)Brand)visibility)
• Constant)‘fresh’)image)
• Scheduling)to)maximize)impact)
• Revenue)contribu>ons)unjus>fied)
Op+on%2:%
Online%Channel%
• 24/7)Shopping)
• Greater)reach)to)target)segment)
• Cost)effec>ve)
• Changing)lifestyle)
• Viral)marke>ng)
• Integra>on)of)online)channel))
• evenue)contribu>ons)unknown)
• Lack)points)of)differen>a>on)
Op+on%3:%
Geographic%Expansion%
• Diversifica>on)
• Increase)revenues)fast)
• Increase)brand)visibility)
• Compe>>ve)pressures)to)move)fast)
• New)collabora>ons)with)local)designers)
• Lack)understanding)of)foreign)markets)
• Right)>ming)to)enter)emerging)markets)
important)
• Constrained)by)resources)
Op+on%4:%
Product%Category%(LT)%
• Diversifica>on)
• Increase)revenue)streams)in)lucra>ve)market)
• Leverage)on)exis>ng)suppliers)
• Build)H&M)lifestyle)concept)
• Incompa>ble)with)brand)image)
• High)risks)involved)
• Supply)chain)complexity)
• Spreading)resources)too)thin)
• Revenue)contribu>on)unjus>fied)
Op+on%5:%
Brand%Expansion%(LT)%
• Diversifica>on)
• Capture)apparel)market)segments)
• Growth)Poten>al)
• High)risks)involved,)
• No)economies)of)scale)
• Increase)complexity;)resource)constraints)
• Cannibaliza>on))
• Affect)group)culture)

69. Geographic Expansion: Where first?
Variables% Western%
Europe%
Eastern%
Europe%
North%
America%
South%
America%
MENA% Asia%Pacific%
Market%Size%US$379bn)US$64bn)
(Russia:)43.8bn))
US$352bn)
US:)US$329bn)
US$88.3bn)
(Brazil:)43%)of)total)
volume)sales)and)
nearly)55%)of)value)
sales)in)2008)–)
lower)end)market))
US41.5bn) China:)US
$169bn)
Japan:)US
$134bn)
Australasia:)
US$11bn)
Growth%
Poten+al%
2.4%) 8.9%) 4.7%)
(Exp)increase))
4%) 12%) 9%)
5.1%)(Male))
Ease%of%
Entry%
• Easy)
• Familiar)
market)
• Rela>vely)
easy)
• Familiar)
market)
• Easy) • Difficult)
• Unfamiliar)
market)
• Difficult)
• Unfamiliar)
market)
• Sensi>ve)
• Rela>vely)
easy)
• Familiar)
market)(P))
Compe++on%
Note:)Clustering)is)
good)
• Mature)
market)
• Stable)
compe>>on)
• Emerging)
market)
• Intense)
• Mature)
market)
• Stable)
compe>>on)
• Emerging)
market)
• Intense)
• Emerging)
market)
• Less)
compe>>on)
• Emerging)
market)
• Intense)
Posi+ve%
Spillovers%
?ve) +ve)(Russia))+ve) +ve)
(Brazil))
?ve)
(Franchise))
+ve)
(Singapore))
Total%Market%Value%in%2010:%€769.3bn%

70. SeAng%the%Stage%–%H&M%MEN%%
Implementation Conclusion Runway Backstage Stage Analysis
Purchasing Behaviour Process
Need
Recognition
Information
Search
Evaluation of
Alternatives
Purchase
Decision
Purchase
Evaluation
Look Good
Online Self- reliant
Creatures of Habit Comfort, Price, Quality
Brick & Mortar Rationalization
Less reliance on information sharing

71. SeAng%the%Stage%–%H&M%MEN%%
Implementation Conclusion Runway Backstage Stage Analysis
Purchasing Behaviour Process
Need
Recognition
Information
Search
Evaluation of
Alternatives
Purchase
Decision
Purchase
Evaluation
Look Good
Online Self- reliant
Creatures of Habit Comfort, Price, Quality
Brick & Mortar Rationalization
Less reliance on information sharing

