HONG KONG — Not every store opening requires crowd control measures, but such was the case when Hennes & Mauritz opened here.
Even those with invitations to the opening party found themselves waiting to get in — alongside dozens of paparazzi and a noticeable police presence. For its public opening Saturday, 1,000 shoppers lined up starting at 5 a.m. Store managers gave away a few jackets autographed by Madonna as well as M by Madonna sunglasses to the first 500 customers. The Hong Kong store is the first in the world to receive the new Madonna line.
H&M has had a sourcing office in the city for decades, but this week marks the company’s first foray into retail in Greater China. According to Nils Vinge, head of investor relations at H&M, the timing and location are perfect.
“Hong Kong is fashion-oriented and the people are big fashion spenders,” he said, noting the company will add a second location in Hong Kong in the fall and will open two Shanghai stores this spring. The first Shanghai store will bow on April 12 on Huahai Lu, in a location once occupied by Benetton.
Vinge said that, to outsiders, it might seem H&M is slightly behind some of its competitors in terms of Asian expansion, but the company has a strategy. “We still have so much to do in our existing markets. We have no rush to plant flags all over the world; we’re taking it one step at a time,” he said.
Vinge explained H&M prefers to solidify its presence in selected cities rather than through expansion to new markets. “In our business model, in order to get efficiency of sales when it comes to logistics and infrastructure, we need a certain number of stores to reach critical mass. We want more than one or two, but just how many or how fast this happens remains to be seen,” he said.
The location of the Hong Kong H&M provides a big talking point for real estate analysts and retailers alike. For decades, the building, known as Lane Crawford House and owned by Wheelock, served as Lane Crawford’s flagship. When Lane Crawford moved to its new location at International Finance Centre, Wheelock tried to sell the building. However, no bids reached the asking price of 2.5 billion Hong Kong dollars, or $320 million, leading Wheelock to redevelop the 12,286-square-foot building and rename it Crawford House.
This story first appeared in the March 13, 2007 issue of WWD. Subscribe Today.
Vinge declined to specify the terms of H&M’s lease, but said the company normally signs five- to 10-year leases for its stores. Property agents estimate H&M is paying about 100 Hong Kong dollars, or $12.80, per square foot per month for the Central shop. (The Kowloon location, a 10,000-square-foot store slated for a fall opening and located at Union Station, will cost about 50 Hong Kong dollars, or $6.40, per square foot.)
Even before H&M Central opened its doors, the immediate neighborhood began to change — once declining, this end of the avenue now features numerous mass market chain stores with new units by Esprit, Giordano and Nike all opening on the same block of Queen’s Road Central. Farther down the street, Club Monaco has a shop under construction.
Vinge said it’s the H&M effect. “We see all the time that H&M is treated as an anchor tenant. We attract a lot of customers.” The store also is situated across the street from the Central Market building, which is likely to be redeveloped into even more retail space, and adjacent to the busy outdoor escalator that links Central to Mid-levels.
Besides location, the advantage the store has is its sheer size. The retail space measures 40,000 square feet, which, by Hong Kong standards, is vast. Spanning four floors, the store features all of the H&M concepts except BIB, or Big Is Beautiful; cosmetics, and COS, or Collection of Style, which will bow in London next week, but will not be sold in Hong Kong.
Vinge said that, for Asia, H&M has added size 32 (about a size 4 in the U.S.) to its range and also will look at proportions further down the road. “We don’t have all of the answers [about what will be successful in Hong Kong], but we have enough to take the risk,” said Vinge. “We don’t know beforehand what will work. We respect each market, because we know that, even in Europe, each market is very different. The U.S. is a good example, because we thought it was similar to Europe, but we didn’t even break even until the year before last. It took us five years to turn a profit.”
One of the biggest incentives for customers of the Hong Kong H&M was the chance to be first to buy pieces from Madonna’s collection. The singer features prominently in H&M’s advertising throughout Hong Kong, including ads in bus shelters and on subway walls, billboards and trams. (Vinge declined to say how much H&M had spent on preopening advertising, noting that advertising and marketing is always 3 to 3.5 percent of the company’s global budget.) But with such a high-profile ad campaign, it’s not surprising the M by Madonna collection takes pride of place in the center of the ground floor.
In fact, her mostly black-and-white line blends well into the bright space. The ground floor, which features racks of casual separates, accessories, denim and some footwear, is brightly lit, painted in glossy white and highlighted by industrial touches such as matte tile flooring, adjustable spotlights and a two-story-high display cage. Prices, ranging roughly from 19 Hong Kong dollars, or $2.50, for earrings, to 790 Hong Kong dollars, or $102, for an M by Madonna leather trenchcoat, are prominently displayed, and modular tables are employed that can be stacked or arranged according to season, promotion or featured item.
Downstairs, the space is devoted to men’s wear, and runs the gamut from innerwear and accessories to business shirts and suits. The lighting and colors are warmer on this level, which employs steel and dark wood trim. The men’s area also has alcoves in which particular looks are displayed, including layers of “preppy” shirts, but is anchored in the middle by a black “cage” in which more urban looks are sold. Placed on the diagonal, these racks break up the space, as does the sole, asphalt-like carpet.
The second floor features more women’s wear, notably H&M’s main collections of dresses, work attire, workout clothing, eveningwear and innerwear. More industrial touches are added here, like distressed metal boxes and upturned crates used as display accents. The 13 fitting rooms are bright, simple and just big enough for their purpose.
On the third level, children’s wear is the focus, with collections for infants, toddlers and older children all available, as well as maternity clothes. The atmosphere here is sunnier, with grass green carpets and accent walls providing contrast to the gray tabletops and white walls.
Vinge declined to estimate sales for the store, but said the company as a whole likes to take “a pragmatic approach.”
Said Vinge: “There is going to be some adaptation — in everything, when it comes to management, marketing, pricing, sizing and so on. We will have to strike a balance. We will run into a lot of challenges, but our concept has worked well before and will work well again.”