Mission Statement.

Mission Statement H&M's purpose is to offer their customers fashion and quality at the best price. H&M states numerous of times that quality is more than making sure that products meet or exceed their customer s expectations. H&M is constantly working to better their products by manufacturing under good working conditions, and with limited impact on the environment. H&M takes responsibility for how their operations affect people and the environment which is key for their profit and growth. H&M is committed to integrating social and environmental concerns into all their business operations and investing in the communities. This company has a lot of great things going on such as charitable organizations both globally and locally. Some of the global organizations include: UNICEF, Water Aid, Hand in Hand, and Fashion against Aids. In the US, they work with Making Strides for the American Cancer Society in multiple cities to help raise funds for breast cancer research and with the Boys and Girls Club of America. 1 http://stylehm.blogspot.com/2011/02/mission-statement.html In choosing the new location in Cherry Creek Shopping Center, we are supporting our mission statement by expanding our market penetration to this area of Denver. We are also providing quality, convenience, and the best prices on fashionable, designer clothing to our consumers in the Cherry Creek and surrounding areas. We are promoting economic growth by providing jobs to the locals of the area and providing the best work environment possible to our employees. Our dedication to our customers, our products, our environment, and our community is the foundation our business is based upon, and we will strive to create that environment for the benefit of all in the Cherry Creek area. 1 http://stylehm.blogspot.com/2011/02/mission-statement.html 1

DEMOGRAPHIC We will be opening a Hennes & Mauritz AB (a.k.a. H&M) store location in Cherry Creek Shopping Center in the southeastern suburb of Denver, Colorado called Cherry Creek. This will be an extension to the flagship store, located 3.5 miles away from the new site location, at 3000 E 1st Ave, Denver, CO. 2 There are two major commercial centers located in Cherry Creek and the Cherry Creek Shopping Center is one of them, conveniently located off the major traffic route of East First Avenue. General Information: Cherry Creek, Denver, Colorado 3 Latitude: 39.731237 Longitude: -104.952434 Population: 20372 Density: 8138.83 (People per square land mile) Housing Units: 12360 Land Area: 2.5 sq. mi. Water Area: 0 sq. mi. Median Age In Zip Code 80206, Colorado Female Male 36.3 35.8 36 36.2 36.4 36.6 36.8 37 37.2 www.zipskinny.com 37.2 The information is provided for the zip code 80206 which is the majority of the Cherry Creek area of Denver, CO. Of the 20,732 people making up the area, the median age is 37 for women and 36 for men 4, which fits the demographic that our store serves. Our firm currently is designing cheap, chic clothing mainly for men and women ages 18 to 45. We also provide children s apparel and cosmetics to the consumer, which provides a greater appeal to the market we are targeting. Unemployment rates have seen a sharp increase since 2007 in the state of Colorado. This past year they have started to slightly decline and we look forward to contributing to this decrease by hiring our staff locally. 2 http://maps.google.com/ 3 http://www.zipskinny.com/index.php?zip=80206&pagetype=charts 4 http://www.citymelt.com/zip/colorado/80206-co.html 2

Colorado State Unemployment Statistics 2005 to 2011 http://www.bls.gov/web/metro/laummtch.htm According to the Bureau of Labor Statistics, the unemployment percent for zip code 80206 is 2.6 and the percent below the poverty line is 9.9. Despite these statistics, unemployment has decreased 0.8% from December 2010 to December 2011 in the Denver-Aurora-Broomfield, CO Metropolitan Statistical Area, which is creating a larger amount of people in the area with disposable income and improvement to the economy. The education levels in zip code 80206 are above U.S. average 5 with 92.8% graduating from high school or higher and 56.8% of the population with a Bachelor s degree or higher. With a higher education the Bureau 5 www.census.gov 3

of Labor Statistics suggests that earnings will be higher and the chance of unemployment will be lower. A large amount of the consumers in the Cherry Creek area have a higher education level, which leads to an increased amount of disposable income. Annual Household Income in Zip Code 80206 8 % 10 % 4 % 6 % 9 % 6 % 14 % <10,000 $10,000-$14,999 $15,000-$24,999 $25,000-$34,999 $35,000-$49,999 15 % 14 % 14 % $50,000-$74,999 $75,000-$99,999 $100,000-$149,999 $150,000-$199,999 $200,000+ www.census.gov The median household income annually is $40,879, 6 while the average household income for zip code 80206 is between $50,000 and $74,999. The household income being above the U.S. average improves the opportunities for consumers in the area to spend their disposable income in our store. The most common occupations in the Cherry Creek area are Management/Professional at 54.6% and that is followed by Sales/Office positions at 24.6%. 7 These types of occupations usually provide stable work environments with opportunities to excel. This large percentage of consumers can be relied on to bring a good source of revenue to the store. We also provide professional staple pieces for wardrobes and sophisticated styles that will appeal to these groups. 6 IBID 7 IBID 4

