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Within four years of entry, H&M has emerged as the fastest expanding international brand on India’s retail scene, setting example for followers and challenging predecessors. Sanjay Bakshi takes stock.

Sweden’s H&M is the world’s second largest fashion group after Zara. The SEK 210 billion (€19.98 billion) group began its journey in late 1940s as a small garment store for women. Since then, it has shown a steady growth. With an employee count of more than 123,000 in 2018, the fashion group runs over 4,500 physical stores in 71 markets and has an online presence in 47. The group, dominatingly driven by flagship brand H&M, offers a portfolio of eight other distinct brands: COS, Monki, Weekday, Cheap Monday, & Other Stories, H&M Home, Arket and Afound. The group is also among the few ones committed to achieving the sustainability goal it has set. The other interesting fact of the group’s culture is that three-fourth of its employees are women.

The Global Level

H&M’s global sale for 2018 was SEK 210,400 million (₹1,580.10 billion). The sale has grown at a CAGR of 9.7 per cent between 2011 and 2018, but its operating profit in percentage terms has more than halved from 18.5 per cent in 2011 to 7.4 per cent in 2018. In value terms too, its profit has reduced to SEK 15,493 million in 2018 from being SEK 20,379 million in 2011. Operating with an average trade margin of 55 per cent, the group has expanded its global store count from 2,776 to 4,968 at a CAGR of 10.5 per cent during the same period.

In terms of markets, close to 70 per cent of the group’s business comes from Europe and Africa. The European market is very strong and oldest in its portfolio. The sales contribution of Asia and Oceania region are the least, comprising developing markets such as India and China which are at various stages of H&M penetration. The fashion group considers India, China and Mexico its major growing markets.

While global retail is growing at a 5–7 per cent rate, the digital revolution has deeply influenced how customers shop these days. H&M Group, therefore, is investing heavily in improving its digital space to provide better experience to customers. The growing demand for digital space has pushed the group to close down stores in those markets where store growth came to a saturation point or virtual halt.