BackMarket recovery to decide launch of new H&M brands in India: Einola
Online will grow in the future as people are not feeling safe going to physical stores, says Janne Einola, country manager for India, H&M.
PremiumAt the end of month, Janne Einola, country manager for India at the Swedish fast fashion retailer Hennes & Mauritz (H&M), will be stepping down from the role that saw him establish business operations here in the last five years. Today, the retailer has 48 stores along with a presence online. Although globally H&M—the world’s second biggest retailer—announced plans to shut 250 stores, in India, Einola said the retailer will expand both online and offline. Edited excerpts from an interview:
You are leaving India after five years. Why now?
It is wonderful country and it has been a fantastic five years. I’m feeling that in the current situation, I would like to take a small break from my work life, after 23 years, and focus a bit on family and spend time on those things that I have not had time to focus on so much and then look into what I want to do in the future. Of course, I understand, that there have been questions if I’m leaving because of the performance. I don’t think that is relevant. We have had a fantastic ride in India, with over 40% year-on-year (y-o-y) growth. We have opened 48 stores in 24 cities, and launched H&M.com and sell on Myntra. All of them doing well.
With India’s lockdown in March, how was your business affected?
If you saw the nine months report (earnings for the nine months ended 31 August 2020), we were down 31% (net sales in India). And of course, Q3 sales (1 June to 31August) declined 50% in India (on a y-o-y basis). Stores were more or less closed for nearly three months; online also for two-and-a-half months. And since the stores have been mainly closed then there is no secret that there has been a big transformation to digital stores.
How much has online gained since then?
Online will grow in the future also because there is still a sentiment in the country where people are not feeling safe going to the physical stores, despite our efforts to make shopping experience as safe as possible. Also, there are still a lot of local restrictions; some of the stores are still closed. Almost none of the stores is working with normal operating hours.
So yes, digital and online stores and the share of that business is much bigger than it was. But how big, I can’t tell.
Currently it is important to understand that online is improving but we believe that physical stores are very important for us—especially here in India, where we have less than 50 stores, we continue to grow them.
Will your store-opening target for India change? Globally, you are shutting stores.
No, it will not change. Before covid, we were opening up one store per month. Now it will go a bit slower because there is so much uncertainty in terms of licenses, lockdowns and restrictions. But we will continue to expand: A good proof of this is we are still opening a store in Lucknow and will continue opening stores next year.
Globally, it's a more like consolidation, because we know that everything has its lifecycle and we are a 70-year-old company. There are stores which are not relevant any more—it's related to the location and changing customer behaviour.
Has covid changed what Indians are shopping for?
During the lockdown we saw much higher interest in kids-wear. Overall, we saw an increase in casual wear, lounge wear and basics. This trend was similar in men and women’s apparel. What was very interesting is that while women are showing a strong interest for casual and lounge wear, they continue to shop for fashion-forward assortments as well.
How will covid change the fashion industry?
Whoever has the right answer will be a very successful person. These kinds of situations always make people think. Some (consumers) of them are changing their behaviour. It's good that people are thinking a bit about their consumption and where they are spending money. It's more a question of how the customer is making that choice—how they decide where to buy clothes from. Even though sustainability is coming to the picture, we still need to buy new clothes for different occasions. And here I believe that the work that H&M has done for many years on sustainability will start to pay off now.
What will be your investment in India for the next five years?
It's difficult to quantify it in terms of money. Over the last five years, we have opened almost 50 stores. I don't see why in the next five years—may be not as many as 50—we can’t still open many stores. Today, everything is looking more pessimistic, but if we talk after one year, it will be very interesting conversation to have. It’s been proved that our business idea is working well. We know that when we launch the H&M loyalty programme (Hello Member) in India, we will have even better conversations and personalized shopping experience for our customers. We have a strong digital store, we are in the marketplace, so we are all set for a successful next five years in the country.
Has covid derailed plans to launch your brands COS, Monki and H&M Home in India?
H&M as a brand has done well here. Of course the other brands are also looking to the market. The pandemic has most probably delayed these plans a bit. We should not talk till everything is clear, but we have a lot to do in India. From H&M (Group), we are missing categories like home, beauty here. We will follow the situation and when it is the right time to make those investments, then we will do it. The good thing is: currently the FDI environment supports a lot of decisions about putting money into India and growing here.
Now the question is, how will the market recover? What kind of actions the government is taking so that consumption and GDP growth will continue to be strong in the future? And this will decide most probably when the new brands will also come.
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