H&M in India has grown 87 percent last fiscal. Factors such as offering high-quality global fashion products, with affordable pricing and sustainability have worked well for the brand. The brand is further planning to add 30 more stores in its kitty in the next thirty months. Also, the brand is planning to launch its own e-commerce portal and mobile app this year. Also talking about the brands future India strategy and the expansion into tier III cities Janne Einola, CEO - Country Manager, H&M India spoke to Indianretailer.com.
You have been growing by almost 100 percent YOY in India so what are the key factors driving the sale?
Retail stores expansion is one of the key factors for our growth. Along with growing same-store sales, factors like offering global fashion product with great quality and pricing with sustainability aspect is our focus. Our products have been well appreciated by the customers in India.
How many stores are you planning to add in 2018-19?
We will be launching 30 more stores in the coming 30 months. We are planning to have 10-15 percent growth in sales every year.
Are you not afraid of cannibalization?
No, we are not, we are trying to choose the location against cannibalization. India is a big country, if you look at tier I cities, five kilometers travel takes one hour. I believe shopping centers have their own customers. We are not going to introduce entry-level price points.
What’s your plan for expanding into tier III cities?
I think there is a lot to do in tier I cities and there are much more opportunities in tier II cities. Also, there are many tier-II cities where we can enter in. If you look at the pace of development in tier III cities in the long term, these tier III cities will reach a level of tier II cities.
What is the ratio of your overall stores spread across tier I and tier II cities?
Currently, we have 29 stores in India and almost every month we open a new store. Around 75 percent of our stores are in tier I cities, hence we are looking at different cities to explore.
How has been the consumer aspiration for H&M in tier II cities?
Aspiration level for our brand is exactly the same as in tier I cities. All consumers across tier I and II today have access to internet and mobile. Thus, people who are interested in fashion, dress with personal choices knowing what the global fashion is.
What are your global online sales and what would be your strategy with Indian e-commerce portal?
Our global sales coming from 44 countries stands at 12 percent of the total revenue. We don’t offer the facility of order online and pick up from offline stores. We will be launching our e-commerce portal this year along with the mobile app. There will be wider assortment online. Our online strategy must be global and pricing will be in parity with the offline stores. We do promotions of our products and hold the end of the season sales twice a year. It is the norm of the business to offer discount pricing for something good and valuable during sales.
How much does India contribute to your global revenue?
India's contribution is still less than one percent. Our global sales are Rs 185K crore. We are looking at tapping possible avenues for growth and the response so far has been good. We will continue to grow with brick and mortar model.