h&m come together case study

For H&M, the future of fashion is both ‘circular’ and digital

H &M Group, the world’s second-largest clothing retailer, is betting that people will choose and buy clothes differently from the way they have in the past—and it sees itself as a potential catalyst for that change. The company, which operates some 5,000 stores in 70-plus countries, believes it has both the responsibility and a tremendous opportunity to change consumer behavior. So says Vanessa Rothschild, who has helped lead the company’s sustainability efforts for more than four years. Today, as H&M Group’s global sustainability steering and development manager, Rothschild and her colleagues work to define and achieve the company’s sustainability goals, which include using only sustainable materials by 2030 and having a “climate positive” value chain—one that reduces more greenhouse gases than it emits—by 2040.

Rothschild spoke with McKinsey’s Karl-Hendrik Magnus and Monica Toriello about the future of sustainable fashion. The following are edited excerpts of the conversation.

McKinsey: Your job title is quite long. What does it mean? What are your primary responsibilities?

Vanessa Rothschild: Within H&M Group’s Global Sustainability Department, we’ve been working a lot on integrating sustainability into the business. The “steering” part of my job means my team works on steering mechanisms that help make sustainability a natural part of our everyday decisions: what we are being measured on, our KPIs, and so on. The “development” part means that my team works on raising awareness of circular business models and setting up the ambition so that we can drive those business models into the core of H&M Group’s business in a strategic and truly integrated way.

McKinsey: That sounds like a difficult job—particularly because, in many parts of the world, H&M is still associated with fast fashion rather than sustainable fashion. What will it take to shift consumer perception? And, more important, what will it take to shift consumer behavior?

Vanessa Rothschild: I think we can play a central role in both of those. H&M Group, and the fashion industry as a whole, has for many years excelled at making fashion desirable and attractive. Today, we have the same kind of responsibility, and also the opportunity, to make “circular fashion” just as attractive or even more attractive. My definition of circular fashion is an industry in which resources and products stay in use for as long as possible before being recycled or regenerated into new products, again and again.

Part of our role is to find the convergence between the digital shift and the circular shift—to make them come together so that it becomes very, very easy for the customer to adopt new ways of behaving and of using fashion. We have had the power to create desire; I think we also have the power to create meaning and well-being.

McKinsey: To that end, what are some of the most innovative or highest-impact circular initiatives at H&M right now? And how do you see those initiatives evolving over the next ten years?

Vanessa Rothschild: I see three main parts making up a circular ecosystem within the fashion industry: circular supply chains, circular products, and circular customer journeys. There are exciting innovations within each of those parts. For circular supply chains, at the most basic level we need to produce only what we can sell; we need to adjust supply and demand. Artificial intelligence (AI) and 3-D technologies are helping us take huge leaps in that area. For example, algorithmic commerce, or using AI to understand consumer needs in order to produce only the right products in the right amounts and allocate them to the right place, will take us far.

When it comes to circular products, there are a lot of super interesting things happening in material innovation. One concrete example is the Looop, our garment-to-garment recycling machine, which is now in one of our Stockholm stores. Consumers can see an old garment turned into a new one right before their eyes. Another example of material innovation and recycling technology is Renewcell, which is a company that H&M Group has invested in. Renewcell is developing a new material called Circulose, made by gently recovering cotton from worn-out clothes.

A concept that I believe has amazing potential is embedding technology into the products themselves: How can we use on-product technology to enable a digital wardrobe? Product ID is an important enabling technology that will take us very, very far, both in terms of consumer behavior—because it will make it simple for consumers to swap, share, and show garments—and in terms of impact follow-up. Digital enablers will make it much simpler for garments to flow through circular business models such as resale, rental, and repair.

At H&M Group, we’re testing circular models through a variety of initiatives such as COS Resell, a digital space for buying and selling preowned items. But the really exciting part is when we start to scale these business models, and when we decouple business growth from resource use. By 2030, these initiatives won’t just be scattered, sporadic initiatives. They’ll become interconnected initiatives that form the core of our business.

Doing business in this way, coming up with all of those innovations, requires diversity of thought. So inclusion and diversity are crucial preconditions for all of this to happen.

McKinsey: Has the COVID-19 pandemic changed the way H&M thinks about those initiatives? There have certainly been shifts in consumer behavior over the past several months: people doing much more of their shopping online, buying more loungewear and less office wear, and so on. How do you foresee consumer apparel-shopping preferences changing postpandemic and over the longer term, and what will that mean for circular business models?

The future of fashion: Sustainable brands and ‘circular’ business models

Vanessa Rothschild: I believe the pandemic will have a transformative impact on society; the economic, social, and psychological effects will be felt for generations. But we’re now at a point where we are at least past the shock phase and can start planning for the future. Most of the changes we’re seeing right now are major transformations; they are new lifestyle behaviors rather than just short-term trends in the market.

