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June 20, 2016
Sapna Agarwal, Mint
Mumbai, 20 June 2016
Swedish
fashion retailer Hennes and Mauritz (H&M) on Monday said it will
double the number of its stores in the country from six to 12 by
year-end. The Indian unit of Hennes & Mauritz AB, which entered
India in October and currently operates stores in Delhi, Punjab and
Bengaluru, will expand to Mumbai, Pune and Chennai.
Two new
stores in Mumbai will come up at Phoenix Mills in Lower Parel and
Phoenix Market City in Kurla. Chennai will have its first H&M Store
of over 34,500 sq.ft at Express Avenue Mall. Additionally, two
locations have been confirmed for stores in Pune at Phoenix Marketcity
(33,000 sq.ft) and Westend Mall (23,000 sq.ft) and a third location for
Mumbai at Inorbit Mall, Malad, a suburb in Mumbai.
“H&M is
having a great first year in India, the fantastic response from our
consumers, to adopt international trends in their wardrobes, and a
stronger economy have encouraged us to explore new markets in metros
and beyond. All our new locations will be full concept stores, offering
the latest in women’s, men’s and children’s fashion,” said Janne
Einola, country manager, H&M, while sharing that the company plans
to maintain the strategy of opening new stores in the market.
Globally,
H&M had 3,970 stores as of 29 February and plans to open 425 more
by November, The Wall Street Journal reported on 6 April. The company
is the world’s second biggest clothing retailer by sales after Zara’s
parent Inditex SA from Spain.
Inditex SA, the world’s largest
clothing retailer which owns Zara, has been in India since 2010 in a
joint venture—Inditex Trent Retail India Pvt. Ltd—with the Tata group’s
hypermarket and department stores retail company Trent Ltd and has
opened 16 stores in five years, according to its annual report for
fiscal 2015.
Zara is one of the fastest growing apparel and
lifestyle brands in India to have crossed $100 million in revenue
within five years of operations. However, H&M looks like it could
cross the $100 million mark in a much shorter time period. Despite its
late entry in the country, H&M is getting prime locations as mall
developers are making space for it, taking away the advantage of
location for Zara. For instance, at Select City Walk in New Delhi,
H&M has come in place of Pantaloons. Likewise, in Mumbai at Phoenix
Mills and Inorbit Mall, its new stores will replace stores of existing
retailers.
“Sales per sq. ft of
Zara and H&M in India are roughly comparable adjusted for location
and size. If H&M builds scale faster in a shorter time, it will
manage to cross $100 million in revenues even faster than Zara,” said
Devangshu Dutta, chief executive officer, Third Eyesight, a retail
consultancy firm.
India is the
second-most attractive market for global retailers to expand after
China, according to The 2016 Global Retail Development Index by
consultancy AT Kearney. According to the firm, India has in the past
couple of years improved the ease of doing business. Clarity on foreign
direct investment (FDI) regulations too have helped.
To be sure,
challenges remain. India continues to be a complex market for foreign
retailers, where understanding dynamics at the state level is important
as the country’s 29 states have the power to opt in or out of FDI
reforms. Also, infrastructure bottlenecks, including archaic labour
laws, complex regulations, high attrition rates, and limited
high-quality retail space, remain important areas of concern for
retailers, said the AT Kearney report, adding that still, the potential
is vast as the country presents a $1 trillion retail market.
In
the past year, several foreign retailers have entered India. In
fashion, A�ropostale, The Gap, and The Children’s Place entered in
partnership with Arvind Lifestyle Brands. Topshop and Topman entered
via e-commerce through Jabong.com, while H&M became the first
international fashion retailer to enter alone after the government
approved 100% FDI in single-brand retail.
Other sectors that saw
multiple entrants include sports (Sonae, under the Sport Zone banner),
restaurants (Wendy’s, Jamie’s Italian, Jamie’s Pizzeria, Barcelos and
Carl’s Jr.) and convenience stores (UAE-based Fmart). Among existing
international retailers, Marks & Spencer, Burger King, Dunkin’
Donuts, Starbucks and Nando’s have initiated significant expansion
programmes.
(Published in Mint)
