H&M smart money making

It's a must for the foundry, but it does not hesitate to invest heavily in big-name stars. H&M's approach is actually a smart money-making exercise.

H&M often breaks the rules of the fashion industry. It proposes that the "prevalence, quality and price" can be satisfied at the same time. The popular concept in the fashion world is called “Cheap and Chik”. It is cheap and fashionable. H&M is the leader of this fashion.

Looking at every aspect of H&M, many seemingly expensive inputs have received several times the rewards afterwards. However, the quality problems that are frequently exposed are inevitably caused by H&M's suspicion that “radish is not washed quickly”.

"More like a financial expert"

Stefan personally controls the company's expenses. In order to reduce costs, he did not even allow employees to use mobile phones in the 1990s. At that time, the company stipulated that it was only in exceptional circumstances that it was possible to fly business class and take a taxi.

At that time, the mainstream fashion in Europe still maintained a proud attitude, and high-priced fashion was pursued. Persson broke this practice and opened the market at a very low price, which was well received by consumers.

Some consumers even believe that H&M's clothing is like a fast-moving consumer product. It can be replaced with new ones every season, and it will always be purchased.

H&M has achieved great commercial success. Although the unit price of the product is low, the good sales performance has repeatedly pushed the founder of the Persson family to the position of the richest man in Sweden.

In order to ensure the low price advantage of clothes, H&M has been diligently saving at all stages for many years.

In the manufacturing process, we always look for the most cost-effective areas and establish cooperative relationships with foundries. H&M is also extremely sensitive to raw material prices. In its newly released 2011 annual report, H&M repeatedly mentioned “cottage price increases” and the possible risks associated with exchange rate changes.

Today H&M's chairman is the family's second generation Stefan Persson, and the chief executive is Karl-Johan Persson, the third generation of the family who took office in 2009. Stefan's thrift is well-known, and one British analyst commented that he is more like a financial expert, and it is certainly more costly.

The most commonly mentioned is that Stefan personally controls the company's expenses. In order to reduce costs, he did not even allow employees to use mobile phones in the 1990s. At that time, the company stipulated that it was only in exceptional circumstances that it was possible to fly business class and take a taxi.

When H&M promotes corporate culture externally, it often starts with Stefan's experience. In 1967 H&M's first store opened in London. At the time he was only 29 years old, he personally took the record of ABBA, Sweden's most famous band, and distributed and solicited customers on the streets. H&M always uses this story to advocate a corporate culture that requires close attention and diligence.

H&M, a brand known for marketing, does not expect to rely on selling products to make money, but hopes to create topics and sensational effects in this way. As a result, Bo Lai’s free layout and more eyeball effects can actually bring more amazing value.

Like ZARA, H&M is often accused of copying big names. Lu Keqiang, director of the board of directors and chief executive officer of Fukes, told the “China Business” reporter that due to being copied in the early years, many luxury fashion shows were strictly guarded against fast fashion brands, except for fashion magazine editors and buyers. Hands, dealers, etc., outsiders are not allowed to enter.

But this still can not stop the fast fashion brands, they managed to buy pictures from the fashion editors, or go directly to the fabric factory to buy a design line. European fabric factories are factories that specialize in fashion brands. In addition to a few unique designs, the other major products are designed and produced by fabric factories. Fashion big brands sometimes go directly to the fabric factory to see the goods, fancy to buy out the entire series together. H&M also sometimes goes to these European fabric factories.

From time to time this will lead to lawsuits for ZARA and H&M. Many big names will initiate design patent litigations, but due to the long litigation period and when the judgment has been made, the fashion world has long been ever-changing, and both parties will eventually choose to reconcile. ZARA, H&M can spend as much as tens of millions of dollars a year on settlements, which is almost a fixed cost.

Over time, H&M changed its mindset and started to work with luxury brands across the border. This is even more a smart business. Many big brands are also willing to launch a lower-priced product line in cooperation with H&M to try low-end markets and cultivate young consumers.

Willingly personally designing for H&M, not only Carl Lagerfeld, Jimmy Choo, Donatella Versace, and Madonna. In 2012, Italian brand Marni will join the ranks of H&M collaborators.

With each cooperation, H&M has built up momentum. H&M's global stores have long queues at the same time, and even in China, there is a phenomenon of “yellow cattle” speculating.

However, after the upsurge, the problems were gradually exposed. Some consumers worked hard to grab these big-name designs, but they did not try on them because of time constraints. As a result, they found that the products they grabbed were not suitable for themselves. As a result, the contrasting pictures of these masterpieces' designs are far behind the real ones. After the rush to buy booms, there are often successive returns.

However, the joke on these networks did not cause much damage to H&M. Some foreign media commented that H&M does not expect to rely on selling products to make money, but hopes to create topics and sensational effects in this way. As a result, Bo Lai’s free layout and more eyeball effects can actually bring more amazing value.

In recent years, H&M’s compensation to big-name designers has doubled. The industry’s claim is that in 2005, H&M’s reward to designers was only US$1 million. In 2007, the reward for Madonna had risen to US$4 million.

As for the cooperation with Versace in the fall of 2011 and Beckham’s latest endorsement, although the compensation has not been disclosed, it is certainly a stable and profitable business for H&M.