Occupations in Zip Code 80206, Colorado 60.00 % 40.00 % 20.00 % 0.00 % 54.60 % 11.70 % 24.60 % 0.10 % 4 % 5 % Percentage www. zipskinny.com The Cherry Creek area s statistics show that a new store in this location will prove successful. Occupations in the area are stable, household incomes are higher than the U.S. average, and the unemployment rate is going down which creates a promising market for our store. Demographic breakdown: 8 An easy way to get a feel for the demographic in Cherry Creek is to split them into three types of groups. The most common types of people residing in the Cherry Creek are referred to as Power Singles, Multilingual Urbanites, and High Income D.I.N.K.s (Dual Income No Kids). The income level for all three groups is high enough that our store could be found appealing to all of them. 1. Power Singles High-income urban singles. These are classified as highly educated professionals, many with advanced degrees. They draw a handsome salary and have reasonable living expenses while living a hip, upscale life in an urban center. 2. Multi-lingual Urbanites Urban dwellers who speak more than one language. Some have a high school or college education, and they work in a variety of occupations. This group has moderate to upper-scale earning potential. 3. High $$ DINKs Urban high-income couples with no children. 8 http://www.zillow.com/local-info/co-denver/cherry-creek-people/r_268635/ 5

Middle-age Dual Income No Kids couples living in the city and making very comfortable combined household incomes. Most own their own homes and are highly educated professionals, many with advanced degrees. Cherry Creek Shopping Center houses a variety of stores ranging from department stores (Nordstrom & Macy s) to trendy, smaller stores (Banana Republic, Urban Outfitters, Forever 21, and Levi s). Our target market is young professionals and fashion savvy shoppers, which are already drawn to this shopping center by its other fashion forward stores that already appeal to our target market, such as, Charlotte Russe, Urban Outfitters, and Forever 21. 6

PSYCHOGRAPHIC VALS PRIMARY GROUPS According to the VALS Survey, our primary consumers fall into the categories of Experiencers and Achievers. 9 Experiencers like variety and want to be one-of-a-kind, which is what we provide to our consumer with our latest fashion trends and varieties to choose from. Achievers are goal-oriented, but also pride themselves on being fashionable and high-end, which is an image that can easily be obtained from our merchandise. EXPERIENCER Experiencers are motivated by self-expression. Young, enthusiastic, and impulsive consumers, Experiencers quickly become enthusiastic about new possibilities but are equally quick to cool. They seek variety and excitement, savoring the new, the offbeat, and the risky. Their energy finds an outlet in exercise, sports, outdoor recreation, and social activities. Experiencers are avid consumers and spend a comparatively high proportion of their income on fashion, entertainment, and socializing. Their purchases reflect the emphasis that they place on looking good and having "cool" stuff. Favorite Things: ACHIEVER VW Rolling Stone Red Bull to be entertained Motivated by the desire for achievement, Achievers have goal-oriented lifestyles and a deep commitment to career and family. Their social lives reflect this focus and are structured around family, their place of worship, and work. Achievers live conventional lives, are politically conservative, and respect authority and the status quo. They value consensus, predictability, and stability over risk, intimacy, and self discovery. With many wants and needs, Achievers are active in the consumer marketplace. Image is important to Achievers; they favor established, prestige products and services that demonstrate success to their peers. Because of their busy lives, they are often interested in a variety of time-saving devices. Favorite Things: Honda Every Day with Rachael Ray 9 http://www.strategicbusinessinsights.com/vals/presurvey.shtml 7

low-calorie domestic beer recognition at work Our store offers merchandise that delivers the latest styles and fashions that fit a wide range of lifestyles from the everyday office person to someone who wants to have a good time out with friends. Our merchandise is also versatile, so items can be mixed and matched to fit the needs of all lifestyles and the two personalities listed above. Achievers can locate essential items for work and home for their interchangeable lifestyles, while experiencers can express themselves with our loud, colorful blouses and flashy accessories. 8

VALS SECONDARY GROUPS The secondary groups that our store will appeal to are Innovators and Strivers 10. Innovators are higher class and sophisticated and would fit the description of a primary shoppers parent or close relative. Strivers are more of the impulsive shopper and would intermittently come to the store, depending on their financial situation. INNOVATORS Innovators are successful, sophisticated, take-charge people with high self-esteem. Because they have such abundant resources, they exhibit all three primary motivations in varying degrees. They are change leaders and are the most receptive to new ideas and technologies. Innovators are very active consumers, and their purchases reflect cultivated tastes for upscale, niche products and services. Image is important to Innovators, not as evidence of status or power but as an expression of their taste, independence, and personality. Innovators are among the established and emerging leaders in business and government, yet they continue to seek challenges. Their lives are characterized by variety. Their possessions and recreation reflect a cultivated taste for the finer things in life. Favorite Things: BMW Wired sparkling water a rewarding experience STRIVERS Strivers are trendy and fun loving. Because they are motivated by achievement, Strivers are concerned about the opinions and approval of others. Money defines success for Strivers, who don't have enough of it to meet their desires. They favor stylish products that emulate the purchases of people with greater material wealth. Many Strivers see themselves as having a job rather than a career, and a lack of skills and focus often prevents them from moving ahead. Strivers are active consumers because shopping is both a social activity and an opportunity to demonstrate to peers their ability to buy. As consumers, they are as impulsive as their financial circumstance will allow. Favorite Things: 10 IBID 9