The growth in online shopping, as you said, has sped up. Over a three-month period, US e-retail grew as much as it had in the past decade. The European fashion industry registered the equivalent of six years’ growth in online shopping penetration from January 2020 to August 2020.

Consumer demand for comfort, in every sense of the word, is growing: both comfort in terms of styles and fashion trends, but also comfort and convenience in customer interactions. The casual workweek is here to stay. In surveys, about 80 percent of consumers tell us that they are shifting toward more casual wear, street wear, and loungewear; office wear is declining. Consumers are also expecting comfortable, friction-free shopping.

In addition, consumers are making more conscious choices about what they wear, and that’s where we see them starting to embrace circular business models. I think the big winners in the future will be those fashion players that can embrace circularity and digitization at the same time. Future winners will be companies that can problem-solve for customers and create long-term relationships with customers—companies that provide solutions and services, not just products.

McKinsey: What does that look like a decade from now? How do you see the fashion retail landscape evolving between now and 2030, and what role will sustainability play in that landscape?

Vanessa Rothschild: First and foremost, fashion retail will be a very scrutinized market: consumers, stakeholders, and companies themselves will have much higher demands for transparency. Second, it will be a much more cocreated market. Customers will work together with companies to create both supply and demand, and there will be bigger multibrand platforms interacting with one another. Third, partnerships will be even more important in 2030 than they are today. Companies in the industry will need to support one another. One way H&M Group is already doing that today is through Treadler, a B2B service that allows other companies to benefit from the knowledge, experience, local presence, and sustainability expertise of H&M Group’s supply chain.

McKinsey: Thanks for speaking with us today, Vanessa. One more question: What are your boldest predictions about the next decade in sustainable fashion?

Vanessa Rothschild: By 2030, it might be possible to make new products out of postconsumer waste—and maybe even out of carbon emissions! It might be possible to make new products without using any new natural resources at all. Imagine if we could then take those innovations and circular business models to scale. The sharing and resale market will become an even bigger business than the retail market. We as consumers would own a very small percentage of our wardrobe; the majority of our clothing will be shared. Fashion’s next normal will be “ownershift” rather than “ownership.”

Another bold prediction: through increased focus on environmental issues beyond climate change—biodiversity, for one—the fashion industry will become a force for change in other industries. For example, the fashion industry could champion regenerative farming and spearhead systemic changes within farming as a whole. In other words, the fashion industry will become a net-positive contributor to the environment and play a crucial role in the transformation of our society into a circular way of living.

Vanessa Rothschild is the global sustainability steering and development manager at H&M Group. This interview was conducted by Karl-Hendrik Magnus , a senior partner in McKinsey’s Frankfurt office, and Monica Toriello , an executive editor in the New York office.

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H&M Foundation: Sustainable fashion innovation at scale

• Call for Change
• When Tech Meets Human Ingenuity
• A Valuable Difference
• Related Capabilities

Call for change

Fashion industry leaders are calling for radical change and exploring ways to be more sustainable.

Sustainable innovators and entrepreneurs are critical to finding new solutions, but often struggle to attract the necessary support to scale innovations. And time is short. Billions of dollars need to be funneled into sustainable fashion innovation annually to reinvent the industry.

This is where the non-profit H&M Foundation comes in. Since 2015, it has supported early stage sustainable innovation through the Global Change Award (GCA) , in collaboration with Accenture and the KTH Royal Institute of Technology. With 20,000+ entries since its inception, the GCA shows that the collective talent exists to transform the fashion industry. To take sustainable fashion to the next level, the H&M Foundation wanted to measure the multidimensional value some of these innovations could yield with support.

How could the non-profit spotlight 10 of its GCA winners and quantify their potential impact?

"It's crucial to support sustainable innovation if fashion is going to make the shift to a more sustainable industry. The Billion Dollar Collection highlights this untapped opportunity." — KARL-JOHAN PERSSON , Board member of H&M Foundation and Chairman of H&M Group

When tech meets human ingenuity

The H&M Foundation called on its long-term partner Accenture, to help show what the future could look like.

We helped the H&M Foundation develop and launch a virtual collection of five looks—the Billion Dollar Collection (BDC) . Showcased as designer garments, each of the 10 GCA-winning innovations selected come from across the globe and encompass elements from sustainable materials to traceability.

The H&M Foundation drew on Accenture's diverse skills to support the BDC launch. Mackevision (Accenture Song), created a digital avatar from scratch and brought the designer's sketches to life as 10 3D garments using digital twin and CGI technology. To demonstrate the potential impact of the 10 innovations, Accenture applied its 360-degree value approach to each startup with the 2030 UN Sustainable Development Goals in mind. We also helped create a high-end digital fashion lookbook, featuring the design, solution and potential industry value generated if the innovation is scaled up.

