We are in dialogue with govt on sourcing norms: H&M’s Janne Einola
H&M’s Janne Einola on the brand’s pricing strategy, strongest markets and why India needs to alter its sourcing norms
New Delhi: Janne Einola is confident that the Swedish fashion retailer Hennes & Mauritz (H&M) will soon be the biggest international apparel retailer in India on the back of its new online store, outpacing Spanish fast fashion brand Zara. The 43-year-old has been working with H&M for 21 years and has been spearheading India business as country manager ever since it launched in 2015. The company has just launched its e-commerce platform, in line with the global strategy of online expansion. H&M also plans to open around 17 new brick-and-mortar stores in India in addition to its online store. The company had nearly doubled annual sales in India between December 2016 and November 2017 to about Rs950 crore from Rs491.5 crore.
In an interview, he talks about the brand’s pricing strategy, strongest markets and why India needs to alter its sourcing norms. Edited excerpts:
Aren’t you a little late in the day in launching your online store, given that your rivals already have online operations?
It is early instead. We are one of the first brands that are here on 100% FDI and we are one of the few who are actually launching our own online store. We want to have a home store where we can guarantee the quality of products. Online store is a big milestone as a part of our expansion. With this launch, H&M brand will get more visibility and we can reach the locations where we are not physically present.
The online store is hm.com. We have the same store in 44 global markets and India is the 45th. The online shop will be available for everybody across India. The delivery time for tier-I cities like Delhi Mumbai, Bangalore, Chennai and Hyderabad will be one to two days and for tier-II, it will be three to four days. The delivery fee is Rs149 and the return policy is 30 days.
How has your pricing strategy worked out in India? Do you plan to alter it?
Our prices have been the same ever since we launched in India. We did not come with India-specific prices. These are global prices and so is the collection. We don’t see any need to touch the prices. Currently, what we are looking at is to offer best quality products in a sustainable way. Our starting price is Rs299 in kids’ segment, Rs399 in both women and men.
Which are your strongest markets?
India is one of the fastest growing markets for the company. We have been longest in Delhi and we are happy with the sales in all tier-I cities. Tier-II cities are the new markets where we are entering. Chennai is a market that surprised us the most, given the notion that it is a traditional market. We have 29 stores in 12 cities. Last year, we opened 17 stores and we will do around the same number this year as well, depending on availability of space. We have just opened up in Mysore and Ahmedabad.
How has the Indian market changed over the years?
Digitization has changed a lot of things globally especially the behaviour of customers. It’s no longer enough to just have a good product or a good price; it is about customer experience. We have to make it easier for the customers to shop and enhance their experience.
India has changed in terms of ease of doing business. Good decisions have been taken by the government. There were relaxations in the FDI policy.
In terms of fashion, with the emergence of social media, fashion here is no different than fashion globally. Customers are following Indian as well as global celebrities and are excited about global fashion as soon as it enters our stores. We do see an interest for more colours in India.
How do you think the recent changes in FDI policy and sourcing norms will help international retailers like you?
It doesn’t really change things; it just gives more time. For the first five years, you can set off the overall sourcing with global sourcing. The changes will enhance the investment interest of many companies for India.
However, there is a room for improvement when it comes to the sourcing norms as these are not really fair. If a company enters with offline stores, it has to comply with the 30% local sourcing norms, even if it is sourcing more than that for global operations. But if it comes via online mode, it doesn’t need to comply with the sourcing norms. This doesn’t really make sense.
We are also in dialogue with the government on sourcing norms. We have been sourcing from India for 30 years; this should be taken into account. Where you source from should be the criteria, not where or what you source for.
How much do you source from India for local and global operations together?
Let’s just say that if we are earning Rs950 crore from here, the sourcing is many times more, in terms of value.
What is India shopping for?
A lot of colour and prints. This summer will be dominated by floral prints. People are strongly going for such dresses. There is also a strong demand for basic wear (everyday wear).
Our studio collections are liked by customers. When I was here to see how the market in India works for the first time, there was a lot more traditional wear than there is now. There has been a tremendous growth in western wear segment in the past few years.
For 2018, which segment is your biggest bet?
Kids and ladies. We are huge in the women’s section; 70% of the customers who come to our stores are women. We are looking at huge growth in the kids’ section, which is a combination of market development and our good quality products. These two will be our biggest drivers.
Where do you shop?
Everything I have in my wardrobe is H&M. I have a few trousers and a sweater from COS (another H&M group brand) but mostly, I wear H&M.
What is your own style?
White shirt and (any) pants. I used to wear denim pants with a white shirt and blazer but India is too hot for blazers.
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