Chevrolet Playboy Coke Classic win the lottery Referencing the annual household income for zip code 80206 11, both income brackets for Innovators (high income) to Strivers (low to middle income) are present in the Cherry Creek area. Innovators will also be drawn to other shops in the Cherry Creek Shopping Center, such as, Coach, BCBGMAXAZRIA, Tiffany & Co., and Ann Taylor, 12 which can provide our store with the opportunity to appeal to them and their family members. Strivers will also come to the shopping center for the trendy values offered from stores like ours, Forever 21, Macy s, and Nordstrom. The larger department stores will have added appeal for Strivers when there are large, seasonal sales. PRIZM ANALYSIS According to the Prizm Analysis, three market segments that will appeal to our new store location are referred to as Urban Achievers, American Dreams, and Money & Brains 13. Our goal is to continue to provide something unique for each group, whether it is professional wear, affordable clothing for the family, or fashion tips and updates that are provided on our company website 14. URBAN ACHIEVERS Lower-Mid Younger Family Mix Concentrated in the nation's port cities, Urban Achievers is often the first stop for up-and-coming immigrants from Asia, South America, and Europe. These young singles, couples, and families are typically college-educated and ethnically diverse: about a third are foreign-born, and even more speak a language other than English. Social Group: Midtown Mix Lifestage Group: Young Achievers 2010 Statistics: US Households: 1,790,485 (1.54%) Median HH Income: $37,252 11 www.census.gov 12 http://www.shopcherrycreek.com/shopping/department_stores 13 http://www.claritas.com/mybestsegments/default.jsp?id=20&id1=1027&id3=80206 14 http://www.hm.com/us/life 10

Lifestyle Traits: Shop at Banana Republic Play soccer Read Latina Watch Tyra Volkswagen GTI Demographics Traits: Urbanicity: Urban Income: Lower-Mid Income Producing Assets: Low Age Ranges: <35 Presence of Kids: Family Mix Homeownership: Renters Employment Levels: White Collar, Mix Education Levels: Some College Ethnic Diversity: White, Black, Asian, Hispanic With urban achiever s income levels and the probability of children, our store gives a fashionable parent the opportunity to save money while shopping for themselves, their spouse, and their children. Reading lifestyle & fashion magazines and watching self-empowerment television shows, such as Latina Magazine and the Tyra Banks Show, show a consumer that is concerned with their well-being and their image in society. Consumers like these will be intrigued by our stores merchandise and come to shop. 14 15 AMERICAN DREAMS Upper-Mid Middle Age Family Mix American Dreams is a living example of how ethnically diverse the nation has become: just under half the residents are Hispanic, Asian, or African-American. In these multilingual neighborhoods--one in three speaks a language other than English--middle-aged immigrants and their children live in upper-middle-class comfort. Social Group: Urban Uptown Lifestage Group: Young Accumulators 2010 Statistics: US Households: 2,466,519 (2.12%) Median HH Income: $58,517 14 http://www.latina.com/ 15 http://www.tv.com/shows/the-tyra-banks-show/ 11

Lifestyle Traits: Shop at Old Navy Buy motivational tapes Read Black Enterprise Watch TeleFutura Lexus IS Demographics Traits: Urbanicity: Urban Income: Upper-Mid Income Producing Assets: Above Avg. Age Ranges: 35-54 Presence of Kids: Family Mix Homeownership: Homeowners Employment Levels: Professional Education Levels: College Grad Ethnic Diversity: White, Black, Asian, Hispanic American Dreams hold professional positions and tend to have a higher income level than the other two segments. They are also a family mix, which increases our appeal to them as the consumer. Our store offers versatile, sophisticated looks for adults, while offering apparel for the kids. MULTI-CULTI MOSAIC Lower-Mid Middle Age Family Mix An immigrant gateway community, Multi-Culti Mosaic is the urban home for a mixed populace of Hispanic, Asian, and African-American singles and families. With nearly a quarter of the residents foreign born, this segment is a mecca for first-generation Americans who are striving to improve their lower-middle-class status. Social Group: Midtown Mix Lifestage Group: Mainstream Families 2010 Statistics: US Households: 1,940,720 (1.67%) Median HH Income: $36,945 Lifestyle Traits: Shop at CVS Pharmacy Buy Spanish/Latin music Read Seventeen 12