A valuable difference

The H&M Foundation's Billion Dollar Collection helps create a new paradigm to articulate value and innovation in the fashion industry.

The BDC highlights how companies can measure success in a more holistic way by looking at dimensions like sustainability.

The H&M Foundation now has a way to showcase the potential ground-breaking impact of the GCA innovations if they are adopted and scaled. Its sustainable innovations-backed up by thorough analysis-offer the industry an opportunity to reinvent itself to fuel future growth and bring positive change. With these advances, H&M Foundation is changing the face of the fashion industry to make sustainability and innovation default practices by design.

Sustainability in fashion

Related capabilities, retail consulting, sustainability services, accenture song.

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An analysis of “Come Together” (H&M) by Wes Anderson

Come Together has been defined as a short fashion movie that is both sentimental and innovative. The commercial was directed by Wes Anderson, who has been praised on numerous occasions for his unique narrative style. Come Together is a Christmas-themed advert revolving around a typically art-deco train, the H&M express, and its passengers who are not going to be home for Christmas due to heavy snow. Conductor Ralph (Adrien Brody) informs passengers that as a result of challenging weather conditions and mechanical difficulties, it will an extra eleven and a half hours for the train to reach its destination. The H&M express carries a number of peculiar passengers who are all looking forward to getting home for Christmas. Each passenger has a little picture of a dear one, which for a young woman is a dog, meaning that they are all being expected by their loved ones. The short movie features a distant choir singing The Little Drummer Boy, a nostalgic Christmas song that tells the story of a young boy who finds himself witnessing Jesus’ birth and starts playing his drum as well as he can to make up for the fact that unlike the Magi, he hasn’t brought him a gift. Anderson’s musical choice is not casual. Similarly to the young boy in The Little Drummer Boy, Conductor Ralph has to make up for the fact that his passengers will not be home for Christmas by offering them a complementary brunch that is as Christmassy and joyful as possible. At some point, the train passes through a tunnel and the corridor grows unexpectedly dark; as it lightens again, all the passengers leave their respective compartments to attend the brunch. Unlike H&M’s previous adverts, Come Together does not promote any specific outfits in a direct manner, emphasizing how incredibly affordable and trendy they are – even though every single passenger is seen wearing unmistakably H&M outfits. Instead, Anderson produced a short movie that reflects the brand’s philosophy and spirit. Several references to war are found throughout the commercial: the old train, the conductor’s moustache, the dark corridor and the overall narrative style are clearly meant to build an association between World War II and today’s turbulent political and economic environment, thus appealing to consumers’ fear, hopelessness and sadness.

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The last scene of the movie shows the passengers having a good time in the dining car, celebrating Christmas around a Christmas tree that was clearly decorated at the last minute. This is when Happy Xmas by John Lennon starts playing, thus suggesting that the war is finally over. It is important to keep in mind that Happy Xmas is a protest song that John Lennon and Yoko On wrote and composed to criticize the Vietnam War. It follows that H&M is much more than a clothing-retail company: it is also a lifestyle brand that is close to consumers and aims to keep serving and pleasing them through good and bad times. Unlike its competitors, H&M understands what is going on in the world and is not afraid to take a stance on contentious issues. A previous advert, for example, showed two women kissing in the swimming pool, thus suggesting that H&M supports LGTB rights. Similarly, the ad being analyzed seeks to convey a simple and yet important message: we can easily overcome any difficulties as long as we cooperate with strangers rather than being afraid of them. Anderson relies on a series of emotional appeal to ensure that the message behind “Come Together” reaches the company’s target audience. The link to the H&M online store that appears at the end of the video is intended to remind consumers that they can buy H&M clothes even while traveling.

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Come Together has been defined as a short fashion movie that is both sentimental and innovative. The commercial was directed by Wes Anderson, who has been praised on numerous occasions for his unique narrative style. Come Together is a Christmas-themed advert revolving around a typically art-deco train, the H&M express,...

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• Name of CEO/Founder: Helena Helmersson
• State | Country : Stockholm, Sweden
• Date of incorporation: 1947

Vision and Mission Statement

To lead the change towards circular and renewable fashion while being a fair and equal company.

H&M is currently working on making its packaging completely recyclable and compostable. They also want to make their product range 100% recyclable by 2030.

Achievements in Sustainability

Anna Gedda, Head of Sustainability, quoted, “Big change requires bold actions and the courage to aim high. At the same time, we have to be humble to the challenges our planet is facing. So if we want to make a real change, we have to be brave, push the boundaries and not be afraid to fail.”

H&M has always stood by this statement. Over the years, it has set an example for many other leading companies with its astonishing sustainability plans and projects.

