H&M, Topshop in final India retail push

MUMBAI: Swedish fast-fashion giant Hennes & Mauritz (H&M) has asked leading mall developers to block space for its initial stores in India, as the world's second largest fashion retailer hopes to open a local office in the next three months. British billionaire Philip Green owned Topshop is another foreign retailer finalizing plans to enter the country through a local joint venture, as global biggies revive interest in India on the back of recovering consumer sentiments and the recent reform push.
India allowed 100% foreign direct investment (FDI) in single brand retail, a route which H&M would take to enter this market just like its Swedish peer furniture retailer Ikea. H&M's international expansion head Frederik Olsson has frequented the local market in the recent past, asking leading mall developers like DLF and Phoenix Market City to block potential store locations, said people directly familiar with the matter.
"H&M is likely to open an India office within three months after they move the Foreign Investment Promotion Board," said a source who did not wish to be named. H&M's chief executive Karl-Johan Persson while announcing the company's quarterly earnings recently said the retailer would enter India on its own, and was ready to meet 30% local sourcing norms.
UK's Topshop, which came close to partnering the Tatas five years ago, has revived India plans and is close to firming up a local joint venture partner. "We are actively speaking with a number of parties about the market, but as yet nothing is confirmed," said a spokesperson for Topshop. An H&M spokesperson declined to comment on future plans.
These developments come even as Japan's Uniqlo is moving towards striking a joint venture with Arvind, while American retailer Gap Inc has made moves to identify its best possible market access. H&M and Uniqlo could open maiden stores in the first half of 2014. Another iconic US retailer Abercrombie & Fitch has started work to enter the country, possibly through the 100% FDI route.
The New York-listed A&F's Hong Kong office has begun work with leading real estate consulting firms to explore an entry strategy, said sources cited earlier. An emailed query to Abercrombie & Fitch remained unanswered. Notwithstanding the reviving euphoria, India still represents a complex market for most retailers, with real estate costs among the most expensive in the world. Zara, part of the biggest global fashion conglomerate Spain's Inditex group, opened nine stores in an aggressive three year expansion. But Zara's 18,000-sq-ft stores, which pay a fixed 6% fee on sales to mall owners, have not gone down well with many developers in a market with huge shortage of quality retailing locations. The mall owners who in the past chased Zara, even offering to take up store fit-ins, have cooled off, with some preferring to wait out for the newer global entrants like H&M, Uniqlo and Forever 21 while deciding on space allocations for the next 24 months.