Watch Premio Juventud Volkswagen GLI Demographics Traits: Urbanicity: Urban Income: Lower-Mid Income Producing Assets: Below Avg. Age Ranges: 35-54 Presence of Kids: Family Mix Homeownership: Homeowners Employment Levels: WC, Service, Mix Education Levels: Some College Ethnic Diversity: White, Black, Asian, Hispanic This family mix can take advantage of the variety of options in our store as well. From children to adults, we can offer apparel and accessories for everyone. The lifestyle traits of this segment show an emphasis on Latin culture, fashion, and beauty, which directly relates to the promotion of fashion and beauty that we do every day in our store. 16 16 http://musica.univision.com/premios-juventud/ 13

INDIRECT COMPETITION BRIO TUSCAN GRILLE Store Location: Outside of the Cherry Creek Shopping Center Property on Cherry Creek West Where to Park: Outdoor surface lot off of First Avenue (heavy traffic route 17 ) and Clayton Street or valet parking is available. This grill is located outside of the mall and gives shoppers the sit-down, quality meal that they can enjoy. Shopping can take a lot of energy and this is a great food choice versus the fast food offered at the food court inside the mall. This restaurant has the ability to claim a large amount of shopper s disposable income with its offerings of prime steaks and chops. A good way to attract attention from the restaurant to our store would be to place outdoor signs on the walkways around the mall promoting sales or the latest fashions. We could also offer and promote a snack or appetizer for in-store shoppers, to encourage them to shop instead of stopping to eat at a restaurant. GEOGRAPHIC ANALYSIS http://www.shopamericatours.com/destination/10648 17 ccnneighbors.com/documents/ccnnatrafficsurvey.doc 14

www.google.com Medium to fast-paced traffic is located in the area surrounding Cherry Creek. Two major commercial centers exist in Cherry Creek along the major traffic route of East First Avenue. First is an upscale, enclosed shopping mall, the Cherry Creek Shopping Center (our store location), which anchors the neighborhood. 18 Daily the area is moderately busy with foot traffic because of the size and popularity of the shopping centers and the closely located country clubs and art galleries. The second is Cherry Creek North shopping and dining district, which is a 16 city-block area with more than 320 upscale galleries, boutiques, restaurants, salons/spas, and the Fillmore Plaza. POPULATION GROWTH DATA Population growth data shows that almost 1,000,000 people have moved to Colorado from 2000 to 2010. The 2011 population in Colorado is estimated at 5,116,796, while in 2000 it was 4,301,261. 19 Our store location is a suburb of Denver which is also the 20 th largest metro area in America and has the 10 th largest downtown area. 20 The population increase for Arapahoe County, which is where our store will be located, has increased 17 percent in the last decade. This increases the population from 488,896 to 572,000. The growth in Arapahoe County shows that the population has been thriving the past decade, benefiting our H&M with an increasing consumer market. 18 http://en.wikipedia.org/wiki/cherry_creek_denver 19 http://quickfacts.census.gov/qfd/states/08000.html 20 http://www.hometodenver.com/stats_denver.htm#pop 15

MARKET SCOPE The zip codes that are included in our market scope are 80214, 80246, and 80216. Some of the surrounding cities are as close as 2.2 miles from the Cherry Creek Shopping Center 21. Provided is a comparison of these three zip codes with our store opening zip code, 80206, to understand and locate consumers that are in our surrounding areas. The first is Edgewater City, CO, which is zip code 80214. The recorded population for 2010 was 16148, which is approximately 4,000 people less than Cherry Creek. The median age is 33 years old, which is slightly below the median age for our location. The younger age bracket could appeal more to our store s merchandise. Median household income is$34,135, which is similar to 80206 with $40,879 22. According to Prizm, this zip code also contains American Dreams and Multi Culti Mosaic. 23 The second is zip code is 80216, which is Glendale, CO. Population for 2010 is approximately half of the population of Cherry Creek, with 10,701 people. The median age of Glendale is 26.6 years old, which is ten years younger than the median age of the Cherry Creek population and the median household income is about $10,000 lower, with $30,735 24. Conveniently, this age and income still fall into our target market. Prizm classifies this group as a Multi Culti Mosaic as well. It also includes Blue Chip Blues, which is a younger demographic that has midscale income and children 25. Even though the statistics and Prizm segments differ slightly these consumers still fit into our target market. According to Zipskinny, the population of North Washington Cdp, CO is 13,254, which is still not as high as our location. The median age is also lower, at 30 years old, which still fits our target market. Household income fits the income of the rest of the zip codes with $33,336. Zip code 80246, is a perfect match for Prizm segments that appeal to our location. Their segmentation includes Multi Culti Mosaic, Urban Achievers, and Money & Brains. 26 The age and income levels are the target market we serve and we are confident that our new store location will be successful based on our research. The populations are not high in these areas, but these are just a few examples of the surrounding demographic and psychographic that will appeal to our new store location. The high foot traffic received at the Cherry Creek Shopping Center and the heavy vehicle traffic along First Avenue (this street parallels the shopping center) provide ample opportunities for consumers to become loyal shoppers. 21 http://maps.google.com/maps 22 IBID 23 http://www.claritas.com/ 24 www.zipskinny.com/ 25 http://www.claritas.com/ 26 IBID 16