In June 2018, H&M launched Afound. Afound works towards giving unsold products across 300+ brands, including H&M, a new life cycle. You can find past and present season products inclusive of used and vintage commodities possessing the range of discount of 25-70% on their platform. Currently, Afound is only available in Sweden and the Netherlands.

H&M also started the take care concept. The take care concept offers direction on how to do small repairs and fixes by yourself, which prolongs the product’s life. Through the H&M’s app, users can access methods and advice like how to remove lipstick stains or how to reattach buttons and many more. They also offer a variety of products, for instance, sewing kits, environmental-friendly detergents, washing bags that collect microfibres, plus more.

H&M has its recycling service too. Customers can return products they no longer want to the store. About 50-60% of the second-hand items are resold. The next 35-45% of the collected items are remade into something new. The remaining proportion of 3-7% is used as combustibles for energy production. 

The company is also experimenting with new and productive ideas. For example, H&M built one of its stores in Stockholm, Sweden, primarily out of existing store materials or previous purchase leftovers. This maximized the utilization of resources and minimized the environmental impact.

More than 57% of its supply chain consists of recycled materials. In addition to recycling materials like cotton, polyester, nylon, wool, cashmere, and numerous other things, they also are collaborating with people to tackle the problem of recycling blended fibers. 95% of the cotton in their products is sustainable or recycled.

H&M’s value chain is connected to innumerable people and businesses around the globe, who together are creating a positive impact on the world.

Quick pointers:

• H&M was launched in 1947 in Sweden.
• In June 2018, H&M launched Afound. Afound works towards giving unsold products across 300+ brands, including H&M, a new life cycle, at a discount of 25-70% on their platform. Currently, Afound is only available in Sweden and the Netherlands.
• H&M also started the take care concept. The take care concept offers an app that gives direction to users on how to do small repairs and DIY fixes, which prolongs the product’s life.
• H&M has its recycling service too. Customers can return products they no longer want to the store. About 50-60% of the second-hand items are resold. The next 35-45% of the collected items are remade into something new. The remaining proportion of 3-7% is used as combustibles for energy production.
• The company is also experimenting with new and productive ideas. H&M built one of its stores in Stockholm, Sweden, primarily out of existing store materials or previous purchase leftovers. This maximized the utilization of resources and minimized the environmental impact.
• More than 57% of its supply chain consists of recycled materials. In addition to recycling materials like cotton, polyester, nylon, wool, cashmere, and numerous other things, they also are collaborating with people to tackle the problem of recycling blended fibers.
• 95% of the cotton in their products is sustainable or recycled.
• Their vision is to lead the change towards circular and renewable fashion while being a fair and equal company.

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You are in: Home » RXEU » CASE STUDY H&M: engaging with customers

CASE STUDY H&M: engaging with customers

Chloe rigby.

As a global fashion brand, H&M aims to reach existing and potential customers around the world, both online and through its stores. From its website it offers customers a range of ways to engage with the brand as it works towards a strategy of doubling its sales by 2030, while reducing its emissions to zero by the same date. 

H&M is the original brand in an H&M Group that now includes eight brands and turned over SEK 198.97bn (€19.02bn) in 2021. H&M itself was founded in 1947 when Erling Persson opened a womenswear shop called Hennes in Västerås, Sweden. Now H&M, ranked Elite in the RetailX Top1000 Europe, takes a multichannel approach to selling clothing and footwear for men and children as well as women, with 4,157 shops in 76 markets and 56 market-specific local language and local currency online websites.

Building customer relationships

From its home page, H&M offers shoppers the opportunity to sign up to its newsletter, while also linking to its social media channels – Facebook, Twitter, Instagram YouTube and Pinterest. The retailer has more than 40.4m followers on Facebook, where it shares fashion advice and inspiration. H&M’s demographic may be more likely to want to engage via mobile – the retailer offers both iOS and Android apps. Signed in shoppers can save items to a ‘favourites’ list, or in their shopping bag for later. 

The retail brand encourages shoppers to become a member of the free H&M.com club, in exchange for special prices, exclusive discounts, free click and collect and free delivery when spending £20 or more. Shoppers collect points by joining, shopping and once they have collected 300 points they qualify for free delivery and returns as well as surprise offers and early access to collections. All of these approaches are part of developing a data-driven relationship with customers, that enables H&M to send more relevant messages and discounts to shoppers. The retailer also shares features from its customer magazine on the website, with recent features covering Pride 2022 and the crochet trend.

Shoppers can browse the website using a comprehensive navigation that filters by clothing type, by current trends, named occasions, by brands and by rental and sustainable shopping options.

Delivery and payment options

From the checkout shoppers can see reviews, delivery options, and also have the option of finding the item in their local store, using a stock checker.