72. SeAng%the%Stage%–%H&M%MEN%%
Implementation Conclusion Runway Backstage Stage Analysis
Purchasing Behaviour Process
Need
Recognition
Information
Search
Evaluation of
Alternatives
Purchase
Decision
Purchase
Evaluation
Look Good
Online Self- reliant
Creatures of Habit Comfort, Price, Quality
Brick & Mortar Rationalization
Less reliance on information sharing

73. SeAng%the%Stage%–%H&M%MEN%%
Implementation Conclusion Runway Backstage Stage Analysis
Purchasing Behaviour Process
Need
Recognition
Information
Search
Evaluation of
Alternatives
Purchase
Decision
Purchase
Evaluation
Look Good
Online Self- reliant
Creatures of Habit Comfort, Price, Quality
Brick & Mortar Rationalization
Less reliance on information sharing

74. SeAng%the%Stage%–%H&M%MEN%%
Implementation Conclusion Runway Backstage Stage Analysis
Purchasing Behaviour Process
Need
Recognition
Information
Search
Evaluation of
Alternatives
Purchase
Decision
Purchase
Evaluation
Look Good
Online Self- reliant
Creatures of Habit Comfort, Price, Quality
Brick & Mortar Rationalization
Less reliance on information sharing

75. SeAng%the%Stage%–%H&M%MEN%%
Implementation Conclusion Runway Backstage Stage Analysis
Purchasing Behaviour Process
Need
Recognition
Information
Search
Evaluation of
Alternatives
Purchase
Decision
Purchase
Evaluation
Look Good
Online Self- reliant
Creatures of Habit Comfort, Price, Quality
Brick & Mortar Rationalization
Less reliance on information sharing
))))))))))))))))Too)risky)to)increase)emphasis)on)Menswear)
)PILOT%TESTING%in%CHINA%)

76. SeAng%the%Stage%–%H&M%MEN%%
Implementation Conclusion Runway Backstage Stage Analysis
Purchasing Behaviour Process
Need
Recognition
Information
Search
Evaluation of
Alternatives
Purchase
Decision
Purchase
Evaluation
The Fashion
Fraternity
Guest Designers
Lock in loyalty
iPhone Application

77. SeAng%the%Stage%–%H&M%MEN%%
Implementation Conclusion Runway Backstage Stage Analysis
Information
Search
Evaluation of
Alternatives
Purchase
Decision
The$Fashion$Fraternity$
To create a comfortable and pleasurable shopping
experience - for men only
Lounge Catalogues Assistance
Relaxing and
unintimidating
atmosphere
What To Wear
& Fashion
Tips
Subtle, non-
intruding

78. SeAng%the%Stage%–%H&M%MEN%%
Implementation Conclusion Runway Backstage Stage Analysis
Information
Search
Evaluation of
Alternatives
Purchase
Decision
The$Fashion$Fraternity$
To create a comfortable and pleasurable shopping
experience - for men only
Lounge Catalogues Assistance

79. SeAng%the%Stage%–%H&M%MEN%%
Implementation Conclusion Runway Backstage Stage Analysis
Information
Search
Evaluation of
Alternatives
Purchase
Decision
Guest$Designers$
sales per customer x no. of customers
Global
Caters to both
genders
Prestige
Fred)
Perry)
Tom))
Ford)

80. SeAng%the%Stage%–%H&M%MEN%%
Implementation Conclusion Runway Backstage Stage Analysis
Information
Search
Evaluation of
Alternatives
Purchase
Decision
Shi$shangyizhu$
To create a comfortable and pleasurable shopping
experience - for men only
Lounge Catalogues Assistance

81. SeAng%the%Stage%–%H&M%MEN%%
Implementation Conclusion Runway Backstage Stage Analysis
Information
Search
Evaluation of
Alternatives
Purchase
Decision
Shi$shangyizhu$
To create a comfortable and pleasurable shopping
experience - for men only
Lounge Catalogues Assistance