Marketing Objectives 1. Attain a decrease in supply costs for the area -August 2012- Coordinate with flagship location to get assets to new location a. Layout shipping plan between flagship location, Denver, and new location, Cherry Creek b. Discuss merchandise ordering and receiving schedule with flagship location c. Coordinate appropriate order amount that can be shipped to our store d. Schedule the order and pickup/delivery dates with flagship store and supplier e. Maintain scheduled payments and the amount of merchandise in stock and share information with flagship location 2. Extend the market penetration in the Denver, Colorado area. -June 2013- The soft opening of our store will be the beginning to future pursuits of expanded market penetration in the state of Colorado a. To reach the population in the Cherry Creek/Denver corridor of 20,372 27 according to Zipskinny b. Promote and advertise the new location during the Denver Arts Festival 28 (Memorial Weekend) and the Cherry Creek Arts Festival 29 (Opening weekend) c. Post comments about store opening and giveaways through Denver Pavilions (location of flagship Hennes and Mauritz) Facebook Page 30 d. Contact and update Denver Business Journal 31 and Denver Post 33 on the projected store opening and events 3. Reduce Advertising Expenses -July 2013- Following the grand opening, advertising expenses will already be in place because of the flagship H&M in Denver 27 http://www.zipskinny.com/index.php?zip=80206&x=0&y=0 28 http://www.downtowndenverartsfestival.com/ 29 http://www.cherryarts.org/ 30 http://www.facebook.com/denverpavilions 31 http://www.bizjournals.com/denver/news/2011/11/10/photo-gallery-from-the-opening-of-hm.html 33 http://www.denverpost.com/business/ci_19787562 17

a. Increasing the area the advertisements will be sent will increase the exposure both stores will receive b. Advertising for H&M has already been introduced to the public by the flagship store in Denver c. Combined advertising will reduce expenses d. Request feedback from customers through online and in-store surveys about the effectiveness of advertising e. Reduce costs by advertising online through social networking sites, such as, Facebook, Twitter, and H&M blog 4. Brand image is strengthened with the opening in this location -December 2013- Customers will become loyal to the products sold by H&M a. Brand is expanding in Denver area b. Sponsoring local community activities and the Cherry Creek Arts Festival will get our name out in the public and show our compassion and concern for our neighbors c. This brand is growing rapidly worldwide, with it globally opening 168 stores last year alone, and increased sales of 72% within the past 5 years 32 d. H&M logo will signify the brand and store, reminding customers to come back e. Our store will add the combination of fashion and affordability to the Cherry Creek area 5. Increase market share and build profitable relationships by developing better products. -January 2014- Create more value for consumer by increasing products that are in demand a. Product suggestion and satisfaction surveys will be made available online and in-store for customers to give input b. Expansion of H&M merchandise into ecofriendly beauty products c. Increase availability of plus size fashion in Denver and Cherry Creek locations d. Make quality organic merchandise available for the consumer 32 http://www.innovationleaders.net/hm_company_profile.html 18

STRENGTHS Fast fashion retailing increases the appeal for our H&M products Trendy items offered at low prices helps our business thrive through the recession Only 12 weeks for merchandise to go from design to retail state vs. the projected 6 months other retailers use Keep the store s brands fresh with guest designers coming in for different lines in the store Our unique brand creates very few threats from retail chains 33 Increased addressable market with almost 2,500 stores located in 43 countries in the Asia Pacific, Europe, Middle East & North Africa, and North America 34 Cherry Creek is home to hundreds of shops, boutiques, art galleries, salons, spas, restaurants, and everything else that caters to pampering 35 We are located 3.3 miles of, the 20 th largest metropolitan area in the United States, Denver, CO 36 We keep prices affordable by using very few middlemen and buy large volumes cost consciously Cherry Creek Shopping Center already contains some of the most extravagant shopping in the Denver area 37 We are an affordable, worldwide company With a College America Junior College and Art Institute of Denver located less than 6 miles from the shopping center, our store provides convenience of location and price for student shoppers 38 According to Zipskinny, the average household income in the area is 40k 39 Clothing expenditures is above the national average in local area 40 Located 17 miles from Denver National Airport, tourists are within a reasonable distance of the shopping center 41 33 http://voices.yahoo.com/swot-analysis-hm-company-3630037.html?cat=46 34 http://about.hm.com/content/hm/aboutsection/en/about/facts-about-hm.html#cm-menu 35 http://www.denverrelocationbroker.com/cherry-creek/ 36 http://maps.google.com/ 37 http://www.shopcherrycreek.com/ 38 IBID 39 http://www.zipskinny.com/ 40 http://homes.point2.com/neighborhood/us/colorado/denver-county/denver/cherry-creek- Demographics.aspx 41 http://www.shopcherrycreek.com/ 19

