PROJECT ON CONSUMER BEHAVIOUR

COURSE: M.A. (FTM)

STUDY OF THE CONSUMER BEHAVIOUR IN FASHION RETAIL OULETS-

H&M

2018-2020
 TABLE OF CONTENT

S.NO. TOPICS PAGE NO.

1 INTRODUCTION
• Company profile
• 1-13

2 LEARNING OBJECTIVE 14-15

3 METHODOLOGY
• Sources of data collection
• Time period 16-17
• Limitations of the study

4 ANALYSIS AND INTERPRETATION OF DATA

•

18-24

6 FINDINGS 32
7 RECOMMENDATIONS 33
8 CONCLUSIONS 34
9 REFERENCES 35
INTRODUCTION

In India the Textile & Apparel market was estimated at INR 3,20,000 crore (USD 58 billion),
in 2013, and is projected to grow at a CAGR of 9% to INR 7,57,000 crore (USD 138 billion)
by 2023. It is the second largest industry in India, giving employment to approximately 45
million people (India Brand Equity Foundation 2015). Moreover if you look at the market
size projection in table below India got the highest annual compound growth rate of 12% that
means that the market size in India is projected to grow at the highest pace in the following
forecast.

REGION 2012 2025 CAGR*

China 150 540 10
EU-27 350 440 2
United States 225 285 2
India 45 200 12
Japan 110 150 2
Russia 40 105 8
Brazil 55 100 5
Canada 30 50 4
Australia 25 45 5
Rest of the world 75 195 8

The growth of apparel industry and the potential of the nation have lead to increased
investment of foreign retailers. The partial growth in this sector can be attributed to the
emergence of new industry players called “fast fashion retailers”- which can be seen as an
explosive expansion in past few years. Fast fashion is a phrase used for designs that move
quickly from the catwalk to showrooms to tap the latest consumer trends, is growing at a
yearly pace of 25-30%, twice the rate of the overall market. The tables were turned from
classic fashions to fast fashion by coming up of ZARA in India in 2009 which became the
first apparel brand in India to cross $100-million sales mark, five years after it opened its first
shop here.

FAST FASHION IN INDIA

The reasons for the rapid growing fast fashion in Indian consumers could be following:

1) Increase in disposable income:

By 2005, 21 million of India’s 210 million households already earned more than
$4,000 a year, qualifying them for membership in what we call “the consuming
class.” Based on McKinsey research, by 2015 the number of consuming class
households will likely triple to 64 million.

2) Both the Genders in India equally love shopping for clothes:

According to UN reports India’s population is the youngest across the world. Another
research tells that both the genders in India equally love shopping for apparels. In a
 market where almost all shoppers love or enjoy clothes shopping, it is no surprise that
India is projected to become the world's third largest apparel market by 2020.

3) New occasions:
As the lifestyles of India’s prospering urban consumers have evolved, their clothing
needs have broadened, reflecting more varied usage occasions. With more socializing
opportunities consumers are buying more sophisticated combination of outfit which is
different for different occasions, also the ideology of wearing a garment for a season
or for one particular occasion has lead to increased opportunities of fast fashion
retailers. Today, Indians are more inclined than consumers in other markets to buy
apparel for a specific purpose. Indeed, 38 percent of Indian respondents to a recent
McKinsey study said they were highly likely to buy apparel for special events—a
significantly higher proportion than in Brazil (5 percent), Russia (3 percent) or China
(6 percent).

4) Fashion increasingly a form of self-expression:

Increasingly, Indian consumers are embracing the idea of fashion for its own sake, as
a means of self-expression, and not merely as a functional purchase. Television,
movies, advertising and the Internet bombard today’s Indian consumer with new ideas
about style, even as American-style shopping malls lure them away from traditional
market places. In a recent McKinsey survey of Indian consumers, 62 percent said they
thought it was important to “keep up with trends.”

5) Further urbanization and the comparative youth of India’s population:

At present, just 29 percent of India’s population resides in cities, among the lowest
urbanization rates of any nation in the world. But that has been changing. Over the
next 20 years, we expect the number of Indians living in cities to grow by 300 million,
where they will do new styles and fashions to match new lifestyles.

6) Continued rise of “organized retail”:

The increase in number of organized retail outlets has given the opportunity to the
Indian consumer to undergo the transformation in terms of taste and preferences as
the influence from the west is so strong in India that organized retailing has become a
medium to narrow the gap between the fashion of west and the domestic trends. Zara
 one of the leading fast fashion retailers entered India in 2009 and became the first
company to cross $100 million in five years since it opened up.

Following the same trend Hennes and Muaritz (H&M) entered India recently on
October 2 2015 exploring Indian market with the aim to spread all across nation. The
response received for H&M was seen in the sales of the first day of launch which was
1.75 crores that is approximately double of what Zara earned on its first day launch.
Thereby the brand chosen for the project is H&M since it’s completely new to Indian
market and thereby provides and interesting field to further more research on.

 ABOUT H&M
The Sweden based apparel brand Hennes & Muaritz popularly known as H&M is the
world’s second largest apparel company which exists in 61 countries with over 3,700
stores and employed around 132,000 people across the globe. This brand is popularly
known for its hot-off-the-runway fashions at an affordable prices and its fast fashion
concept has dominate the youth around the globe. The basic ideology of H&M is
“fashion and quality at the best price for everyone in a sustainable way”.

BRIEF HISTORY OF H&M

The history of H&M started with a man named Erling Persson, who was a Swedish
former salesman that became fascinated with America’s high-volume efficient outfits
that 8 Barneys and Macy’s carried. Persson first discovered the outfits when coming
to the United States after World War II. Persson brought the retail concept – that high
turnover produced lower prices – and brought it back with him to Sweden. It was then
that Erling chose to open his own store which he called Hennes, standing for “hers” in
Swedish. During this time the store only sold women’s clothing. The company
Hennes was established in 1947 in Vasteras, Sweden and by 1968 Persson had
purchased the men’s sportswear inventory and property of a Stockholm hunting
equipment store which was named Mauritz Widforss. Erling Persson then changed the
name of his store Hennes to Hennes & Mauritz to express the expansion, and later
downgraded to just the abbreviations H&M.

Mission of H&M
The prime focus of H&M is to serve fashion and quality at the best price in
sustainable way. The believe that they should have best customer offering in each and
every market and offer collection that are wide ranging and varied for women, men,
teenagers and children. For them design, quality and sustainability are not a question
of price but ability to offer inspiring fashion with unbeatable value for money.

Sustainability Vision
H&M’s business operations aims to run in a way that is economically, socially and
environmentally sustainable where it means that the need of both present and future
generations must be fulfilled.
USP of H&M
H&M works on a business concept of fashion for all, where this venture serves the
customer with stylish clothes, classic look at the affordable price. Also the tie ups of
H&M with big designers have helped them to establish themselves among the best
fast fashion retailers where they provide the consumer with best designs from the
popular designers at an affordable price due to their effective logistics.

H&M in serving 3 categories:

Kids wear

Born wear Baby boy Baby girl

Boys Girls Socks

Women wear

Maternity wear Sports wear Casual wear Formal wear

Lingerie Dresses Accessories Bags

Balmain exclusives

Mens wear

Balmain exclusives Formal wear Casual wear

Sports wear Shoes Accessories Hoodies
 OBJECTIVES
The main objective of this research is to describe and analyse the consumer behaviour
characteristics and general consumer behaviour theories. This leads to the following
research questions:
 What are the special characteristics of consumer behaviour?
 What are the underlying causes that form the fast fashion consumer behaviour
difference?
 To what extend the general consumer behaviour theories can be applied to fast
fashion consumer behaviour?
 What is the consumer behaviour of a brand?
 RESEARCH
METHODOLOGY
METHODOLOGY
The report is based on both primary and secondary data. But maximum data used in this
report are collected from secondary sources. Exact sources of the secondary sources will be
mentioned. However, primary data is also used depending on the requirement.

SOURCES OF DATA COLLECTION

1. Primary data
 Observation method was followed, as I have to study the entire consumer behavior in
depth
 Interaction with consumers
 Discussion with the employees

2. Secondary data
 Internet
 Consumer behavior related books
 Organizational profile

LIMITATIONS OF THE STUDY

i. It’s very hard to find necessary information because there is no fixed place such as
library where data is kept.
ii. The people of h&m are under tremendous workload.
iii. It was difficult to cover and collect all the necessary materials for completion of such
a report.
 TO EXAMINE CONSUMERS BUYING BEHAVIOUR FOR H&M

RESEARCH DESIGN: EXPLORATORY AND DESCRIPTIVE

DATA COLLECTION TOOL

PRIMARY AND SECONDARY

QUANTITATIVE QUALITATIVE

CLOSE ENDED QUESTIONNAIRE IN-DEPTH

(STRUCTURED AND NON- INTERVIEW
DISGUISED)
PERSONAL
OBSERVATION

SAMPLING PROCESS
INTERNET

SAMPLE TECHNIQUE: SAMPLE AREA:

CONVIENECE & DELHI NCR
JUDGEMENTAL

SAMPLE
SIZE: 50
DATA ANALYSIS
PEST Analysis

Political

H&M do not own any factories but work with suppliers, primarily in Asia and Europe.
Accordingly, H&M uses its immense buying power to influence its suppliers in the ethical
and fair treatment of its employees. They have adopted the UN Guiding Principles on
Business and Human Rights as well as working together with Civil Rights Defenders to
support Human rights and equality.

Talking about FDI, H&M instead of going for a joint venture falls under single brand retail
trading (SBRT) where according to the law on single-brand retail, up to 100% FDI is
allowed, but only 49% can come through the automatic route. For FDI above that, a company
needs to take approval, and is bound to source locally—to the extent of 30% of the value of
goods purchased—preferably from micro, small and medium enterprises, village and cottage
industries, artisans and craftsmen. The government on recently also allowed foreign single-
brand entities to sell products through online channels provided they have permission to sell
through brick-and mortar stores.

Economical

Indian Fashion Retail is poised for high growth with multiple short and long term catalysts -
revival in economic growth leading to increase in disposable income, favorable
demographics, and GST implementation and changing fashion consumption trends. Wazir
Advisors, a renowned sector consultant expect fashion retail to grow at a CAGR of 12.2%
over next 10 years. There exists a strong trend correlation between GDP growth and SSG.
With revival in Indian economy, fashion retail is expected to have growth driven by higher
Same store-growth (SSG) i.e. it will be more consumption driven rather than store network
expansion driven, leading to higher profitability and return on capital.

Social
As all manufacturing is outsourced, often from the developing countries in the world,
working conditions and pay are always going to be a social factor. H&M has launched the
fair living wage Map, working with suppliers to promote living wages for all employees as
well as regular wage revisions and increases. Work place safety as well as basic living
conditions is key areas of concern. With education and basic human rights being highlighted
by H&M, the company strengthens local communities. To this end, H&M “chooses and
rewards responsible partners”. H&M recognises the importance of its staff, which is reflected
in its core values:

o We believe in people

o We are one team

o Straightforward and open minded

o Keep it simple

o Entrepreneurial spirit

o Constant improvement

o Cost-consciousness*

Technological

H&M has embraced and harnessed new technology with regards to its advertising and
branding. They are now using a multiple platform arena to approach and promote their fast-
fashion, thereby appealing to the younger generation. In order to create a more efficient
customer experience, pilot stores in New York have installed payment centers in changing
room to avoid long. They have started working with textile innovators Worn Again on testing
ground-breaking fibre-recycling technology that aims to meet the growing demand for cotton
and polyester production worldwide. The "textile-to-textile, chemical-recycling technology",
as it is called, separates and extracts the materials from old clothing, which is then re-spun
into new yarns. In an effort to reduce their impact on the environment H&M has introduced
new technologies in vits production lines e.g: 21% of shoes now use water soluble glues.
Also recycled polyester which is often made of PET bottles they used the equivalent of
almost 40 million bottles.*
Consumer Analysis

To analyse consumer buying behaviour for H&M a closed ended & non-disguised
questionnaire was prepared with structured set of questions. The data was collected from a
sample size of 99. The Age categories of respondents are as follows:

The occupation was divided into 3 sectors as – Homemakers, Working and Student. The
majority of the respondents constitute students as 74%.