82. SeAng%the%Stage%–%H&M%MEN%%
Implementation Conclusion Runway Backstage Stage Analysis
Information
Search
Evaluation of
Alternatives
Purchase
Decision
iPhone$Application$
Fashion advice Sales channel
sales per customer x no. of customers

83. Back?up)Slides)

84. Why men category?
• High)CAG)
• Increasing)market)share)
• Increasing)acceptance)
• Increasing)affluence)
• Increasing)need)to)look)good)and)
trendy)
• No)strong)focus)at)the)moment)
• China/India:)Dominant)market)
• Experien>al)
• res>ng)area:male)shopping)habits)

85. Why not the franchising model?
1.Interna>onal)brands)in)China)are)losing)control)and)
ability)to)monitor)channels)
2.)Franchisee)has)the)tendency)to)offer)huge)discounts)
when)inventory)builds)up)
3.)Lack)of)compliance)with)brand)building)ac>vi>es)to)
save)money)
4.)Franchisee)do)not)see)brand)building)as)part)of)their)
responsibility)
5.)No)feedback)loop)on)job)informa>on,)supply)and)
sales)rebate)

86. Suits:)Jul)–)Jan)(Summer)sales))
Public)holiday:)Demand)will)spike)
25)–)45)years)old)
economic)basis)+)strong)pref)for)brand)–)300,000,000)
first)>er)ci>es)–)spill)over)to)second)>er)ci>es)
3
rd
)>ers)and)4
th
)>ers)are)also)upcoming)
shopping)is)a))leisure)and)past)>me…switch)shops)less)ouen))
community)malls)are)doing)bever)
price)focus)to)value)driven)

87. Why not verticalization?
1.Interna>onal)brands)in)China)are)losing)control)and)
ability)to)monitor)channels)
2.)Franchisee)has)the)tendency)to)offer)huge)discounts)
when)inventory)builds)up)
3.)Lack)of)compliance)with)brand)building)ac>vi>es)to)
save)money)
4.)Franchisee)do)not)see)brand)building)as)part)of)their)
responsibility)
5.)No)feedback)loop)on)job)informa>on,)supply)and)
sales)rebate)

88. Why not acquire?
1.)Lack)of)exper>se)
2.)H&M)is)a)growing)business)
3.)Risk)of)cannibaliza>on)
4.)Risk)of)spreading)one’s)resources)too)thin)
5.)Unable)to)support)too)many)brands)

89. Why not Integrate?
1.)Lack)of)exper>se)
2.)H&M)is)a)growing)business)
3.)Risk)of)cannibaliza>on)
4.)Risk)of)spreading)one’s)resources)too)thin)
5.)Unable)to)support)too)many)brands)

90. Value%Proposi+on%
Priori>zing)
growth)op>ons)
Sustainable%growth%with)High%Impact%strategic)
ini>a>ves)whilst)keeping)things)Simple%
Cri+cal%Issues%
Objec+ve%
Managing)costs)
Recrui>ng)and)
retaining)talents)
Analysis Stage Implementation Conclusion Runway Backstage
Set.)Stage%Recommenda+on% Strut.)Runway% Backstage%

