H&M's Opportunity for Entering the Australian Apparel Market

Term Paper, 2010

12 Pages, Grade: HD (australisches Notensystem)


Table of Content

1. Introduction

2. Description of H&M
2.1. Company Profile
2.2. Environmental Justification for the Australian market

3. Market Analysis and Competitor Identification
3.1. Market Analysis
3.2. Competitor Identification
3.3. Five-Year-Forecast

4. Market Entry and Expansion
4.1. Market Entry Strategy and Justification of the Choice
4.2. Five-Year-Expansion strategy

5. Consumer Behaviour
5.1. Country-of-Origin
5.2. Consumer Animosity
5.3. Consumer Ethnocentrism

6. Market Segmentation, Target Market and Positioning
6.1. Market Segmentation
6.2. Target Market and Positioning

7. International Marketing Mix
7.1. Product
7.2. Price
7.3. Place
7.4. Promotion

8. Conclusion

9. Appendices

10. Reference List

Executive Summary

H&M is a Swedish fashion retailer operating around 2,000 stores in 37 countries worldwide. Based on their internationalization strategy, that provides to open 10% - 15% new stores each year, they are always looking for new expansion opportunities. Our research and data analysis have shown that the Australian apparel market offers a constant growth in the next years. Besides the market is highly fragmented and no current player is offering a broad product line for all ages and genders. For that reason it seems to be a promising opportunity for H&M to enter the Australian market, as it offers a broad range of clothes for all fashion-conscious people under the same roof. Furthermore the risk of failure is reduced as Swedish products have a good reputation in Australia what results from the success of other Swedish firms who have already expanded to the country.

1. Introduction

The following report provides a detailed analysis of the Australian apparel market and a recommendation for H&M to enter the market. First, it will give a description of H&M and an environmental justification for choosing the Australian market. In the following, the report will deal with the market analysis and competitor identification. Thirdly, market entry and expansion strategy will be described. Fourthly, the report will focus on consumer behaviour. Then market segmentation, target marketing and positioning will be discussed. Last but not least, the international marketing mix for H&M’s expansion is outlined.

2. Description of H&M

2.1. Company Profile

Hennes & Mauritz (H&M) is a Swedish clothing retailer, offering fashion for women, men, teenagers and children, whereas their “styling” ranges from casual to business. The company has been founded in 1947 in Västerås, Sweden and in these days H&M is operating in 37 markets on four continents. In addition to their 2,000 stores worldwide, they also run online shopping in some European countries. Their business concept is to “offer fashion and quality at the best price” (H&M 2010). Next to clothing, H&M is selling cosmetics, accessories and footwear. They promise their customers to be fashionable up to date and to fulfil their needs: “From the latest fashion to the most wearable basics – there is something for everyone” (H&M 2010).

2.2. Environmental Justification for the Australian market

‘H&M is represented in 37 markets. Australia is a fashion-conscious and shopping-enthusiastic country, yet H&M is not in the Australian market at all.’

We recommend H&M expanding to Australia due to several reasons. First of all, the fact that Australia’s culture is similar to the one of European countries to a certain extent is a significant point. This demonstrates that the likelihood to become successful in the Australian market is very high. Besides, the income in Australia is relatively high, what leads to a high expenditure on clothing, or rather fashion. The average weekly expenditure on clothing and footwear amounted to 35.26 AU$ in the year 2003 (Ibisworld 2010). Moreover the ‘Household Expenditure Survey’ from the Australian bureau of statistics shows that the proportion spent on clothing and footwear has increased in the last years (Australian Bureau of Statistics 2010).

Our view is supported by the attitude of many Australians, as the group “Bring H&M to Australia” on Facebook reveals. It is stated that people are enthusiastic about the style and quality, as well as price of H&M ‘products’. Moreover, and what is more for us, it becomes clear that competitors like Sportsgirl and Portmans are not satisfying people’s needs (Facebook 2010).

Another important point that favours opening the Australian market is the fact that both countries have a low-context culture. Chattalas, Kramer & Takada (2008) state that Sweden and Australia are high on horizontal individualism; what shows another similarity in their culture. These cultural similarities show that there are also favourable preconditions for a quick market penetration, as well as good working atmosphere. So we think that the Australian market is an attractive investment opportunity for H&M.

3. Market Analysis and Competitor Identification

3.1. Market Analysis

In the year 2010 the Australian Clothing Retailing Industry comprises 14,500 enterprises with 20,447 establishments. The expected revenues of the industry amount to 12,574,700,000 AUD which would be an annual change of +3.9% in comparison to 2009. 81.1% of the total revenues are generated in Queensland (22.8%), Victoria (25.0%) and New South Wales (33.3%).

The Australian Clothing Retailing Industry can be characterized as highly fragmented and thus low concentrated. The reason for that is the specialisation of retailers into niches, as none is able to serve all segments regarding price, style, quality, location and demographic. Although the brands try to differentiate, the competition in the various market segments is very high, especially in the major segments that are served by clothing retail chains. The strong competition is certainly a result of the large number of retail stores, but it is also because of the substitutes of department stores that “are estimated to account for 35.0% to 40.0% of total women’s and men’s clothing sales” (Lohan 2010, p. 26).


Excerpt out of 12 pages


H&M's Opportunity for Entering the Australian Apparel Market
Victoria University of Technology, Melbourne
HD (australisches Notensystem)
Catalog Number
ISBN (eBook)
ISBN (Book)
File size
559 KB
H&M, Australia, Apparel Market
Quote paper
Marcel Bieg (Author), 2010, H&M's Opportunity for Entering the Australian Apparel Market, Munich, GRIN Verlag, https://www.grin.com/document/283914


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