WEAKNESSES Excessive dependence on third party vendors for supply of merchandise Median age for zip code 80206 is 36-38 years old 42 Buying large volumes means that there is no real guarantee that all the items will be sold 43 Already low prices may have to be lowered in order to make room for next collections, which has been an issue since Spring 2010, causing profit loss 44 Company will have to pay more for extra storage for the items not sold Our brand provides for a wide range of customers, including men ages 18-45, maternity wear, children's wear, variety of clothing styles which can be difficult to manage especially in a vertical company because there is no real focus on a target customer Total crime risk in Cherry Creek is above the national average, according to Zipskinny data 45 Four competitors are located in the same area, or within walking distance, from H&M s projected store opening location OPPORTUNITIES There is a growing market for plus size apparel for women in the US, which our store carries We carry matching clothing for mothers and children, making it appeal to a larger crowd We are adding opportunities in the job market for managerial and sales positions We feature guest designers, such as Marni and Jimmy Choo, to increase our target market and customer loyalty Our company offers style advice and fashion updates through our website (HM LIFE) 46 THREATS High cotton prices and wages in Asia may impact H&M's margins negatively 47 Weak consumer spending has been recorded in the US and Europe in previous seasons (Spring 42 http://voices.yahoo.com/swot-analysis-hm-company-3630037.html?cat=46 43 IBID 44 IBID 45 www.zipskinny.com/ 46 http://www.hm.com/us/life 47 http://mobile.bloomberg.com/news/2011-09-29/h-m-earnings-fall-less-than-analysts-forecast 20

2011) due to weather patterns not coinciding with the season 48 Most sales are made in euro, while purchases are made in euro and US dollar, making fluctuation in the exchange rates costly 51 Uncertainties exist concerning how external factors such as raw materials prices, transport costs, and the capacity among suppliers will affect buying costs for H&M s products 49 Changes in the global economy may change consumer buying behavior 50 Buying costs may be affected by decisions at the national level on export/import subsidies, customs duties, textile quotas, embargos, etc. 51 A competitor, Gap, with their quality, reasonable prices, and loyal following of consumers Discounting to shift unsold stock led to a drop in fourth-quarter profit has continued into January 2012) 52 Markdowns on merchandise have increased from the year before due to overstock STRENGTHS For the fourth quarter of fiscal 2012, total company net sales increased 9% over the same quarter last year to $731 million 53 All brands ended the year with inventory growth below that of sales growth 54 Cleaned up inventories and shares rose almost 3 percent 55 Ending inventories were clean, and on a comparable store basis, lower than the prior year 56 For the fourth quarter of fiscal 2012, total company net sales increased 9% over the same quarter last year 48 http://www.fashionunited.com/fashion-news/fashion/hm-sales-up-but-warn-of-excess-stock-201025063127 51 http://about.hm.com/content/hm/aboutsection/en/about/corporate-governance/40/risksanduncertainties.html 49 IBID 50 IBID 51 IBID 52 http://www.reuters.com/finance/stocks/overview?symbol=hmb.st 53 http://www.reuters.com/article/2012/02/09/idus136742+09-feb-2012+hug20120209 54 IBID 55 IBID 56 IBID 21

Cherry Creek is home to hundreds of shops, boutiques, art galleries, salons, spas, restaurants, and everything else that caters to pampering 57 They are located 3.3 miles of Denver, CO, which is the 20 th largest metropolitan area in the U.S. 58 Already contains some of the most extravagant shopping in the Denver area Merchandise ranges from clothing to home décor Serves as a one stop shopping experience for all things urban Moderate pricing Throughout the recession they have accomplished an increase in sales without excessive discounting 59 Operations spread across the US, Canada, and Europe With a College America Junior College and Art Institute of Denver located less than 6 miles from the shopping center, our store provides convenience of location and price for student shoppers 60 According to Zipskinny, the average household income in the area is 40k 61 Clothing expenditures is above the national average in local area 62 Located 17 miles from Denver National Airport, tourists are within a reasonable distance of the shopping center 63 Total household expenditures are above the national average in local area 64 Strategic brand positioning helps to cater to separate consumer groups 65 Presence in multiple sales channels 66 Direct sales, which are virtually all online, accounted for 20 percent of sales in 2011 70 Growth in revenue is at 6.34 percent 67 57 http://www.denverrelocationbroker.com/cherry-creek/ 58 http://maps.google.com/ 59 http://voices.yahoo.com/swot-analysis-urban-outfitters-company-4232629.html 60 IBID 61 http://www.zipskinny.com/ 62 http://homes.point2.com/neighborhood/us/colorado/denver-county/denver/cherry-creek- Demographics.aspx 63 http://www.shopcherrycreek.com/ 64 http://homes.point2.com 65 http://www.fundinguniverse.com/company-histories/urban-outfitters-inc-company-history.html 66 http://internetretailer.com/2012/02/13/direct-channel-grows-16-urban-outfitters 70 IBID 67 http://ycharts.com/companies/urbn/revenue_growth 22