On H&M’s Swedish website, standard delivery, in two to four days, is free when shoppers spend at least SEK 200, or costs SEK 39.90 for smaller orders. Collection and locker delivery are also available. A variety of express delivery services which deliver in one to two days are available for an extra charge. Payment methods include Klarna – available to registered members – PayPal and Apple Pay as well as credit and debit cards. Returns can be made within 30 days, and are free to a shop or for members, but cost SEK 39.90 for returns via a courier or a locker service. 

In the UK, the cost of standard, two to four day delivery or collection is £3.99, while next day delivery is also available on orders placed by 7pm for an extra charge. Returns are free and must made within 28 days. Standard fulfilment services are free to HM.com members.

This first appeared in the RetailX Top1000 Europe . Download here to see the full listing and analysis of Europe’s leading retailers

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H&M: Stitching Core Business & Operational Effectiveness Together

H&M is winning by focusing on what they’re good at and outsourcing the rest.

What makes H&M one of the largest and most effective retailers in the world?

To understand why H&M is arguably the most effective retailer in the world we need to examine their core operating and business models. H&M has come a long way from their first store in Västerâs, Sweden that opened in 1947 based on the ready-made-clothing industry in America. Today, they have over 3,700 stores in 61 countries and about 132,000 employees- handling an enormous supply network, warehousing and logistics. H&M has a business model that focuses on outsourcing non-core operations so they can focus on the core business model. To do this, H&M buys clothing and accessories from a large selection of suppliers and does not own a single factory. Their core business is to have “fashion and quality at the best price”. By eliminating the intermediaries and out-sourcing production they are able to focus on the design of their clothing and the retail experience. This gives consumers fashionable product with good quality and the best price. That said, they closely manage the production processes to ensure that you get that chic, trendy jacket at a great price.

How is H&M getting you stylish clothing at the right price?

Pathways to Just Digital Future

H&M prides itself on understanding emerging trends and they do it with a large team. H&M has over 700 suppliers, about 60 pattern makers and 20 worldwide production centers. [1] Their manufacturing operations depend on building strong relationships with suppliers and operating under manufacturing strategies that reduce lead times so their fashionable items are on trend.

Strong relationships with supplier:

It’s all about the relationships H&M makes with their suppliers through collaboration and partnership. With over 30 production oversight offices globally, these offices take on a mediating function with local suppliers ensuring efficient communication. Further, these offices are the checks and balances for maintaining quality, price and compliance with the company’s code of conduct.

“The H&M road map rests on strategic relationships with factories producing two-thirds of its products. For the pilot group of model factories in Bangladesh and Cambodia, H&M has committed to purchasing 100% of its production for five years. This represents a significant shift towards business incentives for improving working conditions, as opposed to a compliance model that focuses on inspections. To be sure, it will be easier for H&M to manage those incentives when it’s buying all of a factory’s production than it will be when H&M is one among several brands buying from a factory.” [5]

Manufacturing strategies:

At the end of the day, H&M is bound to price economy. This is where inventory management strategy steps in. They place bulk advance orders to manufacture with about 80% of their retail inventory and the balance 20% are speed to market items to meet market trends. Placing these bulk orders also help with scale of economy, which keeps production lines full and gives competitive pricing. H&M offers a Spring and Fall collection each year with each season having sub-collections that keep inventory refreshed. The main Spring and Fall collections are traditional long-lead items whereas the trendier items have a short lead-time.

Additional, they have adopted an IT infrastructure that has brought the average lead-time down by 15-20%! [6] The IT system connects all stores with corporate logistics, procurement systems and the central H&M warehouse. The system integrates the design and product development teams, keeping a transparent view of the commercialization process.

The clothing industry is extremely competitive and H&M’s business and operating models help them be a leader in the industry. Outsourcing their operations has situated them to focus on getting you the trendiest designs at great prices; thus reducing their costs and becoming as resourceful as possible. H&M is creating a long term business and operating model by building relationships with their suppliers, fostering compliances for future suppliers, managing their inventory and placing bulk orders. As a global company, how will H&M keep suppliers happy so they can continue to focus on their core business? What will keep H&M winning in the retail space?

[1] http://erply.com/in-the-success-stories-of-hm-zara-ikea-and-walmart-luck-is-not-a-key-factor/

[2] http://www.supplychain247.com/article/the_art_science_of_supply_chain_leadership

[3] http://www.bloomberg.com/bw/articles/2013-04-04/h-and-m-goes-public-with-list-of-suppliers

[4] http://sustainability.hm.com/en/sustainability/commitments/choose-and-reward-responsible-partners/supply-chain.html

[5] http://spendmatters.com/2013/12/05/hm-consolidates-spend-strategic-sourcing-supply-risk-reduction-101/

[6] http://erply.com/in-the-success-stories-of-hm-zara-ikea-and-walmart-luck-is-not-a-key-factor/

Student comments on H&M: Stitching Core Business & Operational Effectiveness Together

Thanks for sharing your insights on how H&M has been able to grow in an ethical way! It seems like their deep partnerships and strong convictions have been a driving force behind their success.

