Fast Fashion to Hit the U.S.


H&M Hennes & Mauritz AB is a Swedish retail clothing company that is known internationally for its affordable fashion for men, women, and children. With 2,776 stores in 48 markets, H&M has been ranked the second largest clothing retailer in the world. Though the clothing company has gained a reputation for being fashion forward, the same cannot be said about its ability to keep up with online shopping demand. H&M currently offers online shopping to customers in just eight of its 48 markets around the world: Sweden, Norway, Denmark, Finland, Germany, the Netherlands, Austria, and the United Kingdom, but none in the United States. This has U.S. customers scratching their heads in confusion and growing impatient. The retailer stirred up excitement back in January 2011 with a tweet that stated:

“Good morning is an understatement! H&M has decided to have online shopping in the U.S. at the turn of the year 2011/2012! Stay tuned for more.”

Unfortunately, two years have passed and H&M has failed to deliver on that promise. The retailer is still “not set up for mail order, phone orders or e-commerce at the present time”. However, there is still hope for U.S. customers. H&M’s 2013 Expansion Strategy revealed: “Investments will also continue within online sales. H&M plans to launch online sales in the US, the world’s largest market for e-commerce.” Business Week also reported that shopping from H&M’s website could happen as early as Summer 2013.

Entering the U.S. online retail market goes beyond satisfying millions of America’s fashion lovers. “The U.S. online retail market is the biggest in the world; research firm Forrester estimates it will reach about $260 billion this year. Taxes vary by state, shoppers expect free shipping, and returns are common”. The process is quite complex and H&M has cited “issues with security, customer service, logistics, and the assortment of items offered” as reasons for delay. But the longer the retailer waits, the more demanding customers become. Not only are U.S. customers looking for the ability to shop online, but they are also expecting the company to have smartphone applications available, too. H&M says they will meet this demand. For investors sake, H&M cannot disappoint  because the company’s competitors have already figured out how to engage their U.S. customers in online shopping.

With just a few weeks left till summer, anticipation for the launch of H&M’s online store will grow largely. Having only photo galleries of tasteful, trendy clothes and accessories will not be enough for die hard shoppers this year and if the project fails to launch, there could be dreadful consequences for the company. In ending, some important questions to consider are: Do you think H&M waited too long to enter the U.S. online market? Is this expansion strategy necessary in today’s retail industry? How do you think launching an online store will affect H&M’s competitors?  Finally, on a scale of 1-10, how important is online shopping for you? Does it affect the way you shop?



Business Week:

H&M Expansion Strategy:

Annual Report:

Differentiating through the Demand of Dogs


DirectTV is catering to not only humans, but to dogs as well. My dog would be thrilled! How about yours? The only option available to my pup right now is the Puppy Bowl, which we have to record so he can watch all year long. Today, dogs have their own parks, Facebook pages, stores, so why not a TV channel as well?  DirectTV is not only catering to the dogs but also providing help for the families they belong to. The new DogTV will keep these puppies occupied while moms, dads, or children can keep up with their daily tasks without any barking or begging. DirectTV is definitely differentiating from other cable providers with this strategy.

In class, we discussed the strategy of competing through differentiation. I have learned about differentiation in the past, but it is always interesting to see examples of companies using the concept to their competitive advantage. Through their new channel, DirectTV is now implementing this concept and can be seen through the Chicago Tribune’s article, “DirectTV to broadcast channel for dogs.” Differentiating, as discussed is the advantage of being better or different in regards to a company’s product or service. No company wants to be like another so, differentiating is the concept designed to compete through uniqueness.

As mentioned in the article, DogTV is currently only available through online streaming or for select subscribers in California. Is DirectTV testing out their new channel in case it fails to provide the benefits that it hopes for? As one of the larger cable providers, this could solely be a test run for all the other companies as well. If DogTV were to fail, other companies such as WOW or AT&T Uverse will be able to see if there is a demand for this type of channel without hurting their company. But, if DogTV does in fact succeed, these similar companies may need to expand on their differentiation strategies in order to remain in the competition. While it is hard to believe that a channel for dogs could change the face of cable television, DirectTV is currently taking a big risk with this target in either helping or hurting those other companies within the market. Once or if available nationwide, will this create a demand for DirectTV as households’ main cable provider? Through reading the article and understanding the new concept, I thought about whether or not DirectTV is trying to create a higher demand for their service through creating a demand for dogs. This idea may seem silly but could also provide success. We will find out this coming fall when the company is supposedly launching the availability for this channel nationwide. Again, further information on this topic can be found here.


You made need a rope before jumping off the Fiscal Cliff

The economy is still not doing that well, the Fiscal Cliff is looming, and large companies still continue to pinch their pennies. So why are many publicly traded companies ready and willing to give their extra cash away? Good question…

In the recent weeks, in the light of the looming Fiscal Cliff where many believe Congress will not be able to reach a resolution and the dividend tax rate will jump (among other things), people are starting to get a bit greedy…or cautious, or weird…and some publicly traded companies are declaring large special dividends to their shareholders, which in some cases also means the CEO pads his pocket too along with all other employee-owners.

The most recent case in the 68 cases known so far is that of Costco. The big-discount, warehouse style retailer just recently announced $3 Billion in Special Dividends to be paid in December bringing the payout to $7/share versus the regular dividend rate of just $1.10/share. This will of course make for many happy shareholders as it will prevent them from paying a higher tax on their dividend returns should the tax rate increase next year. It will also have the effect of reducing Costco’s $5 Billion in cash before any fiscal uncertainty of next year. Experts suspect the likes of Bed Bath & Beyond, Staples, and Williams Sonoma to soon join the ranks (WSJ).

We are also likely to see companies move up their dividend distribution date from 2013 to 2012 to ensure payout to shareholders with the current discounted tax rate instead of risking uncertainty of next year. Wal-Mart is a big proponent of this strategy, and we are sure to see similar stories before the end of the year.

In addition, some market analysts are calling for a bullish market no matter what the outcome of the Fiscal Cliff is. Since Government spending will no-doubt decrease, the bond rates remain flat; the only chance of a strong return on investment is to go with stock. This is playing right into the hands of many mature companies looking to excel in the near-term.

Again, looking at Costco; they borrowed $2 of the $3 Billion used to pay the special dividend, but they also have plans to expand their stores and distribution centers. They are looking to expand business, not decrease it despite taking on some additional debt and decreasing their credit rating from A+ to AA-. The outcome looks the same for other large retailers like Wal-Mart and Home Depot. As investment options narrow, new business strategy takes hold. (Barrons)

As we near next year and the uncertainty of our fiscal policies seem no better defined, these trends will continue for companies that are cash heavy with stable growth. We will continue to see special dividends distributed to aid those favored with stock options, distribution dates moved forward, and stocks preferred over many other short-term investments. Only time will tell how they all fair. (Yahoo)

Other Sources: