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H&M Firm’s Business Model and Sustainability

H&M is an international fast-fashion company with Swedish origins and is the second-largest global clothing retailer. The brand operates through direct distribution in chain stores and online with solid recognition and various campaigns (Bini and Bellucci, 2020). Their operation strategy allows them to produce goods at affordable prices and address the recent environmental challenges (Bubicz et al., 2021). This paper aims to identify three critical components of H&M’s business model and discuss if sustainability plays a part in the industry.

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H&M’s business model is based on providing its customers with quality fashion at a reasonable price. The key component of their strategy is direct distribution; it excludes third-party sellers and helps maintain a strong brand presence in various countries (Islam et al., 2020). Moreover, H&M’s business model includes independent production and suppliers optimally located to reduce lead times (Elizaga, 2016). Lastly, the crucial component in multiple campaigns is collaborations with celebrities, brands, and collections to make fashion more affordable (Lanzolla and Markides, 2021). Sustainability practices influence H&M’s business model, and the brand has recently launched several programs to encourage consumers to address the environmental issues caused by the industry.

The sustainability addressed by H&M in their business model includes two key benefits inside and outside of the company. The internal damage decrease by optimizing the supply chain and manufacturing (Johnson et al., 2020). The external benefit is the deliberate creation of environment protection projects such as the Conscious clothes category and garment collecting (Garcia-Torres et al., 2017). These benefits are relative to similar fast fashion brands such as Zara and Gap, yet their practices are limited to manufacturing (Beyer and Arnold, 2021). Besides, these brands have parental (Inditex for Zara) and subsidiary (Old Navy for Gap) companies; therefore, it is more challenging for them to have an optimal sustainability mission.

The sustainable performance of H&M is mainly based on encouraging consumers to participate and selling eco-friendly clothes, in contrast to Zara, with no such programs. The latter is willing to address the global challenge by switching its fabrics to be fully sustainable (Aras-Beger et al., 2020). Gap addresses the challenge by achieving a balance between the quality of all its products and less harmful production (Gap Inc., 2021). The recommendation for H&M is to optimize the manufacturing volume to decrease waste (Hsu and Chou, 2021). The company also can expand sustainable and recycled clothes production beyond their Conscious collection. Lastly, helping independent suppliers and manufacturers move towards ecology-friendly solutions is beneficial for H&M’s business model.

Reference List

Aras-Beger, G., Sağlam, B.B. and Bekki, N. (2020) ‘Case studies on sustainability for various fashion brands, in Supply Chain Management and Logistics in the Global Fashion Sector, Routledge, Oxfordshire, pp. 242-260.

Beyer, K. and Arnold, M.G., (2021) ‘Circular approaches and business model innovations for social sustainability in the textile industry, in Sustainable Textile and Fashion Value Chains, Springer, Cham, pp. 341-373. Web.

Bini, L. and Bellucci, M. (2020) ‘Business model disclosure in sustainability reporting: two case studies, in Integrated Sustainability Reporting. Springer, Cham, pp. 117-150.

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Bubicz, M.E., Barbosa-Póvoa, A.P.F.D. and Carvalho, A., (2021) ‘Social sustainability management in the apparel supply chains, Journal of Cleaner Production, 280, p.124214. Web.

Elizaga, U.L. (2016) The contrast of fast fashion giants, Zara, H&M and UNIQLO’. Web.

Garcia-Torres, S., Rey-Garcia, M. and Albareda-Vivo, L., (2017) ‘Effective disclosure in the fast-fashion industry: From sustainability reporting to action’, Sustainability, 9(12), p.2256. Web.

Gap Inc. sustainability strategy (2021). Web.

Hsu, T.F. and Chou, H.M., (2021) ‘The dilemma of the sustainability of the fast-fashion industry, in Smart Design, Science and Technology, CRC Press, Boca Raton, pp. 93-95. Web.

Islam, M.M., Perry, P. and Gill, S. (2020) ‘Mapping environmentally sustainable practices in textiles, apparel and fashion industries: a systematic literature review’, Journal of Fashion Marketing and Management: An International Journal.

Johnson, G., Whittington, R., Scholes, K., Angwin, D. & Regner, P. (2020) Fundamentals of Strategy, 5th end, Pearson, Harlow.

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Lanzolla, G. and Markides, C. (2021) ‘A business model view of strategy’, Journal of Management Studies, 58(2), pp. 540-553. Web.

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