Despite HMs obvious past success it has recently floundered as demonstrated by

Despite hms obvious past success it has recently

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Despite H&M’s obvious past success, it has recently floundered, as demonstrated by a 3 per cent sales decline at stores in 2011. Because of its longer supply chain, H&M finds it difficult to react quickly to changing trends as Zara does. Its focus upon basics such as T-shirts and trousers, which customers typically shop around for to get the best price (Hansegard, 2013), means it has not developed a sustainable niche. Other lower-cost competitors have developed more efficient distribution sys- tems and embarked upon market growth strategies that could further erode H&M’s position. The lack of fully-integrated operations, especially in new markets in the Southern hemisphere, further hampers the company. Because it lacks the cutting-edge in fashion-basic provisions, it cannot charge more for its products. Yet it is forced even further into cost-based competition at precisely a time when its rivals are more efficient at driving down their costs. Generally speaking, H&M has failed to develop the enhanced design capabilities of Zara and, despite its attempts to match competitors’ quick response times, it has been unable to fully capture the higher margins of fashion-forward products. It is also less successful at integrating strategic customer purchasing behaviour with production schedules and consequently experiences supply–demand mismatches and inventory management problems (see Cachon & Swinney, 2011; Caro & Martinez de Albéniz, 2010). Discussion and conclusion The adoption of the fast fashion business model that emphasizes speed to market and design responsiveness has been widespread and is becoming the norm in the fashion- basic sector (Barnes & Lea-Greenwood, 2013). An increasing number of retailers are adopting strategies that enable them to reduce lead times and become more respon- sive to consumer demand whilst nonetheless offering cheap items. GCCs are being transformed and restructured, enhancing channel integration and increasing global sourcing. Costs continue to be pushed down and throughput rationalized in order to meet greater demand variability. Many retailers that failed to adopt market segmen- tation or fast fashion have experienced a decline in sales and reduced market share (Crofton & Dopico, 2007). Most studies of fast fashion analyse the transformation of supply chain logistics and the means whereby product throughput time has been dramatically reduced with attendant cost-savings. The key supply-side components of this new model are fourfold. Technological innovations such as point of entry sales data provide firms with greater accuracy in responding to market trends; operational innovations and improved supply chain logistics have reduced lead times for new products; trading companies perform a valuable role by customizing value chains and providing flexibility and quality; and, finally, trade regimes have enabled Western retailers to capitalize upon emerging economies’ economic development models predicated upon export-led manufacturing growth strategies.
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