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H&M plans for Indian market

Written By Views maker on June 24, 2011 | 6/24/2011

Swedish fashion retail giant H&M has started work on entering India. The $15-billion Hennes & Mauritz AB, abbreviated as H&M , began business development talks with India's leading mall developers and corporates with interests in fashion as it looks to open the first stores within 24 months, said industry sources familiar with the process.

Global fashion and retail brands have revived their interest in India on hopes of relaxed foreign direct investment norms, and buoyed by the country's relatively robust consumer sentiments as they battle tentative growth in the west. H&M's main fast fashion clothing rival globally and Spanish fashion behemoth Zara made an aggressive entry into India last year, grabbing the attention of its peers worldwide.

Zara has four stores operating and has plans to add more in the near future.

Sources said H&M has had recent meetings with mall developers like Phoenix and DLF besides holding talks with ITC Group and Mukesh Ambani's Reliance. These discussions were informal as H&M is keen on firming up a viable business model for a key growth market like India. An emailed questionnaire to H&M did not elicit any response.

"H&M is at the preliminary stages of firming up their India plan. I will be surprised if we get to see the first H&M stores before fall winter of 2013," said a person briefed on the matter. "They are trying to come up with a business model and are obviously interested in this market after Zara's arrival," added a second source who did not wish to be named.

The Indian government officials have talked up sentiments to reform the country's FDI regulations in retail. At present, FDI is barred in multibrand and general merchandise retail while it is restricted to 51% in single-brand retail. Another iconic Swedish retailer IKEA had dropped its $1-billion India plans until the FDI regime was revamped.

H&M's concerns will include Zara's aggressive 'home pricing' —meaning parity of pricing with stores in Spain—that is 12-15 % cheaper compared to their globel operations. "The common mistake fashion brands do is with regard to pricing in India. Marks & Spencer learnt this the hard way. H&M is known for selling quality merchandise at an affordable price and should keep the Indian audience in mind before deciding their pricing strategy," says R Kannan, president of Ramms, a retail consultancy firm.

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