I appreciate H&M’s good intentions, but wonder how sustainable some of their business practices will be given their ambitious 10-15% store growth targets. Under this pressure and public scrutiny, I wonder if their supplier standards may loosen as a result of increasing (and potentially different types of) demand from these new stores.

Further, with H&M not owning any of their own plants (yet still committing to 100% of some plant production), H&M needs to have lots of trust in their suppliers to operate ethically. As the supplier base continues to increase, it may become increasingly difficult to monitor suppliers for compliance. This 100% commitment to a plants production also seems to leave H&M with substantial risk, because if demand drops off, H&M is still committed to purchasing the production / bulk shipments. I guess they must be very confident in their growth and demand forecasting ability to enter into these arrangements!

Thanks for the post!

I agree that H&M is one of the most effective retailers globally, but I would be interested, how based on you experience, would you compare them to Zara. Zara is famous of hyper-efficient supply chain and ability to deliver new garments to the stores twice a week. On top of that, Zara adapts couture designs, manufactures, distributes, and retails clothes within 2 weeks of the original design first appearing on catwalks, what seems really fast!

Do you know Zara’s supply chain compares to H&M and what is the lead time in H&M? Furthermore, Zara is producing over 85% of their apparel in their own factories – why do you think H&M is outsourcing the production?

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In this case study, you will discover how H&M resolved communication challenges, managed to ramp up employee engagement and develop its employee training program.

Table of contents

Introduction

H&M is one of the leading global fashion brands. In the Netherlands, they have around 3000 employees spread out over their numerous stores, distribution centers, and their offices.

We interviewed Natascha Poncia-Kilsdonk (Recruitment & Development Manager), Britt Kleinepier (Internal Communication Coordinator), and Youssef El Kandoussi (Store Manager) to learn more about how Oneteam helps H&M to make their employees successful.

“Oneteam helps us to motivate, inspire, and develop our colleagues, which clearly contributes to the success of our business.”

Summary of results

• An adoption rate of 96% ;
• 86% of weekly active users;
• Bridged the communication gap between HQ and the shop floor;
• Improved employee engagement ;
• Structured communication flows ;
• A personalized and scalable digital learning environment;
• The possibility of gathering feedback from the shop floor .

The challenge

What Employee Experience challenges were you facing before using Oneteam?

Natascha : We were facing a lot of challenges. The main challenge we had was that we shared too much information in too many ways. Think of email, newsletters, intranet, a Facebook group, and internal phone calls. It was quite a challenge to combine all this information and make sure that all employees received the right information at the right time.

Youssef : As a store manager, I received a lot of information from the company to share with my team. Having a large team, it was a big challenge to make sure the right information was shared with the right people.

How was this affecting your business?

Natascha : I can’t really tell how it affected us in numbers, but our colleagues gave us feedback that the communication overload made them confused and that it was hard to give everyone the right information. This obviously affected operational efficiency.

"Oneteam really helps us to build a bridge between our desk and non-desk employees"

The solution

Why did you choose Oneteam?

Natascha : In order to overcome the challenges, we decided that we wanted to create an inspiring, relevant, and easy-to-use communication platform. The platform had to facilitate 2-way communication for all H&M colleagues in the entire country, both for desk and non-desk workers.

Oneteam offered us the best solution for optimizing our communication flows. Furthermore, we find it very important that people working at H&M can develop themselves professionally, and the built-in onboarding and e-learning modules perfectly fit this need.

How did you experience the implementation process with Oneteam?

Britt : We launched our Oneteam app last year in March. This was the week we had to go into our first lockdown due to the pandemic (COVID-19). All our stores needed to close, and it was more important than ever to stay in touch with each other and to reach all our colleagues with relevant information. At that exact moment, we launched our Oneteam app, which coincidentally we already planned for that week. This created an immediate urgency to use Oneteam, which helped us with the smooth implementation.

Youssef : Oneteam is very easy to use. Whenever we have a new colleague in the store, it takes us just about 5 minutes to teach them how the app works.

Who uses Oneteam in your organization?

Britt : Everyone within the H&M Brand for the Netherlands uses the platform. This includes employees working in our distribution centers, stores, as well as in our offices. Currently, we have around 3000 employees working with Oneteam.

The results

How has Oneteam helped you with your communication challenges?

