With growth slowing down, H&M could lose benefits at malls

H&M’s sales and revenue growth have been shrinking every quarter in India. As a result malls which were earlier were wooing the Swedish brand with lower rentals and free fixtures are now bargaining to cut store size and increase rent. As per H&M global investor presentations, in the first quarter ended February 2018, H&M India grew 21 per cent a sharp drop from the 188 per cent growth in the same period a year ago and more than 100 per cent in the following quarters. The brand stated recently that, it was stuck with unsold shirts, dresses and accessories internationally.

The buzz in India is, sales have been flat or declined by around 20 per cent for stores opened more than a year ago and some are looking to tweak store sizes. Janne Einola, Country Manager, H&M India, says in 2017 after expansion in Tier II, III markets and subsequent stores in the same city, there are bound to be differences in sales versus top malls and cities in the country where H&M opened in the first year, the brand sees this as a natural expansion phase.

The world's second largest clothing brand will close 170 shops this year while opening 390 new stores, leading to a net addition of about half the number of stores as last year. H& M turned profitable in its first year of operations in India and clocked significantly higher sales than largest rival Zara in its first year in the country. And unlike its Spanish rival that entered India more than seven years ago and now has over 20 outlets, H&M has been far more aggressive opening about 29 stores even as it entered five years later.