“We’re always interested in opening more stores”

Swedish fast fashion chain H & M – Hennes & Mauritz AB – is upbeat about its two new stores in Macau. One has newly opened in The Venetian Macao, while another is soon to open its doors in Galaxy Macau Phase II. In an interview with Business Daily, the company’s Country Manager, H & M Greater China Magnus Olsson said it is still confident in China’s fast fashion sales despite slower economic growth Stephanie [email protected] When did H & M first plan to open a store in Macau? We’ve looked at the market for a while. But for us it’s important as well that when we open a new store – in this case, in a new market – that we are doing it in a very good location. We don’t see any concerns. We don’t see any problems. As with so many other things, now the opportunity came and in a way that fits us. It’s just natural business that you need to find a combination of what’s available and what you want. Sometimes it happens quicker, and sometimes it takes a bit longer. Declining gaming revenue has impacted many businesses. What are the prospects for the H & M stores here? We’re extremely excited. We expect a lot from these two stores here. We have also read about the diminishing gaming revenue but for us at this stage it’s very difficult to relate back to how that could influence us. But we think we will do really, really well. I think we’re offering garments and fashion that is very attractive, with quality offered at the best price. This is the way that will always have the opportunity of selling really well, and that I think is the main approach, so to say. Apart from stores in The Venetian and Galaxy Phase II, has H & M planned any more stores for Macau or other H & M owned brands like COS? We’re always interested in opening more stores if the right opportunity comes along. We have discussions and we have a pipeline of projects to talk about. But for now we would like to focus on these stores [in Macau] and celebrate entering the Macau market. Is it true that this year H & M is planning to open 80 new stores in Mainland China, as a Jones Lang LaSalle report says? The truth is we don’t really know yet. Because we’re all having quite a big pipeline. We have a high ambition level, and we opened up more stores last year. But exactly how many will be there it’s difficult to say at this stage because some will be delayed, some will be added and some will disappear from the negotiation list, so to say. The thing for us is not the number [of shops] that’s important. The more important thing is to do the right thing. So we don’t necessarily want to commit to a certain number and then feel we need to open up to the number because we’ve promised it. For us, it’s more important that we open good stores and then make products to offer to customers where they want us. We have a very long-term view in everything we do. And for us it’s absolutely crucial to make sure we grow together with Chinese consumers and become an appreciated company. Did the slowing economy and weakened consumer sentiment in Mainland China translate into slower sales growth for H & M in the Mainland last year? Our view is that the growth in China is still, internationally, at a very high level. Another part is that we still have a growing market with the offer we have. I’m optimistic about the future of China. We don’t necessarily see a correlation between the slowing economy and sales. What about the sales prospects for the whole of the Greater China market this year? I’m very optimistic about the future. We see that consumers appreciate what we offer. We see that H & M is a well-known brand even in cities that we do not have stores in. And we see that disposable income continues to grow and we have a good offer. Chinese consumers are very fashion focused. They are very savvy. They read and study. They know a lot about fashion and trends. Chinese consumers look for a good deal, and they know what a good deal is all about. And we see that we benefit from that. Knowing that we offer high fashion – everything from modern basics to the latest trends as well as to very attractive price points with good quality; it’s something that customers appreciate. And we can also see that there’s a growing awareness of which retailers are offering products in a sustainable way, which we are paying lot of attention to. This month, China implemented a new import tax cut policy, which also covers items like suits, fur coats and shoes. How does that affect H & M’s retail pricing? When we are setting the price of the product, it’s based upon what is the best customer offer for each product. And that’s the most important thing for us. We do not base that upon cost. Because over time some costs go up and some costs go down. When it comes to this tax, it is also difficult to forecast how much they would influence us because some of these products you mentioned we are producing in China. So to make a long story short, this may not influence prices because the price should be good anyway. What we are focusing upon is we want to have a really cost efficient way of running our business. We are cost conscious in every part of the business. For instance, we have very few middlemen in the process; we buy large volumes from our producers. And we’re experienced in knowing what markets to buy from, and which ones have an efficient logistics and distribution chain. We are cost conscious when it comes to operating a store, etc. – so that’s even more important for how we can keep our prices as attractive as they are. H & M just opened its online store last year for Mainland China. How’s that been doing? It’s been doing very well. What’s interesting is to see how visitors to our home page increase and how we get more Weibo and Wechat followers every month. That makes us happy. Regarding online consumption patterns, what makes Chinese different from other international customers shopping online? I think the whole digital industry in China is very innovative and creative. And it’s growing at a pace that is mind-blowing. And I think in terms of global perspective more and more companies are interested in following what’s happening in China and what they’re doing. For us as one of the biggest fashion retailers in the world, it’s natural to be available in both real stores and online – that’s something customers want us to offer. It [the online store] is also something we would like to offer because we cannot expand everywhere at the same time. H & M is running the store on its own official website for Mainland customers but not co-operating with platforms like Alibaba or JD.com? We’re doing it ourselves. When it comes to big retailers they do it [online sales] themselves. Customers get more and more used to knowing that the big companies are present online. So if they visit a store and for some reason they cannot find the size, they know that they can find it most likely online. And the other way round, people are exploring the company online before they go to the store. -- [Quotes] “We have also read about the diminishing gaming revenue but for us at this stage it’s very difficult to relate back to how that could influence us. But we think we will do really, really well.” “Chinese consumers are very fashion focused. They are very savvy…Chinese consumers look for good deals, and they know what a good deal is all about. And we see that we benefit from that.” “When we’re setting the price of the product, it’s based upon what is the best customer offer for each product. And that’s the most important thing for us. We do not base that upon cost.” [BOX] Magnus Olsson Magnus Olsson was appointed Country Manager, H & M Greater China (Mainland, Hong Kong, Taiwan and Macau) this year. Prior to this position, he had worked in various positions and countries within H & M, a company he has been with for 19 years. Brands owned by H & M H & M, COS, Monki, Weekday, Cheap Monday, and Other Stories Breathless pace 379 new stores worldwide in 2014. Another 400 new stores for 2015 (for a worldwide store count of close to 4,000) Existing Greater China presence (excluding Macau) 250 stores – Mainland China 15 stores – Hong Kong 1 store – Taipei