Britt : Oneteam is the most important communication channel we have. Via Oneteam it is super easy to ask questions and it really helps us to build a bridge between our desk and non-desk employees. It gathers all need-to-know and nice-to-know information in one easy-to-use platform.

Have you seen an increase in Employee Engagement?

Britt : What we see is that the engagement levels are super high. Especially during the several lockdowns (due to COVID-19) we had last year, we saw huge engagement peaks. Stores were closed, so the majority of all H&M colleagues were at home and really missed working together. The app helped them to stay in touch with each other, do funny challenges and really keep their strong bond alive.

How does Oneteam help you train your frontline workforce?

Natascha : With the onboarding module in Oneteam we are able to give new employees a motivating, inspiring, and informative start to their work career at H&M. It really offers them a warm welcome! During the onboarding, we explain who we are, introduce the team, and share all they need to know to get started during the first weeks.

Furthermore, we also create eLearning courses to train the team about topics such as security, leadership, and conversation techniques. Some e-learning courses are mandatory, and some can be accessed whenever someone wants to learn more on specific topics. We recently asked our managers how they find the eLearning courses, and they’re really positive about the easy way of learning facilitated in the platform.

What other results have you seen so far?

Britt : We see an adoption rate of 96% and we have 86% of weekly active users on Oneteam. Obviously, we are very satisfied with these stats.

Youssef : There are a lot of benefits to using Oneteam. But the most important one for me is that it is now possible to filter the information shared by the company and only share the relevant information with my team.

How does Oneteam contribute to the overall objectives of your organization?

Natascha : Oneteam helps us to motivate, inspire, and develop our colleagues, which obviously contributes to the success of our business.

What are your following plans for Employee Experience?

Britt : Right now we’ve been working with Oneteam for one year and we’re really happy with it. The platform also keeps on developing, and with the recently launched survey feature we are able to gather feedback from all our employees instantly.

We can now run employee satisfaction surveys and easily listen to any wishes they have regarding internal communication.

"With the onboarding module in Oneteam, we are able to give new employees a motivating, inspiring, and informative start to their work career at H&M."

Try Oneteam and achieve similar results

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Question: Read the case study below and answer ALL questions. H&M: A Global Fashion Company Hennes & Mauritz, hereafter H&M Group, is a family of eight brands where employees with different roles, skills and experiences come together to make great design accessible around the globe. H&M, COS, & Other Stories, Monki, Weekday, H&M Home, ARKET and Afound currently

Read the case study below and answer ALL questions.

H&M: A Global Fashion Company Hennes & Mauritz, hereafter H&M Group, is a family of eight brands where employees with different roles, skills and experiences come together to make great design accessible around the globe. H&M, COS, & Other Stories, Monki, Weekday, H&M Home, ARKET and Afound currently constitute the eight well-defined brands which make up the multi-brand matrix organisation called the H&M Group. From its humble beginnings in 1947 as a single shop in the Swedish city Västerås, H&M is now one of the largest names in the retail fashion industry, handling an enormous supply network, warehousing and logistics. H&M employs over 177, 000 people, both in Sweden and in more than 4, 414 stores, which are in over 73 countries, spread across the globe, including most countries in Europe. Over the years, the rapid expansion has continued. Today there are H&M stores in Europe, North America, Asia, the Middle East, Africa, South America, and Australia. It plans to open further stores (it has a target of increasing the number of stores by 10 -15 per cent each year), as well as expanding its online sales operations (currently 51 online markets) by rolling out its digital presence to an increasing number of countries. H&M’s digital ambition means setting up not only a dedicated website to serve each new country, but also the physical presence that can ensure goods ordered on it will be delivered to customers in that country. The most visible part of H&M’s operations is its stores. The company says it wants these to provide an ‘inviting, inspiring and exciting experience’ to shoppers. While every store is unique, any is immediately recognizable as H&M from its signage, window displays and internal layouts. All stores seek to place the clothes centre stage through the use of internal displays that aim to provide styling tips and inspiration. H&M’s online stores try to emulate this experience in the virtual world, while providing additional accessibility for customers who can’t easily get to H&M’s physical stores, and enhanced levels of service by enabling customers to view and order a much wider range of merchandise (and in many more sizes) than will be possible in any physical store. However, the stores are only the end point of a much longer supply process. This starts with design. All of H&M’s garments are designed in Stockholm by its in-house team of clothing designers, pattern-markers and print designers. They aim to provide something for men, women, and teenagers and children, whatever their taste or style. The H&M Group has always believed that great design should, and can, be available to anyone. From the beginning, their role has been to democratise fashion. Today, that means making it sustainable: the only way to keep making great fashion and design available to many people, for many years to come. H&M has a business model that focuses on outsourcing non-core operations so they can focus on the core business model. To do this, H&M buys clothing and accessories from a large selection of suppliers but does not own a single factory. Their core business is to have “fashion and quality at the best price”. In contrast to the design process, H&M does not produce any of its garments in-house, but instead buys its products from a network of over 1900 factories owned by as many as 900 independent suppliers which are based in 2 countries such as China, Turkey, Bangladesh, Cambodia, India and some European countries. H&M views its suppliers as long-term strategic partners who manufacture its products, including being responsible for sourcing the necessary fabrics (mainly cotton) and related components. By eliminating the intermediaries and outsourcing production they are able to focus on the design of their clothing and the retail experience. This approach gives consumers fashionable product with good quality and the best price. That said, they closely manage the production processes to ensure that you get that chic, trendy jacket at a great price. As H&M buys large volumes of garments and other related products in these countries, H&M contributes by creating jobs for many people. For many countries, these jobs, created by companies within the clothing industry such as H&M, spark further industrial development and help to lift individuals and nations out of poverty. H&M’s logistics and distribution operation must then ensure that the right goods end up in the right quantity as required by each store. Factory shipments are transported, mostly by sea and rail, to H&M’s logistics centres, which are strategically located in the geographic vicinity of its stores in each region. Stores do not hold backup stocks, and so must replenish as required from the distribution centres. In 2013, H&M launched its Garment Collecting Initiative (GCI), which enables customers to hand in clothes that they no longer want for reuse or recycling. This is aimed at creating a closed loop in textiles, so that nothing ever goes to waste. The first H&M garments containing materials from the GCI were launched in 2014 – denim garments that contained 20 per cent recycled cotton. Source: www.hm.com (accessed on 30 September 2019)