91. • Wet%Seal%Shows%The%Way%
• Are%you%slowly,%cau+ously%sor+ng%out%how%to%engage%with%your%customers%in%
social%networks?%By%Chris%Murphy%,%%Informa+onWeek%September%25,%2010%12:00%
AM%
• Are)you)slowly,)cau>ously)sor>ng)out)how)to)engage)with)your)customers)in)social)
networks?)Well,)if)your)customers)are)teenage)girls,)and)72%)of)them)are)on)
Facebook)and)36%)of)them)have)a)smartphone,)you)don't)have)the)luxury)of)taking)
your)sweet)>me.That's)why)teen?girls')clothing)retailer)Wet)Seal)is)among)those)
blazing)a)trail)in)marke>ng)with)Facebook.)One)lesson)it's)learned)is)that)girls)want)
to)do)different)things)on)each)medium.)They)use)Wet)Seal's)site)to)create)
oueits??500,000)of)them??but)they)prefer)to)share)oueits)with)friends)using)
Facebook.)Girls)don't)use)their)iPhones)much)to)post)content,)but)they)viewed)
750,000)oueits)a)week)on)the)retailer's)iPhone)app)in)the)back?to?school)season.)
Here)are)some)hard)results)Wet)Seal)has)seen)with)its)integrated)Web,)social)
networking,)and)iPhone)strategy:)
• Girls)using)the)oueit)tool)are)40%)more)likely)to)buy,)and)they)spend)20%)
more.Girls)using)a)"Shop)With)Friend")feature,)accessed)through)Facebook)or)the)
site,)have)a)2.5)>mes)higher)conversion)rate.)
• Facebook)is)now)the)largest)marke>ng)base)for)store)traffic,)thanks)to)coupons)and)
campaigns,)and)one)of)the)biggest)drivers)of)traffic)to)Wet)Seal's)Web)
site.Facebook)also)is)a)gold)mine)for)the)customer?support)team.)"It's)one)of)the)
primary)tools)they)use)to)know)if)there)are)problems)out)there,")says)Wet)Seal)
development)director)Shawn)Keim.)Wet)Seal)doesn't)erase)complaints)but)tries)to)
resolve)problems)with)comments)on)Facebook,)so)people)see)issues)gezng)taken)
care)of.)

92. • )91%)of)all)US)consumers)own)
and)use)a)mobile)device)
• )1.8)billion)smart?phones)in)use)
globally)by)2013)
Smartphone%penetra+on%
• )Mobile)marke>ng)spend)will)
top)USD)1)billion)in)2011)
Poten+al%in%mobile%
• 48%)of)smartphone)users)say)
they)have)already,)or)soon)will,)
do)mobile)shopping)
Mashopping%takeup%• 2D,)sta>c)photo)
• Only)works)when)near)certain)
H&M)stores)
Basic%features%
Limited%geographic%reach%
The%current%
H&M%applica+on%
Source:)Forrester)Research,)
)ABI)Research,)Modus)Associates)

93. Taobao)Mall)
• Levi’s)is)the)latest)interna>onal)brand)to)set)up)an)online)shop)in)China.)Well,)that)
is)made)possible)through)Alibaba)Group’s)Taobao)Mall.)It’s)a)wise)choice)as)Taobao)
is)China’s)largest)retail)website)with)more)than)370)million)users)and)receives)over)
50)million)unique)visitors)each)day.In)Levi’s)new)online)store,)users)are)spoilt)for)
choice)with)over)200)Levi’s)products)to)choose)from.)On)top)of)that,)Levi’s)will)also)
introduce)exclusive)online?only)styles)on)Taobao,)a)bonus)to)keep)users)coming)
back.Despite)in)early)stage,)Levis’s)effort)seems)to)be)paying)off)well.)Several)
thousands)pair)of)jeans)were)already)sold)online,)according)to)Taobao’s)sta>s>cs.)
Apparently,)Levi’s)isn’t)the)only)brand)that)has)entered)China’s)online)market)
through)Taobao.“UNIQLO,)Adidas,)Procter)and)Gamble,)L’Oreal)Paris,)Lenovo,)Li)
Ning)and)Revlon)have)all)launched)official)online)retail)storefronts)on)Taobao)Mall)
as)part)of)their)e?commerce)strategy,”)a)Taobao)spokeswoman)told)Penn)
Olson.“For)corporate)retailers,)Taobao)Mall)offers)the)infrastructure)for)complete)
management)of)their)own)brand)and)online)retail)channel)while)providing)access)
to)consumers)situated)in)second)and)third)>er)regions)across)China)in)addi>on)to)
urban)centers)such)as)Shanghai)and)Beijing,”)she)added.Business?to?consumer)
(B2C))ecommerce)is)booming)in)China.)Last)quarter,)China)hit)a)new)high)with)a)
total)of)64)million)B2C)orders.)Without)a)doubt,)a)large)number)of)orders)comes)
from)Taobao.)If)you’re)a)retailer)and)looking)to)capture)the)Chinese)market,)Taobao)
seems)like)a)good)place.)

