1 page, single spaced. Strategy paper- business model (10am EST, 6th)
1.
International Update: Fast Fashion a Boon or Bane?
Perfect Sourcing . (May 31, 2018):
Copyright: COPYRIGHT 2018 Athena Information Solutions Pvt. Ltd.
http://www.perfectsourcing.net/
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The Fashion industry is no stranger to disruption, and it's facing a global reform. Driven by consumer trends, it's now struggling to cope with the Fast Fashion business model it created. In order to remain profitable, the market must now produce multiple, season-less collections on demand and that's no easy task for large and small companies across the globe. with the advent of fast fashion there are new set of challenges to be countered. While the problem of stocks existed before also but the pace, volumes and periodicity is huge as compared to last few years. The recent example is H&M which reported an accumulation of 3.4 billion euros of clothing stock on February 28, 2018, a 7% increase compared to the same date in the previous year.
The company's CEO Karl- Johan Persson has announced that due to stock levels being higher than forecast, there will be an increase in markdowns in the second quarter of 2018. Inventory currently accounts for 17.6% of H&M's sales and up to 32.3% of total assets. Persson also explained that the growing volume of stock was related to the need to fill the racks of 220 new stores.
Signs of its expanding unsold inventory began emerging last year, when it reported an unexpected quarterly drop in sales. The decline was the first in two decades, a period in which H&M expanded from a lone women's wear store west of Stockholm to a gargantuan network of 4,700 stores around the world.
The scale of the problem illustrates H&M's vast size - as one of the world's largest clothing manufacturers, it produces hundreds of millions of items each year. There are so many that a power plant in Vasteras, the town where H&M founded its first store, relies partly on burning defective products the retailer cannot sell to create energy.
But while luxury brands have enjoyed a rebound in fortunes in recent months, fueled by millennial appetite and a recovery in demand from the lucrative Chinese market, mass-market companies have had to deal with enormous changes. In the digital era, the challenges around offering trendy apparel before it goes out of style have mounted, particularly as growing numbers of shoppers choose to buy from their smartphones and become more quality conscious.
ASOS is an online-only retailer, and Inditex has managed to ramp up its digital sales. But H&M, which also owns brands like Cos, & Other Stories and Arket, has fallen behind the pack.
H&M has insisted it has a plan, saying it would slash prices to reduce the stockpile and slow its expansion in stores. It said it hoped its online business would expand 25 percent this year.
It's worth remembering that the H&M group, which owns H&M, & Other Stories, Cos and Monki (among others), and is currently launching new brands Arket and Nyden, reported a 44% decrease in its net income in the first quarter of 2018, suffering from a drop in sales (-1.7%) and a series of markdowns. As the group looks to revitalize its operations, it would appear to be counting on its "new business" division which includes all brands in its portfolio other than H&M and saw a 15% increase in turnover in the first quarter.
Moving the stale stock of mostly clothes, accessories and electronics is likely to lead to bigger discounts and steeper markdowns, which in turn would reduce chances for a swift profit rebound for most of the retail chains reported Reuters recently.
Disappointing sales by some of the biggest retailers including Target Corp (TGT.N), Macy's Inc (M.N), JC Penney (JCP.N) and Kohl's Corp (KSS.N) are likely to lead to even more promotions and discounts to woo customers. According to a report by analytics firm Dynamic Action, retailers sold 4% fewer items at full price in the first quarter than a year ago, while the percentage of promotional products ordered online jumped 63%.
Right now retailers have started cutting back on deliveries for the third and fourth quarter; which would leave them with less products for selling by the end of the year, when most retailers make as much as 40% of their annual sales.
The world's largest retailer, Wal- Mart Stores Inc (WMT.N), bucked the trend and posted surprisingly higher sales as lower-income consumers spent more. That should mean Wal-Mart sold much of the stock earmarked for the quarter, easing the pressure to offer steep promotions and discounts, analysts said.
