Effective Distribution Strategy
A large part of the finished products that were manufactured were shipped using external contract companies to the central warehouse in Hamburg, Germany, which served as the transit terminal. Logistics was managed centrally from the company's headquarters in Stockholm.
Most of the goods from the production centers across the world passed through this transit terminal on their way to the destination country.
The transit terminal received the goods from all the suppliers across the world
Before opening new stores or before entering a new market, H&M conducted extensive research on the demographics of the consumers, spending power, competition, and other factors that could contribute to the success of the international venture
An IT platform
The entire operations in H&M - right from the designing to the store management - were IT enabled.
The production offices and the central office were connected and the central office distributed the designs and sketches to the production offices through the Internet.
As most of the stores were owned by the company, they shared a common IT platform.
Reasons behind the success of H&M are:
- H&M's core business strategy: to provide the fashion concept and quality at the best price
• organization of production and integration of the supply chain;
• vertical integration with the distribution network allowing direct control of market and
• continuous and efficient collection of information on demand which allows cost efficiency and shortening of lead times.
innovative supply chain practices
Central Warehouse and Distribution with constant replenishment