Delhi was divided into 4 major chunks as North, South, East & West and thus further it
helped to gain knowledge in terms of demand of fast fashion location wise.
According to the data collected from the questionnaire following are the results in terms of
preference of consumer for a particular brand. The following has been done to figure out the
main competitor of H&M in minds of consumer.
From the
above
graph it is
very clear
that the
most
preferred
brand in
field of Fast fashion is ZARA. Also the On-Store employees of H&M and ZARA both feel
that they are peer brands.

Words of the Consumer

On an interview it was found out that the particular respondent assumed that H&M was
serving best quality due to it being globally recognized, which made it obvious for
respondent that the brand is providing good quality but has tried 3 garments and found the
quality adequate however when asked the same question for ZARA the respondent had a sure
answer for it being a brand serving best quality not just because of its global recognition but
because of her personal experience in terms of quality, style and the products long last thus
further describing it as sustainable. On the other hand the respondent felt that ZARA is highly
priced as compared to H&M and that is another reason she believed that the former brand is
serving better quality than the latter.

Interpretation

On an interview conducted with a consumer and analysis of the responses received of these
brands it was informed that H&M though has been able to place itself in minds of consumer
due to it being highly reputed brand abroad haven’t faced much problem in creating a brand
awareness as majority of fast fashion buyers were aware of this brand but somehow on
comparison with ZARA it has recently established itself in the country whereas Zara has been
part of consumer’s shopping bags since past 5 years thus a level of trust in terms of quality
has being created since it’s tried and tested brand and it’s long lasting ability has made it
sustainable in terms of usage of the consumer. On the other hand H&M is on introductory
stage therefore it is assumed that the brand serve good quality due to its high reputation
abroad and the word of mouth by Indian consumers who have shopped H&M globally
however for majority of the shoppers a trust factor is yet to be established for H&M. Also
referring to consumer’s psychology ZARA is priced highly makes the consumer believe that
the brand is serving good quality.
Conclusion

 The firm has focus on 3 major chunks that they feel are responsible for their growth in
the global market - Internal customers
 -External Customers
 -Environment (Sustainability)
 The firm has succeeded in satisfying the employees with its effective HRM policies
and also making them a part of the success of the firm, their HIP –Incentive program
has created a desire for the employee to stay loyal to the firm. The result being that
H&M has being ranked on 24th rank in the world and comes under the category of
best companies to work with according to a research by Fortune partnering with Great
Place to work.
 Taking into consideration that H&M has entered India recently therefore the
awareness of the sustainability initiatives of the firm is missing. The people in India
are not aware about the ethical working policies of H&M. A drift has being seen in
the buying pattern of consumers preferring more from the brand with moral grounds.
Thus it can be an advantage for the firm. Therefore company with span of time and
focus on spreading awareness about the environmental initiatives can prove itself to
be most sustainable among the other brands present
 Also the Movement carried out by H&M about conscious clothing consumption was
miscommunicated to people therefore an awareness about that initiative via a popular
celebrity can be a way to incorporate more people for good cause.
 Celebrity influence the consumers in big way thus tie up with films in term of outfits
and celebrity endorsement can help to tap the market.
 According to the responses they have inelastic demand towards fast fashion however
have elastic demand towards H&M thus the firm should not plan to increases its
prices in near future.
 Also the consumer are overall happy with the products and services offered by H&M
but when on comparison with ZARA, the consumers would prefer ZARA due to its
established trust and brand Image in minds of consumer for which H&M take time.
 The rate at which H&M has plans of progressing in terms of number of stores is more
than the rate at which ZARA has progressed