By  on September 11, 2008

TOKYO — Hennes & Mauritz unveiled its new flagship in Ginza on Thursday, making its much-anticipated debut in the competitive Japanese retail market.

The four-level store, which covers an area of 10,764 square feet, occupies the lower portion of a new building that houses restaurants and offices on the upper floors. H&M joins a diverse block of merchants along Chuo Street, including Zara, Salvatore Ferragamo, Lanvin and Mont Blanc. H&M feted the store Thursday evening with a party and the doors will open to the public Saturday.

In November, H&M will open a second store, in the trendy Harajuku neighborhood, coinciding with the launch of a special collection designed by Comme des Garçons creative director Rei Kawakubo. A third store in Shibuya is planned for fall 2009.

H&M chief executive officer Rolf Eriksen said it is too early to estimate how many more stores the fast-fashion retailer could open in Japan. But the executive said he sees plenty of untapped potential in the country, poor macroeconomic conditions notwithstanding.

“We’ll take it easy in the beginning. But if we succeed, we can see huge potential in Japan,” Eriksen said. “We are new on the market. I think that will be exciting for the customer.”

The Ginza store features minimalist white walls and black shelving units and displays. Women’s apparel and accessories occupy the top three levels while the basement level houses a men’s wear department furnished with oriental rugs. Retail prices range from 799 yen, or $7.44 at current exchange, for a basic T-shirt, to 15,990 yen, or $148.98, for a flared trenchcoat.

Eriksen declined to release sales forecasts for the store or H&M’s business in Japan since the company is in a blackout period before releasing third-quarter earnings Sept. 30. But he said the Ginza store’s sales per square foot should be comparable with that of H&M’s flagships on Fifth Avenue in New York and Boulevard Haussmann in Paris.

H&M is entering a highly competitive market since there are numerous small retailers and local chains in Japan skilled at churning out affordable and trendy clothes. These brands, with names like Cecil McBee, Lip Service and Another Edition, populate shopping complexes like Shibuya 109 or Harajuku’s La Foret and attract throngs of young fashion-conscious Japanese. Last Saturday, thousands of women packed into a former Olympic stadium to watch these brands’ fashion shows at the biannual event Tokyo Girls Collection.

H&M will also compete here with the Gap, Zara and Mango, its storied rivals in Europe and the U.S. The Gap posted sales of 67.4 billion yen, or $627.96 million, in Japan in 2007. It entered the market in 1995, while Zara arrived three years later.

Still, Ann-Sofie Johansson, H&M’s head of design, said she doesn’t feel any added pressure to keep up with the frenetic pace of fashion in Tokyo.

“There are slow trends and then maybe some quick ones that are reduced really quickly and you’re tired of them in a couple of weeks,” she said. “Sometimes it’s no use jumping onto these quick things either.”

Eriksen said H&M is still in the process of testing the Japanese market.

“We know when we are entering new markets we have to do some adjustments. I believe that will be the same in Japan — that could be size-wise or it could be the balance between the different concepts we are selling,” Eriksen said, adding he’s encouraged by the performance of the brand’s first two stores in Asia, in Hong Kong and Shanghai, which opened last year.

Meanwhile, H&M is gearing up for another major strategic step in Japan with the Shibuya opening and the launch of the Comme des Garçons’ one-off collection. Margareta van den Bosch, who oversees H&M’s designer collaborations, said Kawakubo has played an active role in the patterns and design of the collection, featuring a lot of navy and black as well as her signature unique linings and men’s wear buttoning.

“I like that she made such a typical Comme des Garçons collection for us,” she said.

— With contributions from Kumi Matsushita, Tokyo �

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