BEM1023 CASE STUDY 2 FOR GROUPS 3&4 FORMATIVE PRESENTATIONS (Week 9)

Boohoo / H&M

Student Notes:

 You are not expected to become experts in the industry, but you may wish to follow
up some general reading sources listed at the end of this case to build a broad
awareness of the industry.
 Your case study presentation should demonstrate wider reading connected with the
questions that you are required to answer. You may find it useful to access academic
articles via Business Source Complete and company information via Statista.
 Your presentation must address the questions set – although please bear in mind that
there are many ways in which you could approach these questions, and thus many
equally good responses.
 Please remember that this formative presentation follows the same format as the
summative presentations in term 2. You are required to demonstrate your subject
knowledge through independent research alongside your presentation skills.
 As tutors, we expect all group members to play an active part in group discussions and
activities.
 You can choose to present ‘live’ in class (preferred) or to show a recording of your
presentation. All members will have to be present for the Q&A session.
 You will need to send the slides to your seminar tutor, together with the group
planning work and the minutes of meetings held, the day before you are presenting.

Presentations will be focusing upon the crucial link between developments in business strategy,
management style and the relative success of organisations. We encourage you to undertake your
own research to develop your independent study skills and move beyond the suggestions provided
here.

Background Information:

This case examines two organisations that both exist within the fashion world – Boohoo and H&M -
however, their routes to market differ quite significantly – in particular their ability to use innovative
technology, implement digital transformation, understand changing requirements of their
customers, as well as their position with respect to social awareness of ethical concerns (Stringer,
Mortimer, & Payne, 2020), sustainability (Chang & Jai, 2015) and inequality e.g. of pay and
conditions, and the impact upon stakeholder purchasing.

The most obvious similarity is that both companies see themselves as operating within the ‘fast-
fashion’ sector alongside companies including Primark, Zara, Top Shop and ASOS. The combination
of COVID pandemic and pre-existing strategic decisions has also resulted in variable outcomes
recently for these competitors too. It is a time of change and disruption for the fashion industry. So
how did our two case examples evolve?
H&M was founded in 1957 in Sweden selling women’s fashion under the name Hennes, then
acquired Mauritz in 1968 to expand into men’s and children’s clothing, trading as Hennes and
Mauritz, more recently as H&M. Expansion really started to take off beyond the Nordic region from
the 1980s, with “around 5000 stores in 74 markets” (H&M Group, 2021). H&M has collaborated
with designers since 2004 (first with Karl Lagerfeld) producing limited edition clothing and
accessories for “massclusivity” (WWD Staff, 2004), resulting in low cost designer items selling out in
minutes, generating value for both H&M and the designers (Ahmed, 2018), plus giving customers
access to brands that would be otherwise beyond their pockets alongside the additional benefit of
some items now being valued at much more than their original sales price. From 2006, H&M started
to sell online with rapidly changing product lines and continued designer collaborations, with annual
online sales growing of 24% in FY2019 (H&M Hennes & Mauritz AB, 2020) although the following
Statista chart (Shahbandeh, 2020) shows profits have almost halved since 2009.

Exhibit 1 (Shahbandeh, 2020)

Boohoo, on the other hand, was founded more recently in 2006, in Manchester, by Mahmud Kamani
and Carol Kane, who stepped out of the supply chain to ‘young fashion’ stores Primark and New
Look, to establish their own enterprise. Boohoo’s low-cost approach includes photographing
clothing on site, leveraging social media platforms, offering fashion sizes for all and providing ‘own
brand’, inexpensive fashion clothing with a significant amount manufactured in UK-based Midlands
factories. Boohoo references photographs of the rich and famous to quickly produce low-cost copy-
cat clothing, then encouraging customers to post images wearing the clothes to further promote
their brand. Social media is therefore an integral part of Boohoo’s growth strategy and in 2016,
Boohoo established the student ambassador programme as part of its online strategy of targeting
16-24 age group.
In December 2016, Boohoo purchased a 35% stake in online retailer PrettyLittleThing (£260m),
owned by Kamani’s son Umar and business partner Paul Papworth. They have continued their
acquisitive theme acquiring the brand and online presence of high street stores Oasis, Coast and
Karen Millen (£18m) in August 2019, closing stores and making 1,100 redundancies. Most recently
Debenhams brand and internet offering, reputed to take £400m of business per year from 300
million online visitors, was acquired in January 2021 (£55m), again closing stores (124) and in the
region of 12,000 potential job losses.