WEAKNESSES Recently criticized for unattractive merchandise at Urban Outfitters and sister locations, which led to a build-up in inventory 68 Promotional activity was significantly higher than planned, creating a larger expense for the company 69 Have no influence on the Asian market nor plan to make one in the near future Asia is a developing market that they are ignoring Competitors, such as Guess and H&M, have established themselves in Asian markets already Other retailers that serve the same demographic are located within walking distance of Urban Outfitters 70 OPPORTUNITIES Expansion into the Asian market Growth opportunities offered by online retail channel Improving product efficiency through investment in technology research 71 Added opportunities in the job market for managerial and sales associate positions, which helps promote the growth of the economy THREATS The Gap and Guess also markets to the same age range and has several retail stores worldwide and targets the young hipster Rising input costs because of shortage of cotton VAT (value added tax) rate increase to 20% in the UK market, increasing taxes on Urban Outfitters merchandise that is distributed to consumers and the production of merchandise in the UK 72 Rising minimum wage rate in the US 73 68 http://www.reuters.com/article/2012/02/09/us-urbanoutfitters-idustre8181ax20120209 69 http://investor.urbn.com/phoenix.zhtml?c=115825&p=irol-newsarticle&id=971682&highlight= 70 http://www.cherrycreekshoppingcenter.com/ 71 http://www.urbanoutfitters.com/urban/help/privacy_security.jsp 72 http://www.bbc.co.uk/news/business-12099638 73 http://smallbusiness.chron.com/raising-minimum-wages-hurts-us-employers-11744.html 23

Weak consumer spending has been recorded in the US in previous seasons due to weather patterns not coinciding with the season 74 A competitor, H&M, with their quality, low prices, and loyal following of customers Competitors include, Abercrombie & Fitch, Gap, and Guess, which are also located at the Cherry Creek Shopping Center 75 Poor product designs and names have created discomfort for consumers and legal actions have been taken by organizations (examples are Navajo products and St. Patrick s Day themed t-shirts) in the past76 77 74 http://www.fashionunited.com/fashion-news/ 75 http:/voices.yahoo.com/swot-analysis-urban-outfitters-4232629.html?cat=55 76 http://www.usatoday.com/money/industries/retail/story/2012-02-29/navajo-trademarkurbanoutfitters/53299172/1 77 http://www.irishcentral.com/news/urban-outfitters-st-patricks-day-products-disgrace-rages-on141761593.html 24

COMPETITORS Express, Inc. Express operates specialty retail stores internationally. Its stores offer apparel and accessories for women and men between 20 and 30 years old across various aspects of the lifestyles, including work, casual, and going-out occasions, as well as provides gift cards. As of January of 2011, the company operated 591 stores. Negative reports are shown on Mergent Online of; 45% of trade experiences indicate slow payment(s) are present and payment experiences exist for this firm which are greater than 60 days past due. Express clothing store is located in the Cherry Creek Shopping Center, which is also where H&M will be located. They cater to a smaller demographic than H&M which provides them with more opportunities to provide variety and styles to the customer. Forever 21 Forever 21 is an American chain of clothing retailers that carries women s and junior s clothing, accessories, active wear, swimwear, lingerie, handbags, and shoes. Imitating both Korean and American fashion trends and offering them at reasonable prices is a major part of the store s image. Their marketing image is based around made-in-the-usa merchandise produced in California and it sources its designs from hundreds of Southern California suppliers. Forever 21 is located within walking distance of Cherry Creek Shopping Center (approx. 0.1 mile). 25

A. Acquire Location Locate an area with space size of 2,500-3,000 square feet in Old Town Fort Collins Meet with landlord to discuss lease and requirements Meet with accountants to create business budget Discuss historic, city, and state requirements with attorneys Have attorneys review the leasing agreement and dispute any issues with the landlord Obtain necessary permit/licenses to operate store in location Sign the lease B. Bring in Interior Design Team Display Coming Soon signs in windows, facing foot and vehicle traffic Research the interior layout of local competitors Consult with design company, if necessary Create store layout Locate and purchase lighting, decorations, furniture, and fixtures C. Bring in Contractor Hire contractor and builders Build stock room, fitting areas, and cashier desk Install lighting and fixtures (After painting is completed) D. Bring in Painters Hire painters Paint walls and fixtures white Paint select display areas E. Merchandising Locate vendors Contact vendors about present and future order dates Set up a bi-monthly shipment schedule for merchandise with vendors Order merchandise racks and miscellaneous clothing display items 26

