 "Janne Einola")
A day before the scheduled launch of its first India store, in Select City Mall in south Delhi, H&M is on everyone's lips. At the entrance to the mall, the logo of H&M, as the world knows Swedish fashion retail chain Hennes and Mauritz AB, is at the top, followed by that of Zara, its biggest rival in Europe. Not only has H&M's global chief executive Karl Johan Persson come down for the store's launch, a quick preview of the 25,000-sq-ft outlet shows it is filled with specialist sales training staff from Estonia to Helsinki, Stockholm to Berlin. They have been coaching and getting things done the H&M way for about three weeks. Expecting an Apple-like frenzy for discounts and freebies ahead of the store's launch, the chain requested the mall owners not to shut the doors through the night and allow the crowd to queue inside. H&M India CEO Janne Einola speaks to Karan Choudhury & Nivedita Mookerji on the chain's India plans. Edited excerpts:
Why did it take H&M so long to enter the Indian market? Was it because of the government's policies or because you needed the business climate to improve back home?
The proposal for FDI (foreign direct investment) was approved in April 2014. After securing permission, we had to assess the resources and the right to open a market. For us, this was the right time to open in India and enter our 16th market. We have to ensure our stores are in line with local rules and regulations and in compliance with Indian guidelines. It takes time to do things the right way.
Another reason is when we enter a new market, we have to ensure the quality of the H&M brand is maintained.
What are your expansion plans?
Globally, our target is to grow 10-15 per cent a year. This year, we are opening 400 stores worldwide. Another store in India will be opened in Vasant Kunj (Delhi) by the end of this year.
Are you doing anything special for the Indian market in terms of your fashion apparel line?
Our product line-up, design and quality wise, is the same across all markets.
What kind of crowd do you expect on Day One?
H&M store openings are always exciting. Three years ago, we saw similar excitement in Baltic countries - Lithuania, Latvia and Estonia. People were queuing for 48 hours straight.
In India, I cannot put a number to it. But I know there will be a long queue outside our store on Day One. We have a Facebook page on which around 23, 000 people have said they will come to our store tomorrow (Friday, October 2). As it is a public holiday, I am sure we will have a great footfall.
You have said you will open 400 stores globally. What is India's share of this number?
In Bengaluru, we will open a store in 2016; it will be one of our biggest stores in India. This year, we will open only two stores in Delhi. Our aim is to provide fashion apparel at the best price and grow in a sustainable way pan-India. The timeline of opening stores depends on the type of locations we find. We only open stores in prime locations; these have to be according to our requirements.
So far, both the stores to be launched in India are in malls. What about high-street plans?
Our store concepts are such that we can open different kinds of stores. We are looking at all major cities in India and talking to owners of high-street commercial properties. There is no thumb rule on the size of the store. It could be as small as 16,000 sq ft or as big as 50,000 sq ft.
Do you plan to target Tier-II and Tier-III towns?
We want to be a pan-India company and offer our quality products at the best prices. We could go to Tier-II and Tier-III cities. We have huge respect for this market and if we find a project that interests us, as well as the right premises, we will definitely explore that area. But currently, the largest number of malls is the five biggest cities.
What is the total number of stores you plan to open in India?
The number mentioned in our application is 50, but the number of stores we will open depends on how the market develops. We could open more than 50.
What are your plans for the festive season?
Every business plans to give special discounts during the festive season. For Diwali, we have a couple of things lined up, which will surprise our customers. But more than discounts, we are pricing our products well for the long run. For instance, our men's denim range starts at Rs 999 and that for women at Rs 699.
Where are you sourcing your products from?
We source 80 per cent from Asia and 20 per cent from Europe. India is a major sourcing market for us. We have been here for the past 30 years (as a company sourcing for global markets). Under the single-brand retail FDI norms, we have to source 30 per cent more from Indian manufacturers. We will increase sourcing and comply with the norms through the next five years.
Do you plan to take your business online?
Currently, we aren't allowed to do that. In the future, we hope it is given a go-ahead, as it is a natural part of the business. For now, we are focusing on opening stores. At some stage, we will look at the online segment, too, as it is an area that interests us. We will not use other online marketplaces to sell our products.
What are the biggest challenges you face in India right now?
There are challenges in all markets. In India, the biggest is to find prime locations for opening stores.
There are other major players in the market, such as Zara and GAP, with which compete globally. How do you look at competition?
Competition is good. We focus on what we are doing and take it forward. Not only Zara or GAP, many local players are also our competitors and we have huge respect for all of them. Online stores are major competitors, too. But I believe when people come to our stores and look at the fantastic line-up, they will realise it's a lot better to come here, explore and buy.
