Marketplace risk is a risk that affects the level of sales to customers. It is an external risk that can arise from failure to achieve presence in the marketplace, poor sales from commercial and market activities and etc.Changing consumer behaviours and preference to shop online instead of going to a physical shop has hurt H&M stock prices to fall sharply in 2017.
This is due to H&M slow adaptation in the industry disruption where majority of fashion retailers are moving rapidly towards a click and mortar models. As a result, H&M far behind in its market presence as brick and mortar model was their business strategy to expand their market. (Wall Street Journal, 2017) New retailers such as Boohoo.com, ASOS and Missguided are bringing products from design to sale in as little as on or two weeks even faster than traditional fast fashion such as H&M.
With a shorter time frame, companies are able to respond more efficiently and adjust inventory to suit current market trend and it prevents them from having to produce a large amount of stock in advance that then risks not selling and being discounted. (Quartz 2017) In addition, companies produce smaller quantities in order to observe how long the trend would last. Hence, Fast fashion is turning into ultra fast fashion.
Furthermore, Consumers’ demands for immediacy are growing and production cycles are becoming faster. Retailers that have the shortest and leanest supplychain cycles are reporting the strongest sales growth results. (Fund Global and Retail Technology, 2017)On 4 April ASOS forecasted it sales to grow from 30 percent to 35 percent and Boohoo also increased its earning forecast, anticipating sales to grow around 50 percent for the year as compared to H where analyst predicted a fall of 21 percent in sales. Therefore, it is essential that H venture and make strategic business plans as well as conduct opportunity assessments in accordance to market movement to prevent such considerable-amounts of damages.