Other bright spots included home improvement chains like Home Depot (HD.N) and Lowe's Companies Inc (LOW.N), which have benefited from a housing recovery; and off-price apparel retailers like TJX Cos (TJX.N), which offer low-priced branded apparel and accessories.
Off-price chains such as Ross Stores Inc (ROST.O) and Burlington Coat Factory had been a negligible force in the industry until a few years ago. But as consumers try to get more bang for their buck, chains that offer quality branded goods at lower prices have become increasingly popular.
Copyright 2018 SAINA MEDIA, distributed by Contify.com
Source Citation (MLA 8th Edition)
"International Update: Fast Fashion a Boon or Bane?" Perfect Sourcing, 31 May 2018. Business Collection, http://link.galegroup.com/apps/doc/A541127885/ITBC?u=udel_main&sid=ITBC&xid=44736bf1. Accessed 6 Mar. 2019.
2.
Global protests demand H&M supply chain wage action
just-style.com . (Nov. 23, 2018):
Copyright: COPYRIGHT 2018 Aroq Limited
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Byline: Michelle Russell
Activists and workers are preparing for a week of global protests to demand Swedish fashion retailer Hennes & Mauritz (H&M) pays living wages and ensures fair employment conditions are implemented for its supply chain workers.
The move comes as retailers gear up for the end-of-year festive shopping season. The protests are expected to take place from Delhi to London, from Washington DC to Zagreb, according to Clean Clothes Campaign (CCC), drawing attention to H&M's "broken commitment that 850,000 garment workers would be paid a living wage by this year".
"H&M's current business model is squeezing workers at different levels of the supply chain" says Deborah Lucchetti, spokeswoman of Campagna Abiti Puliti (Clean Clothes Campaign Italy). "But seamstresses in garment factories, packers at logistic hubs and employees in retail shops all have the right to living wages and fair employment conditions. Today we join hands with H&M retail trade unionists to bring our joint demands to the heart of Milan."
The protests form the newest chapter of the 'Turn Around, H&M!' campaign. From today, running through to 30 November, a series of street actions will take place, kicking off in London, Madrid and Milan, spreading to at least 30 more cities over the next days, CCC says.
"All activities aim to ensure that H&M cannot hide from scrutiny based on the specific and time-bound commitment that H&M has evidently turned its back on, while making deceptive claims of having exceeded its goals," adds Neva Nahtigal of Clean Clothes Campaign International office. "Anyone can do that if they also claim the right to move the goal post as they see fit, but we will not let that hypocrisy go unnoticed."
The alliance says this latest move follows the publication of research findings about the situation in six factories, which were covered by H&M's 2013 commitment.
"Workers revealed that H&M was nowhere near the payment of a living wage at its supplier factories - to the contrary, many workers reported poverty wages and labour rights violations," says Bettina Musiolek of Clean Clothes Campaign who coordinated the research. "We have every reason to believe that those findings reflect the broader reality: H&M took a lot of credit for its original commitment but has failed to deliver in the form of an actual living wage materializing in workers' wallets."
A spokesperson for H&M said in a statement: "We want all garment workers to earn a Fair Living Wage, which is why we are continuing to work closely with industry stakeholders and partners to agree how to achieve a sustainable change.
"We are pleased that the work we do at factory level within our Fair Living Wage strategy has grown to reach 655 factories employing more than 930,000 workers. In December we will present our next update on our progress towards our Fair Living Wage goals."
This article was originally published on just-style.com on 23 November 2018. For authoritative and timely style business information visit http://www.just-style.com.
Source Citation (MLA 8th Edition)
"Global protests demand H&M supply chain wage action." just-style.com, 23 Nov. 2018. Business Collection, http://link.galegroup.com/apps/doc/A569942315/ITBC?u=udel_main&sid=ITBC&xid=cac9e2c4. Accessed 6 Mar. 2019.