Economic Times: September, 2015
Stockholm: Karl-Johan Persson is a fashion mogul with understated aggression. It's on display as the 40year-old billionaire and chief executive leads Hennes & Mauritz AB, better known as H&M, on conquering fashion retailing in India.
"We enter markets irrespective of the size and potential. Our aim is to provide something fantastic to the consumer," Persson tells TOI in his first interview to Indian media. However, he adds: "India is probably the most interesting market in the world where we are not present yet. We have huge hopes."
On his watch, Swedish giant H&M has emerged the most potent disruptor of fashion retailing globally . H&M has revved up US and stormed China markets to deliver strong double-digit growth in recent years, baffling its rivals.
Persson -himself a former tennis player with Stefan Edberg like persona -is unperturbed even as the world talks about a slowdown in China's economy and its reverberations elsewhere. "We invest in the long term and I am not worried about China currently ," he says as the Asian powerhouse has the largest share of the 400 H&M stores added annually .
Arguably the biggest name in fast fashion, H&M operates 3,900 stores across 59 countries, generating $22 billion in revenue.
H&M is the first international fashion retailer to enter India alone after government allowed 100% foreign direct investment in single brand retail. Its launch, starting with the first store in New Delhi in early October, is being closely watched by fashion and retailing industry experts. It had announced plans for 50 stores and $115 million investment when it received the government nod in early 2014, but didn't any mention timelines for the same.
H&M's aggressive pricing for the Indian market -average pricing of t-shirts at Rs 799, denims at Rs 1,999 and outerwear at Rs 2,999 -and its agility in striking real estate deals to build a store network may worry many home-grown, mainstream fashion retailers. "They are showing a clear intent, but how well they execute the strategy , especially beyond top metros, must be seen," a CEO at a rival fashion retailer argues.
Spanish rival Zara has 18 stores in nine cities five years after entering India. US fashion retailer Gap is promising a faster expansion with 10 stores across four cities in the first year of operations.
Persson didn't dwell on the details of the pricing strategy , but said the company tries to maintain a consistent price across markets, excluding some fluctuations due to currency volatility."We want to be honest and fair about our pricing. We don't believe in raising the price or dropping the quality for short-term benefits. We constantly work on improving efficiencies and plough it back," he says, helming a fashion empire founded by his grandfather Erling Persson seven decades ago.
Persson says the company will bring in e-commerce and m-commerce channels in sync with the huge interest in the country's digital market."We are awaiting certain developments on the size and scope of our digital stores before deciding on our e-commerce and m-commerce plans. We will work on an omni-channel model -connecting the consumer, physical stores and online," he adds.