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H&M Opportunities and Threats

H&M Opportunities and Threats

Opportunities H&M contributes to numerous causes that make them a socially conscious company. The clothing producing business has become very environmentally conscious and most importantly, price conscious. H&M has committed to having a corporate responsibility to social and economic issues, which was the cause of them creating a meticulous sustainability policy. Sustainability describes practices and policies that reduce environmental pollution and do not exploit people or natural resources in meeting the lifestyles needs of the present without compromising the future (Kadolph).

H&M holds their suppliers to the same standards that they have established as a corporation. H&M conducts audits that not only check for working conditions and child labor, but also focuses on water treatment, chemical handling, and waste management. H&M has created a list of chemicals that would not be tolerated in the factories and before the factory can begin manufacturing H&M products, they must sign the Chemical Restrictions Compliance Commitment to confirm their compliance with the restricted chemicals list.

H&M began using organic cotton in 2004, incorporating it in 5% of baby and children garments and now have lines made up of 100% organic cotton. (H&M Website) The farmers that supply organic cotton to H&M also has a restricted chemical list that they must adhere to, just like the factories. This is an aspect of H&M that they have a substantial advantage over other companies with their commitment and expansion to organic cotton line. They have increased the use of organic cotton by 50% each year since 2004 and goaled to reach 15,000 tonnes, or 16,530 tons, used for their clothing by 2013.

H&M participates in numerous organizations that request clothiers abide to more environmentally safe practices, like the Fur Free Alliance. H&M is also one of 73 companies that have signed the United Nations Water Mandate, which stresses the correct disposal for unclean water that is left after production. UN Website Threats With all the good that H&M does, their practices could backfire on them. Their avoidance of using unsafe chemicals is quite an expensive task.

If sales were to drop significantly, these practices could be the first cost-cutting measure taken. There is one looming concern for not only H&M, but all clothing manufacturers is the increasing price of cotton. Cotton prices have hit a 15 year high and consumption is expected to increase by 5%, all this during a time when cotton farmers will harvest the lowest acreage in more than 20 years. As of February 2011 cotton is $1. 90 per pound, which is double from last year, and highest since the Civil War when it was $1. 9 per pound. China and India, which are the one and two producers of cotton respectively, have shut down factories since the recession and have no plans to reopen them. H&M spokesperson Jenni Tapper-Hoel, has not alluded to a price increase, “H&M is constantly monitoring the price of cotton and increase of alternative fabrics” (Wei). H&M did post a fourth quarter loss of 11%, with experts believing the reason being is H&M refusal to pass the cost down to the consumers, which prompted a response from H&M CEO.

Karl Johan-Persson stated, “H&M has to adapt to changing conditions, but always in a way that is in accordance to our business concept, to offer fashion and quality at the best price, and in that way increase the opportunities for us to continue to take market share”(Ward). One new concept that has emerged recently to help battle increasing prices is EcoSpun. EcoSpun is a process that takes recycled plastic bottles and develops them into a polyester fiber that can be used to produce clothing. Eco-fi, which is the name of the fiber, can be combined with wool, cotton and tencel to create an even more durable material.

This process is still in its infancy stage, but other clothiers may adopt this new process and save them money, while H&M stays loyal to cotton. Works Cited Ward, Andrew. 27 January 2011. Cotton Price and Strong Krona Take Toll at H&M. Financial Time. Retrieved from www. ft. com/cms/s Wei, Michael. 15 November 2010. Clothing Costs Rise on ‘Terrifying’ Cotton Prices. Bloomberg News. Retrieved from www. bloomberg. com/news/2010-11-16 Kadolph, Sara. 2010. Textiles (11th Edition). Saddle River, NJ; Prentice Hall. Can’t figure out how to cite website without an author