H&M reduces store size to beat expensive realty and space crunch at malls

NEW DELHI: Swedish clothing retailer Hennes and Mauritz (H&M) plans to reduce its several of its upcoming store sizes in India by nearly half due to expensive real estate and space crunch in leading malls, multiple sources told media.

Many of the new stores will be in the range of about 15,000-17,000 sq ft, one of the smallest globally for the fast fashion giant that otherwise operates sprawling outlets spread over 25,000-50,000 sq ft space.

“There has been a shift in their internal policy. They are looking for flagship stores in various cities in the range of 30,000 sq ft and all the other stores will be around 15,000-17,000 sq ft,” said a person familiar with H&M plans but asked not to be identified.

“They have realised real estate is expensive and it is difficult to get space. Therefore, they have decided to reduce the size and the proportion sales and size don’t go hand in hand here.”Currently, Hennes and Mauritz Retail, a fully-owned subsidiary of the world’s second largest fashion retailer, operates six stores in India in Delhi-NCR, Bengaluru and Mohali each in the range of 25,000-37,000 sq ft.

“The availability of attractive business locations is the major deciding factor in our rate of expansion, The best business loca tion is so important that we would rather hold off from opening a new store and wait until the right location becomes available.We see tremendous potential to open many more stores in India which will be is determined by real-estate opportunities and retail market development,” a H&M spokesperson said in an email response to ET’s questionnaire regarding the reduction of store spaces due to high realty prices.

The H&M store in Noida is spread over 40,000 sq ft where as Mohali is spread over 26,000 sq ft space.

The H&M stores in Mumbai opening this fall at High street Phoenix and Phoenix Marketcity are spread over 30,000 and 37,000 sq ft respectively, the company added.

In 2013, H&M received government approval to invest Rs 700 crore to roll out H&M branded outlets in India. The company has said it plans to open about 50 stores in India over the years. H&M competes with Spanish rival Zara and US-based Gap for India’s rapidly growing fast fashion market. India’s $10-billion branded apparel market is growing at 10-12% per annum, a recent report from Antique Stock Broking estimated.

A head of a prominent mall in Mumbai says H&M clocks revenue of about Rs 12 cro says H&M clocks revenue of about Rs 12 crore per month from its 25,000 sq ft in the Select Citywalk Mall in Delhi, while Zara generates Rs 10.5-11 crore from its 17,000 sq ft shop in the same mall.

“So the per sq ft sales for Zara is much better and the yield for developer from H&M is lower,” the mall head on condition of anonymity. “Since the developers have revenue sharing (arrangements) with the brands, some of the malls are now committing smaller space for H&M as their initial hype is over.”

The Mumbai mall executive said even Forever 21 is pruning the size of its stores in India. “Forever 21 is also looking at smaller sizes from their usual 15,000-20,000,” the executive said. “Their recent opening in Bengaluru is almost like half at 8,000 – 9,000 sq ft. This is what I would call right sizing for India.”

Credits ET Realty

Leave a Reply

Your email address will not be published. Required fields are marked *