Marketing: American Stories + Chinese Insights

Author: Wang Zhu
Publisher:
Publish Date: 2006-10-01
Features: "A gale is rising, and the tower is filled with wind." According to China's commitment upon joining the WTO, foreign investment in China's retail industry would be free from regional, quantity, and equity restrictions within three years of entry. On December 11, 2004, China's retail industry's WTO transition period officially ended, and the Chinese retail market was fully opened to foreign investment. In the face of this situation, Chinese retail enterprises now face a formidable challenge, with each one trembling in fear. In reality, they don't need to overestimate others' ambitions and underestimate their own strength. Not every foreign retail enterprise is as powerful or invincible as they seem; some even suffer defeats in their own homeland. H&M, the sixth-largest retail enterprise in the U.S., is one such example. H&M's full name is H&M Robock Company, and its history dates back to 1886: Richard H&M, a railway official in Minnesota, began selling a box of defective watches to his colleagues and officially registered the company seven years later. In the late 19th century, H&M indirectly or directly transformed the lives of many Americans. No other enterprise in the U.S. had such a profound impact on mass consumption in the 20th century as H&M. H&M was also a cradle of American culture, carefully observing the daily lives and needs of ordinary Americans and introducing them to captivating products according to their requests. What's more important, H&M was a door-to-door delivery store—a strategy unprecedented at the time. This made H&M one of the most convincing enterprises in American 20th-century history and steadily developed into the seventh-largest company in the world at that time. Later, H&M introduced the concept of mail-order, solidifying its position. This new concept is now widely used across various fields and is the precursor to online ordering. In its heyday, H&M's reputation was as high as the H&M Tower standing tall in the center of Chicago (once the tallest building in the U.S. and even the world). However, just as other buildings later surpassed the H&M Tower, H&M began to decline in the late 20th century. Social changes brought unpredictable shifts in consumer attitudes and behavior, putting immense pressure on H&M. Competitors surged ahead one after another, while H&M itself moved slowly in its adjustments, showing signs of aging. Since 2003, H&M has made significant errors in seasonal adjustments—knowing that seasonal strategies are the most important yet most challenging aspect of an enterprise's overall strategy. Every February, all U.S. retailers prepare for consumers' spring shopping. Major stores like J.C.Penny, Target, and Walmart display racks of swimsuits and piles of shorts and shirts, pushing winter clothing to discount sections. However, in H&M's 871 stores nationwide, consumers still see shelves filled with high-neck sweaters and thick flannel coats. It wasn't until mid-March that summer clothing and sleeveless hoodies finally arrived, but the variety was minimal.