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H&M Eyes Latin American Expansion

Retailer last week opened a 44,600-square-foot store in Mexico City’s luxury Santa Fe Mall.

MEXICO CITY — “We can have many stores in Mexico,” said Daniel Kulle, North America president for Swedish fashion retailer H&M, which last week opened a 44,600-square-foot store in Mexico City’s luxury Santa Fe Mall.

The store, H&M’s second-largest after its 58,400-square-foot location on the Las Vegas strip, will be the first of many in Mexico, Kulle predicted, adding that the retailer hopes to open several more in the fall of 2013.

Kulle would not provide a precise count, adding that “nothing has been signed yet.” However, an H&M spokeswoman said the firm is scouring Mexico for new locations and that the store additions could be significant, depending on whether the right retail spots are found.

The Santa Fe store will contain the first in-store H&M Home shop in the world, the spokeswoman said, adding the space should be ready next spring.

The three-story store is also home to H&M’s first in-store quality lab, where customers can watch technicians test the retailer’s products.

Location was not the only factor persuading H&M to make Mexico its regional launching pad.

Not only is the country Latin America’s second-largest economy, with 120 million people, it also has an easier legal framework and lower import tariffs and barriers than other Latin-American nations, at least when compared with Brazil, where high duties and import red tape have kept many retailers out of the market. As Argentine President Cristina Fernandez steps up her protectionist agenda, that country, too, has become a difficult market for international fashion retailers to enter.

Mexican consumers also have great awareness of the H&M brand. According to Kulle, the country has the fifth-largest number of H&M Facebook fans globally, and 50,000 Twitter followers

After hiring 200 people and launching one of the “most ambitious” introductory marketing campaigns in the world, Kulle added Mexico “will be a very important market for us, which we hope to penetrate fully.”

Chile will be H&M’s next Latin-American market. The retailer plans to open a 34,000-square-foot store in the country’s capital of Santiago next spring, Kulle said. He would not provide a specific opening date or detail more expansion plans for Chile. The store will be in the Providencia quarter’s Costanera Center shopping mall.

Kulle said H&M is actively looking at other expansion markets in Latin America but would not reveal which ones. He reiterated the chain plans to grow its retail presence by 10 to 15 percent a year as it continues to expand its global network of 2,600 stores.

But unlike rivals such as Gap and Inditex (which have more ambitious and detailed Latin-American-expansion programs) Kulle said H&M’s main growth markets will continue to be China, the U.S. and Europe.