H&M to expand operations in Tier-II cities

H&M to expand operations in Tier-II cities

The retailer has been growing at an average rate of one store a month since it entered the market four years ago in 2015

At a time when slowdown has gripped most companies with them putting out conservative growth forecasts, H&M is a surprising story of success in India. Over the last four years, the Swedish fast-fashion clothing retailer has grown to 42 stores clocking in Rs 1,100 crore of sales revenue.

India is one of its fastest growing markets and it expects the pace to continue. H&M sales grew by 39 per cent to Rs 380 crore in Q2 of the financial year December to November 2018.

It will now focus on the Tier-II cities for the next leg of growth. "Today, we are 70 per cent in Tier-I cities and 30 per cent in Tier-II cities. In the long term, we want to be a pan-India company. It means that we will not be concentrated in the metros but will be equally distributed between Tier-I and Tier-II cities," says Janne Einola, Country Manager at H&M India.

However, he adds, that they haven't decided which cities they will expand to. "Opening a new store depends on finding the property that meets the space requirements, and if it has all the required compliances and permits in place. Unfortunately, these things are not so clear in many places." Most of the H&M stores are large format stores, with the average size of 2,200 square meters.

The retailer has been growing at an average rate of one store a month since it entered the market four years ago in 2015.

Earlier this week, the firm partnered with fashion e-tailer Myntra to complement its offline and digital presence. The H&M's online store on Myntra will have over 15,000 products that will be it biggest assortment in any store.

"We entered the partnership because it seems the consumers here are very interested in the digital experience," said Fredrik Olsson, Managing Director, H&M. Online sales in India are slightly higher than their global average of 15 per cent.

"We will continue to invest in online and to invest in creating a seamless experience for customers here in India," said Olsson.

On India's growth potential, he added, "We are very happy to see the high growth here. I believe it's a combination of things. Our business model works here. Our fashion and quality at the best price in a sustainable way seems to be a good match with Indian consumers."

He said, "People here are very fashion oriented, they quickly adapt and follow trends than we see in other metropolitan areas in the world."

The firm has committed to invest up to Rs 700 crore in India. It has used the funds to open its new stores, hire and train its workforce of more than 2,000 people.

In March, 2018, the company had launched its own online store to reach a wider market.

"This market is so interesting, because you never know what is happening. You just need to take what you get," says Gurgaon-based H&M India head Einola. 

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