Swedish fashion retailer H&M might be facing inventory issues in the US currently, but in India, the brand seems to be doing fine. Its first store in India in 2015 saw serpentine queues. H&M India, with 29 stores in 12 cities currently, recently launched its online store in India making it the 45th global market where H&M has an online store. H&M’s Janne Einola, in an interaction with BrandWagon’s Meghna Sharma, talks about how it plans to keep opening stores across the length and breadth of India to fill the need gap, and tap this ever-growing retail market. Edited excerpts:
Despite being a late entrant in the Indian market, H&M posted a nearly twofold increase in sales in India (over Rs 955 crore) for the fiscal ended November, 2017. What worked in H&M’s favour?
The fact that we offer the latest fashion of best quality at the best price is what Indian customers wanted and there was quite a demand for our offerings. There was fashion, but it was expensive; there was fashion, but maybe the best quality was not available here. Customers today are aware of global fashion and know what they want. Also, our expansion strategy has helped us gain customers across the country and not just in cities (metros and tier I). Therefore, all components combined helped create such a huge market for us in a short time.
When entering India, H&M had plans to invest 100 million euros (about Rs 730 crore) over the next five years. How much of it has been invested? H&M has now extended its footprint to smaller towns — can you elaborate on the expansion strategy?
We are looking at great locations as well as choosing the right malls to open our stores in cities we want to enter. If there is none available, we wait. As for investments, since we entered India, we have been opening stores across cities. In 2017 alone, we opened 17 stores. A great amount of investment has gone in opening these stores. It is not just the number of stores… we also have 1500 employees in India.
We have opened a number of stores in tier II cities and in 2018, we will continue to do so in metros as well as smaller cities. In the long term, we want 50% stores in tier I and the other 50% in tier II cities
in India. Tier II has a great growth potential and we can see customers appreciating this move as we bring our global collection to them.
H&M’s entry made Zara slash its entry-level product price by more than 50% (Rs 390-799), a year ago. How do you see the Indian retail market responding?
I think competition is secondary; customer satisfaction is a bigger deal. We have kept our prices constant and we are very proud of it.
Our contribution to the Indian retail market is not just limited to opening stores but also giving opportunities to people to work with us. We also contribute a lot to women empowerment; today almost 50% of our employees are women and we will continue to grow this. We were also the first company in retail in India to keep five days working for our employees. We believe in work-life balance.
We have been sourcing from India for a long time now. In sourcing, we have secured fair wages, working conditions and environment of places where clothes are made.
What is H&M’s strategy for the Indian market since it has a wide product portfolio catering to different segments? When it comes to advertising, which mediums work best for H&M?
It is all about our collection; we have the same collection in India as we do across the globe. Similarly, for marketing, we follow our global strategy. However, we do alter it a little to fit the local market by, say, using local influencers.
As for advertising, digital is our first choice. We also invest in traditional channels but digital is at a strong point now and therefore, it is the main medium of advertising.
Social media plays an important role in our strategy but OOH and print are utilised to create the brand we want to create in India. However, we believe that the best marketing place is our stores; when the customer exits our store satisfied and shares the experience with others, it is the best form of marketing.
H&M has also entered the digital space. What kind of sales are you expecting through your online presence?
If we look globally, online sales from the 44 markets we are present in are 12.5%. How much of sales will come from India — is it bigger or smaller in percentage — is difficult to say. However, we see a great potential in our online presence in India. We will have to wait a while to get a hang on numbers. Also, we will not be associating with other e-commerce players in India and follow the global protocol of pushing products on our own site.
How do you foresee 2018 for H&M India’s growth?
I hope it will be big! Last year we opened 17 stores; I hope to keep up the same speed for this year as well when it comes to expansion. With more stores and an online presence, there is bound to be growth. But how big will it be, is something we will have to wait and watch.