95. 1) Eastern)Europe)&)Asia)Pacific)
2) Grow)by)10?15%)new)stores)(220?330)stores)
in)following)12)mths))

96. Eastern)Europe)

97. Back?up:)Zara)opera>onal)efficiency)

98. 2010)Expansion)
Region% No%of%new%
stores%
%%of%total%new%
stores%
Western)Europe) 151) 62.1%)
Eastern)Europe) 29) 11.9%)
Asia?Pacific) 26) 10.3%)
Middle)East)and)
Africa)
15)
6.2%)
North)America) 22) 9.1%)

99. Variables%Western%
Europe%
Eastern%
Europe%
North%
America%
South%
America%
MENA%Asia%Pacific%
Market%Size%US$379bn)US$64bn)
(Russia:)43.8bn))
US$352bn)
US:)US$329bn)
US$88.3bn)
(Brazil:)43%)of)total)
volume)sales)and)
nearly)55%)of)value)
sales)in)2008)–)
lower)end)market))
US41.5bn) China:)US
$169bn)
Japan:)US
$134bn)
Australasia:)
US$11bn)
Growth%
Poten+al%
2.4%) 8.9%) 4.7%)
(Exp)increase))
4%) 12%) 9%)
5.1%)(Male))
Ease%of%
Entry%
• Easy)
• Familiar)
market)
• Rela>vely)
easy)
• Familiar)
market)
• Easy) • Difficult)
• Unfamiliar)
market)
• Difficult)
• Unfamiliar)
market)
• Sensi>ve)
• Rela>vely)
easy)
• Familiar)
market)(P))
Compe++on%
Note:)Clustering)is)
good)
• Mature)
market)
• Stable)
compe>>on)
• Emerging)
market)
• Intense)
• Mature)
market)
• Stable)
compe>>on)
• Emerging)
market)
• Intense)
• Emerging)
market)
• Less)
compe>>on)
• Emerging)
market)
• Intense)
Posi+ve%
Spillovers%
?ve) +ve)(Russia))+ve) +ve)
(Brazil))
?ve)
(Franchise)
model))
+ve)
(Singapore)?)
SEA))
Total%Market%Value%in%2010:%€769.3bn%

100. Macommerce)
)a)complementary)revenue)stream)
• 5
th
:%mul+achannel)
• build)integrated)mul>?channel)plaeorms)(addressing)customers)via)
different)plaeorms)and)integra>ng)them))call)centers,)web)&)
mobile,)direct,)other,)catalog,)print/mail,)TV,)stores.))
• Customers)touched)by)numerous)channels)will)spend)more)with)the)
retailer:)Average)annual)spend)(USD):)260)?>)660)?>)1,620)from)
single)channel)?>)dual)channel)?>)tri?channel)(store,)catalog,)
internet))also)creates)more)loyal)customers)
• push)into)online)–)e?/m?commerce)
• “Apparel,)accessories)and)footwear”)is)biggest)category)in)online)
sales,)and)is)expected)to)con>nue)to)grow)at)high)rates)(2009?2013)
CAGR:)11%,)forecasted)online)sales)for)USA,)$40.3)bn)in)2013))
• challenge)for)fashion)industry)–)need)to)define)equilibrium)between)
brand)and)commercial)objec>ves)

101. Emerging)markets)
Asia%Pacific)
Middle)East))
&)Africa)
Eastern)Europe)
South)America)
Market)Size)Ease)of)Entry)
Growth)
)Poten>al)
Compe>>on)
Favorable) Unfavorable)
Where%to%expand%in%2011%
Posi>ve))
Spillovers)
Franchise)to)MEA)
Cultural)and)legal)constraints)

102. Emerging)markets)
Asia%Pacific)
Middle)East))
&)Africa)
Eastern)Europe)
South)America)
Market)Size)Ease)of)Entry)
Growth)
)Poten>al)
Compe>>on)
Favorable) Unfavorable)
Where%to%expand%in%2011%
Posi>ve))
Spillovers)
Move)to)medium)run)–)
1.)compe>>on)is)intense)
)2.unfamiliar)market))

