H&M Gets Pric­ing Right, Sales Surge

Sell­ing mer­chan­dise at lower prices than Zara helps co log sales of ₹ 460 cr in just 6 months Fash­ion For­ward

The Economic Times - - Brands: Creating Desire - Sa­gar.Malviya@ times­group.com

Mumbai: Swedish fash­ion re­tailer Hennes & Mau­ritz’s sales in In­dia dur­ing the six months ended May ex­ceeded that of its en­tire pre­vi­ous fi­nan­cial year af­ter sell­ing mer­chan­dise at rel­a­tively lower prices than ri­val Zara.

H&M clocked sales of ₹ 460 crore in the six-month pe­riod com­pared with ₹ 445 crore dur­ing De­cem­ber 2015-Novem­ber 2016, the fi­nan­cial year it fol­lows, ac­cord­ing to a re­port on its web­site.

With about 16 stores each gen­er­at­ing an av­er­age of ₹ 16 lakh per day in sales, H&M’s per­for­mance is among the best within the ap­parel space in the re­tail mar­ket. Span­ish chain Zara, which opened its first store in In­dia in 2010, had set the bench­mark as the fastest-grow­ing — and now the big­gest in­ter­na­tional ap­parel brand in In­dia — with sales of ₹ 1,023 crore dur­ing FY16-17. Levi Strauss and Benet­ton, which have been around for two decades, and Marks & Spencer, which started a decade ago, had sales of ₹ 700-800 crore. Fabindia re­mains the big­gest lo­cal life­style brand, with sales of ₹ 918 crore in the year ended March 2016.

“At the cur­rent rate, H&M should cross ₹ 1,000 crore in the cur­rent fis­cal. The brand po­si­tion­ing is right in a price-sen­si­tive mar­ket like In­dia,” said Ruchi Sally, di­rec­tor at Elargir So­lu­tions, a re­tail con­sul­tancy.

H&M, the world’s se­cond-largest cloth­ing gi­ant, had said it will open 50 stores in In­dia with an in­vest­ment of ₹ 700 crore by 2020.

The re­tailer stocks fast fash­ion items cre­ated in-house and teams up with de­sign­ers for one-time col­lec­tions. It keeps a large in­ven­tory of ba­sic, ev­ery­day items sourced from places in­clud­ing In­dia and Bangladesh that carry a lower price tag than most of its ri­vals. In com­par­i­son, Zara em­u­lates the lat­est fash­ion, makes af­ford­able ver­sions and stocks them for a very short span of time. H&M’s en­try into In­dia prompted Zara to slash prices by 10-15% for some of its mer­chan­dise last year. The In­dian re­tail mar­ket was worth $641 bil­lion in 2016 and is ex­pected to reach $1.6 tril­lion by 2026, ac­cord­ing to the In­dia Busi­ness of Fash­ion 2017 re­port.

As the world’s se­cond most-pop­u­lated coun­try, In­dia is an at­trac­tive mar­ket for US and European brands and has at­tracted some of the world’s largest pri­vate la­bels that are bank­ing on young con­sumers in­creas­ingly em­brac­ing western­style cloth­ing. Ecom­merce com­pa­nies could have added to their sales as well, con­sid­er­ing that ap­parel ac­counts for 2535% of over­all sales for Ama­zon, Flip­kart and Snapdeal. Zara will launch its on­line store in In­dia this Oc­to­ber while H&M plans to en­ter the on­line mar­ket by 2018.

16 stores, each gen­er­at­ing about 16 lakh per day

Zara posted sales of

in FY16-17 Levi Strauss, Benet­ton re­ported sales of 700-800 crore

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