NEW DELHI – Hennes & Mauritz AB opened here to enormous shopper turnout on Friday, marking not only its entrance into the market but also the continuing evolution of the nation’s retail landscape.
Marking the importance of the Indian market, H&M’s chief executive officer Karl-Johan Persson flew in for the opening of the 25,000-square-foot store at New Delhi’s Select Citywalk mall. “I’m here for the opening. This is one of the most exciting openings — ever,” he told WWD.
India’s retail market is expected to nearly double in size to $1 trillion by 2020 from $600 billion in 2015, according to a report by the Boston Consulting Group and Retailers Association of India.
H&M is also the first brand to open in India on this scale under the Indian government’s policy of allowing 100 percent foreign direct investment in single brand retail, which was approved in 2012. In its application to enter the market, the retailer said it would invest 100 million euros, or $112.2 at current exchange, to open 50 stores in India. The FDI rules also mean H&M must source at least 30 percent from India.
“We have already been sourcing extensively from India for the past 30 years,” Pernilla Wohlfahrt, the retailer’s head of design, said, “and we are continuing to grow between 10 and 15 percent a year. Sourcing will continue from India.”
Launching on a national holiday as the country marked Mahatma Gandhi’s birthday, the brand offered prizes for the first shoppers as well as opening discounts, four-page newspaper advertisements and low prices that analysts believe represent a turning point for modern Indian fashion retail. H&M’s T-shirts start at 399 rupees, or $6 at current exchange, and the store also offers women’s, men’s and children’s wear, shoes and accessories.
But while H&M is breaking some ground, it is somewhat late to the Indian market. Zara entered the market five years ago and crossed the $1 million revenue mark in March with more than 16 stores in India. One of the highest-grossing Zara stores is located within the same mall as the new H&M.
Gap launched in India in May, with a single store, also located within the same mall, while Forever 21 has been in India for two years with a store located in the adjoining DLF Place, Saket.
But these retailers entered the market with joint venture or franchise partners, rather than wholly owned stores. Zara has a joint venture with Trent Ltd., a subsidiary of Indian conglomerate Tata Ltd., and Gap launched with a long-term franchise agreement with Arvind Brands, a subsidiary of textile major Arvind Ltd. The U.K.’s Topshop and Topman launched last week, but have chosen an e-commerce route with e-tailer Jabong.
“It’s not a race that we have to run,” Persson said with quiet confidence. “We often get that question, ‘Why are you late in entering the market?’ and ‘Why were you not first on the market?’ But we don’t care that much about that. When we enter a new market we want to do it at a pace that we feel confident that we can give quality, recruit the right people and so on. That’s the most important thing — not the amount of stores or who is first. It is important to give customers more fashion, more products, more sustainability, at the right price points. So we constantly invest in making it better. When we enter a new market we want to have the best offering.”
Speaking of the India launch, Persson said India was an important market with “a lot of interest in fashion. It also has a huge population with diverse styles and that fits well with our business model, because we offer a lot of diversity. We offer also a lot of value for money, which fits in all markets, but India as well.
“The supply of retail space is happening at a rapid pace with a lot of new shopping malls being built in India,” he said, adding that Asia continues to be an important focus for the retailer.
Although he did not share specifics about the number of stores that will open in 2016, he said two more units would open in India shortly, including a second store in New Delhi and another in Bengaluru.
The new H&M flagship offers women’s wear on the ground floor of the store, representing about 60 percent of the store, with men’s and children’s wear on the first floor.
Wohlfahrt said the selection offered was the same as in Paris and New York, tweaked by weather considerations. “We think that people are very interested in fashion all over the world so we try to focus on the global trends. So you might have more transitional, not too-heavy garments here to cater to the weather. This is a new market for us, and we will watch closely to what people like here,” she said.
H&M has already opened in several new markets this year, including Peru, Taiwan and Macau, and will open in South Africa this month.
The target of opening 400 stores in 2015 has been speeding along, with 240 more to go in the coming months. These include both new markets and existing markets, where H&M has been growing aggressively, such as in the U.S. It is a target that will be met, Persson said.
In 2014, the retailer opened 379 stores and plans to increase the number of stores by 10 percent to 15 percent each year.