103. Eastern%Europe:%midaprice%on%the%rise%
Value)Proposi>on) Focus) Forge% Implementa>on)Conclusion)
• )Economic)crisis)
• )Increased)demand)for)middle?
market)
Timely%opportunity%
• )Manufacturers)in)Turkey,)
Morocco)and)Bangladesh)
• )Headquarters)in)Stockholm)
Geographical%proximity%

104. Variables%Western%
Europe%
Eastern%
Europe%
North%
America%
South%
America%
MENA%Asia%Pacific%
Market%Size%US$379bn)US$64bn)
(Russia:)43.8bn))
US$352bn)
US:)US$329bn)
US$88.3bn)
(Brazil:)43%)of)total)
volume)sales)and)
nearly)55%)of)value)
sales)in)2008)–)
lower)end)market))
US41.5bn) China:)US
$169bn)
Japan:)US
$134bn)
Australasia:)
US$11bn)
Growth%
Poten+al%
2.4%) 8.9%) 4.7%)
(Exp)increase))
4%) 12%) 9%)
5.1%)(Male))
Ease%of%
Entry%
• Easy)
• Familiar)
market)
• Rela>vely)
easy)
• Familiar)
market)
• Easy) • Difficult)
• Unfamiliar)
market)
• Difficult)
• Unfamiliar)
market)
• Sensi>ve)
• Rela>vely)
easy)
• Familiar)
market)(P))
Compe++on%
Note:)Clustering)is)
good)
• Mature)
market)
• Stable)
compe>>on)
• Emerging)
market)
• Intense)
• Mature)
market)
• Stable)
compe>>on)
• Emerging)
market)
• Intense)
• Emerging)
market)
• Less)
compe>>on)
• Emerging)
market)
• Intense)
Posi+ve%
Spillovers%
?ve) +ve)(Russia))+ve) +ve)
(Brazil))
?ve)
(Franchise)
model))
+ve)
(Singapore)?)
SEA))
Total%Market%Value%in%2010:%€769.3bn%

105. Defining)the)Tiers)
FirstaTier%Ci+es%
Four)municipali>es:)Beijing,)Chongqing,)Shanghai,)Tianjin)
Ci>es)with)total)retail)sales)of)more)than)RMB30bn,)annual)per)capita)income)of))
RMB11,000)and)high)per)capita)retail)sales)as)propor>on)of)income:)
10)provincial)capitals:)Changchun)(Jilin),)Chengdu)(Sichuan),)Guangzhou)(Guangdong),)
Hangzhou)(Zhejiang),)Harbin)(Heilongjiang),)Jinan)(Shandong))Nanjing,)(Jiangsu),)
Shenyang)(Liaoning),)Wuhan)(Hubei),)Xi’an)(Shaanxi))
Four)leading)ci>es:)Dalian,)Qingdao,)Shenzhen,)Xiamen)
SecondaTier%Ci+es%
17)provincial)capitals:)Changsha)(Hunan),)Fuzhou)(Fujian),)Guiyang)(Guizhou),)Haikou)
(Hainan),)Hefei)(Anhui),)Hohhot)(Inner)Mongolia),)Kunming)(Yunnan),)Lanzhou)(Gansu),)
Lhasa)(Tibet),)Nanchang)(Jiangxi),)Nanning)(Guangxi),)Shijiazhuang)(Hebei),)Taiyuan)
(Shanxi),)Urumqi)(Xinjiang),)Xining)(Qinghai),)Yinchuan)(Ningxia),)Zhengzhou)(Henan))
50)prefecture?level)ci>es,)including,)Ningbo,)Suzhou,)Wuxi,)Wenzhou,)Nantong,)
Dongguan,)Zhanjiang)
15)more)ci>es)with)popula>ons)of)between)500,000)and)2mn)
ThirdaTier%Ci+es%
Approximately)200)county?level)ci>es)
FourthaTier%Ci+es%
Approximately)400)capitals)of)county)towns)
Source:)Ogilvy)