H&M’s market entry strategies
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Question
What are H&M market entry strategies?
Answer
H&M continues to grow in new and existing markets with a focus on quality, sustainability and continued high profitability. Their growth target is to increase the number of stores by 10-15% per year. H&M has expanded to over 3300 stores in 54 countries and has a pool of over 116,000 employees.
Today, the majority of the clothes sold in H&M stores are produced in Asia, Europe, and Northern Africa; specifically, Egypt, Pakistan, Bangladesh, China, India and Turkey. Considering that H&M has a desire to grow and maximize its financial capabilities, it is only but logical that as a company, it outsources its production, as it benefits from a lower cost of manufacturing devices and labour. Contract manufacturing is a market entry strategy where a company, in this case H&M, outsources their entire or part of manufacturing operations. In fact, H&M outsources all its production.
As of 2016, H&M plans to enter new markets which include New Zealand, Cyprus, Colombia and Puerto Rico. H&M operates on its own as a single-brand retailer, complying with foreign direct investment (FDI) regulations, which is another market entry mode. In other words, H&M stores are run by H&M, with the exception of some markets where they collaborate with franchising partners. However, franchising is not part of the general expansion strategy.
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