Question 1 (30 Marks)

Drawing on the operations management literature and supporting evidence from the case study above where necessary, answer all questions below.

1.1 With the aid of an appropriate diagram discuss any FOUR (4) perspectives that inform the content of the operations strategy of a globally competitive company, such as H&M. In your discussion highlight how a consolidated view of the four perspectives of operations strategy provides broader ideas about the pressures which inform the content of H&M’s operations strategy and provide a practical example to illustrate each of the four perspectives. (15 marks)

1.2 H&M has a business model that focuses on outsourcing non-core operations so they can focus on the core business model. To do this, H&M buys clothing and accessories from a large selection of suppliers but does not own a single factory. Their core business is to have “fashion and quality at the best price”. Identify and discuss the core competencies and core operations of the H&M Group. (5 marks)

1.3 From the perspective of the comparative advantage theory, highlight the factors accelerating the continuous expansion of outsourcing by global companies and discuss the non-core operations which the H&M Group has decided to outsource. (10 marks)

Question 2 (15 Marks)

2.1 Discuss any SIX (6) possible reasons why the H&M Group has chosen to globalise (internationalise) its operations beyond its domestic market of Sweden. (6 marks)

2.2 In pursuit of global opportunities multinational firms typically employ one of four options of global operations strategy. By first elaborating on the four options of global operations strategy, identify and analytically discuss the most likely global operations strategy option which the H&M Group uses in their extensive international operations. With the aid of a diagram and substantive evidence from the case study situate H&M Group within one of the four global operations strategy options. It is recommended that your discussion weaves together evidence from the case study on one hand and relevant theoretical viewpoints and citations from relevant academic sources on the other hand. (9 marks)

Question 3 (15 Marks)

Study the information provided below and answer the questions which follow:

INFORMATION H&M’s chief demand planner has estimated that 9,250,000 units of clothing will be sold in 2021.

H&M’s cost of placing and processing an order is R250, while the annual cost of holding a unit in its distribution centre is projected at 5% of the unit purchase price.

Both costs are expected to be constant for the foreseeable future. On average H&M sells a unit of clothing for R300.00 at cost plus 50%.

Orders are received two weeks after being placed with the supplier. Assume a 365-day year and that demand is constant throughout the year.

Furthermore, as part of the drive towards operational efficiency, the chief demand planner is thinking about using the seasonally-adjusted moving average

method to forecast demand for H&M’s clothing for the 2021 financial year.

In this regard, Mrs Masuku has retrieved from the retailer’s database the following information on number of clothing sold over a four–year period.

Year Quarterly sales (‘000 units) Q1 Q2 Q3 Q4 2016 1300 1500 1200 2000 2017 1600 1800 1100 2200 2018 1700 1900 1300 2300 2019 1800 2100 1400 2500

3.1 Study the information provided above and answer the following questions: Calculate the economic order quantity (EOQ). (3 marks)

3.2 Using a simple regression analysis, determine the trend equation of the sales and use it to estimate the number of units of clothing sold throughout the fiscal year 2020.

Assume that Q1 of 2016 is 1, Q2 of 2016 is 2, etc. Show all relevant calculation details. (12 marks)

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