F. Locate Management Staff Advertise open management positions and prerequisites required Schedule interviews for prospects Set up training schedule for new management (4 weeks) Inquire about relocating a manager from another location to take lead at new location G. Hire Employees Advertise job openings for sales associates and clerks in the local area Schedule interviews for prospects Schedule new employee training (2 weeks) H. Set up Store Begin inventory on merchandise as it is received Organize and display merchandise throughout the store (on display shelves, mannequins, tables) Hang banners that advertise the latest trend of the store (Top 10 Essentials, etc.) throughout Set up window displays for foot and/or street traffic Ensure all cashier stations, audio, and telephone connections are working properly I. Soft Opening Open store 25 days prior to announced grand opening Record sales progress and customer satisfaction and demands J. Promoting Various amounts in gift cards will be offered to the first 500 customers (Top prize being $500) Apply for Cherry Creek Arts Festival (July 5-7 2013) sponsor program (Offer a donation from the sales of the grand opening weekend to the not for profit mission, which is to provide art experiences and support art education in local schools) Host a fashion show incorporating other fashion retailers in the shopping center (Urban Outfitters, Forever 21, Diesel, Free People, Anthropologie, Juicy Couture) 27

K. Advertising Send invitations to exclusive personnel, including the people that helped create and set up the store, celebrity homeowners in area, and local retail fashion businesses (10% off coupon included) Display H&M Coming Soon 07/05/12 signs near the shopping center entrances and heavy traffic areas near the shopping center Post opening information on H&M blog Contact local radio to promote the grand opening Become a sponsor for the Cherry Creek Arts Festival and gain access to advertising opportunities L. Grand Opening The opening will be celebrated with in-store gift cards for the first 500 customers Pass out promotions for local businesses at the Cherry Creek Arts Festival (Make it known we care about our local businesses) Host fashion show from 11am-4pm on day of grand opening Have local artists and artwork displayed (with art education for classes) to show the culture of Cherry Creek and promote the message of the Arts Festival Hair, makeup, and facial care demonstrations held by Bare Escentuals, La Biotique, and Aveda Business Opening For the opening of H&M in Cherry Creek Shopping Center, we have planned a series of spectacular events. The grand opening will begin at 10A.M. and will be celebrated in the passing out of in-store gift cards to the first 500 customers; the top prize will be worth $500. Included with the gift cards will be flyers promoting the Cherry Creek Arts Festival and the Marni for H&M charity T-shirts to raise money for disaster relief. The headline for the flyer will be We Care <3 H&M. An hour after the grand opening we will be hosting a fashion show in the center of the shopping center where the main foot traffic is located. Some featured stores will be ourselves, of course, and Urban Outfitters, Anthropologie, Diesel, Free People, and Forever 21. The fashion show will end at 5P.M. Beginning at 11 A.M. and ending at 4P.M. select local artists will set up 28

booths inside the H&M store to display their artwork and offer art education to children and adults to emphasize the culture of Cherry Creek and promote the message of the Arts Festival. From 3P.M. to 7P.M. there will be free makeup, hair, facial care, and henna demonstrations for customers at the entrance to our store. Demonstrations will be held by businesses located inside the shopping center, including Bare Escentuals, La Biotique, and Aveda. Store grand opening at 10A.M. Gift card and festival flyer distribution (10A.M. until limited stock is distributed) Host fashion show (11A.M.-5P.M.) Local artwork and classes (11A.M.-4P.M.) Hair, makeup, and facial care demonstrations held by Bare Escentuals, La Biotique, and Aveda (3P.M.-7P.M). Store closing at 9P.M. Communicating the Store Image H&M portrays a hip, youthful image with an emphasis on affordability and fashion forwardness. We also are moving towards using more eco-friendly products and helping the environment. The company is currently switching to greener supplies and using fibers like organic cotton in our merchandise production. Including the disaster relief t-shirts on our flyers and in our advertisements will encourage consumers to notice our humanitarian side and get everyone involved in the aid for disaster relief. The store image is also about being fashionable, beautiful, and trendy, which will be displayed during the fashion show we are hosting to keep consumers informed of what the hottest styles are now. The skincare, cosmetic, and hair demos are going to add the finishing touches to what our consumer needs to keep in the know of what s fresh and on-trend. Local artists are going to put the icing on the cake by promoting the unique style and culture of the surrounding area of Cherry Creek. 29

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