Exhibit 2

Boohoo has not, however, been a company without controversy and scandal. In fact, a number of
serious events including sweatshop conditions in their Leicester factories, below living wage pay and
poor health and safety conditions for employees including not protecting against COVID spread have
been highlighted, as well as scandals relating to similarly poor conditions for workers in their supply
chain Pakistani manufacturing sites, leading some to suggest Boohoo were effectively involved in
modern slavery. Television and newspaper articles using whistle-blowers and undercover reporters
have blown the lid off poor people management practices throughout the organisation. Boohoo
have rebutted some claims and with others, insisted they have taken steps to rectify the situation. As
a consequence Boohoo shares have taken a number of hits, dropping 46% in July 2020, however,
Boohoo and the company’s profits continue to grow, bouncing back after multiple hits including the
market crash in March 2020 and the revelations in July 2020 of Modern Slavery.

Statista results for Boohoo (Sabanoglu, 2019) show increasing profit between 2012 and 2019, and
that this continues until the reporting latest date, 20 October 2020, with growth in all regions of the
world during COVID pandemic (Sabanoglu, 2020) and total revenue in the period to May 31 2020
£367.9million – representing a 45% year-on-year increase.
 Exhibit 3 (Sabanoglu, 2020)

On paper, these companies are competing for the same customers, but their strategy and brand
values are quite different, with Boohoo staying firmly in the e-commerce arena with some
questionable standards of people management, whilst H&M are developing a ‘brick and click’, dual-
channel business and remaining true to strong social responsibility roots (Shao, 2020).

Your summative presentation should answer the following 3 questions:

1. Using module strategic theory, critically discuss Boohoo’s acquisition of high street
brands. Why does Boohoo strategy show resistance to ‘bricks and mortar’ retail?
2. What advice would you give the Board of Boohoo, if you were asked to propose
suggestions on how they can challenge other online retailers?
3. To what extent do you agree with the view that H&M are not leveraging their strengths
and should make more aggressive moves to survive and grow? What suggestions would
you make to H&M?

Suggested sources of information:

Ahmed, O. (2018, November 21). The Power Of Designer Collaborations. Retrieved from
www.vogue.co.uk: https://www.vogue.co.uk/article/the-power-of-designer-collaborations
Chang, H., & Jai, T. (2015). Is fast fashion sustainable? The effect of positioning strategies on
consumers’ attitudes and purchase intentions. Social Responsibility Journal, 11(4), 853-867.
H&M Group. (2021, January 15). H&M Investor relations at a glance. Retrieved from
www.hmgroup.com: https://hmgroup.com/about-us/h-m-group-at-a-glance.html
H&M Hennes & Mauritz AB. (2020, October 15). H & M Hennes & Mauritz AB SWOT Analysis.
Retrieved from www.marketline.com:
http://eds.b.ebscohost.com.uoelibrary.idm.oclc.org/eds/pdfviewer/pdfviewer?
vid=1&sid=6e4c1ce5-6921-4b0e-88b1-43cc9a2cb575%40pdc-v-sessmgr02
Sabanoglu, T. (2020, October 20). Revenue of Boohoo Group plc in first quarter 2019 and 2020 (in
million GBP), by region. Retrieved from www.statista.com: https://www-statista-
com.uoelibrary.idm.oclc.org/statistics/1136536/boohoo-revenue-during-coronavirus/
Shahbandeh, M. (2020, November 23). Operating profit of the H&M Group worldwide from 2009 to
2019. Retrieved from www.statista.com: https://www-statista-
com.uoelibrary.idm.oclc.org/statistics/252191/profit-of-the-h-und-m-group-worldwide/
Shao, X. (2020). Online and offline assortment strategy for vertically differentiated products. IISE
Transactions, 52(6), 617-637.
Stringer, T., Mortimer, G., & Payne, A. R. (2020). Do ethical concerns and personal values influence
the purchase intention of fast-fashion clothing? Journal of Fashion Marketing and
Management: An International Journal, 24(1), 99-120.
WWD Staff. (2004, November 15). Truly Fast Fashion: H&M’s Lagerfeld Line Sells Out in Hours.
Retrieved from wwd.com: https://wwd.com/fashion-news/fashion-features/truly-fast-
fashion-h-m-8217-s-lagerfeld-line-sells-out-in-hours-593089/

More sources of information

The management strategy of both companies has received wide press coverage over the years. You
will find several well-researched articles in The Economist and Financial Times archives as well as in
the press (Guardian, BBC). These will provide you with plenty of background information. You can
also find comprehensive information on both companies via the Statista database via the e-library.