Hennes & Mauritz AB, better known as H&M, one of the inexpensive clothing fashion brand's leaders, established an expansion strategy, above all towards the East. They opened a lot of new stores in the best location, on shopping streets and in shopping centers in the United States (Beverly Center in Los Angeles) and in Canada (Center Rockland in Montreal). The Swedish firm also decided to develop itself in the Middle East, and in Asia. After China with Hong Kong and Shanghai, a contract has been signed to open its first store in Japan, sometime during the year 2008. The Japanese are known for being very fashionable people, but further information is needed to conclude if H&M's business is likely to be successful in the Japanese market. This report will focus on a macro environmental analysis and will be a more market-specific analysis, mainly through the SLEPT and 12C frameworks, before going onto a further assessment of the main challenges for the company in this market.
[...] As Japan has a stable environment, a complete ownership can be preceded. Nevertheless, other way of expanding can be considered. Joint venture The joint venture alternative would permit to shrink the cultural gap between H&M's enterprise culture and the Japanese culture. Indeed, an association with a market-experienced firm would erase the lateness H&M has on this market compared to companies like Gap or Zara which have been present there for more than a decade, or even the market leader, Uniqlo, which is unbeatable in matter of Japanese culture's adaptation. [...]
[...] H&M is able to find its place on this market, but has to adopt an adapted strategy in every dimension, for the market entry for example. It has furthermore a crucial advantage through its collaboration with Madonna, which should permit to the Swedish brand to implant successfully in this new market. Appendix 1 Hofstede's cultural dimension Appendix 2 Historical exchange rate of Yen per US Dollar Year Month Source : Bank of Japan Appendix 3 H&M advertisements Bibliography Tung, Rosalie [...]
[...] Consumption : H&M is late in the Japanese market, considering that one of its worldwide's most serious competitor, the Spanish group Inditex, has a strong presence there since ten years, with now 28 Zara stores. Moreover, the clothing expenditures of Japanese consumers do not stop shrinking since a decade, representing now less than of the total Japanese's household expenditure, against in 1991 (Jetro's report: Japanese Apparel Industry) ! The main reason for this is the uncertainty about the future of the Japanese economy, which made the Japanese consumers being more conscious, notably about cost and quality. [...]
[...] It is imperative for H&M to have a clearly visible presence on the Japanese market to benefit from the high fidelity of Japanese consumers. They expect to build a kind of relationship with the vendor; H&M consequently has to do its best to meet this expectation. It is essential to show an oriented strategy on Japan, through a high presence on the market, among others through events and other forms of communication to deserve the consumers' fidelity. Gap, present on the Japanese market since 1994, succeeded thanks to abundant advertisements by every canal: billboards, TV commercials, and once again, magazines (JETRO), like H&M could judiciously do with FRUiTS for instance. [...]
[...] here that the core market of the country is located, with the South Pacific coast (Osaka), as the mountains represent 70% of the territory. The Japanese labour force is estimated at 67 million (more than 50% of the population), among which two third are in the services in the industrial sector, and only in agriculture. Its unemployment rate is rather low which is the second lowest of the G8 countries after the United Kingdom. That is one of the reasons why Japanese consumers have an important purchasing power. [...]
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