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H & M wary of entering Indian Market

Presented By Amit Kumar (2k11b48) Tapas Nandy (2k11b39)

Introduction
H & M Hennes & Mauritz AB is a Swedish retail-clothing company, known for its fast-fashion clothing It has over 2,300 stores in 43 countries It is ranked the second largest global clothing retailer It leads over third largest global clothing retailer, United States based GAP Inc. The design team in the companys Sweden office controls the steps of production, and production is mainly outsourced to approximately 800 factories in Europe and Asia.
These facilities are used for horizontal division of labour rather than being integrated

Difference between H & M and Inditex


H&M outsourced all its production, half of it to European suppliers H&M had been quicker to internationalize, generating more than half its sales outside

Unlike Inditex, H&M marketed its clothes under numerous labels or concepts to different customer segments
H&M also tended to have slightly lower prices than Zara It refurbished its stores less frequently than Zara

Indian Market Perspective


Back in 2010 H&M had meetings with mall developers like Phoenix and DLF
They also hold talks with ITC Group and Mukesh Ambani's Reliance. H&M's closest rival globally and Spanish fashion behemoth Zara made an aggressive entry into India FDI was then barred in multi-brand and general merchandise retail and it was restricted to 51% in singlebrand retail H&M's concerns will include Zara's aggressive JIT

Current Indian Market Scenario


India relaxed laws allowing foreign retailers to wholly own their businesses with a rider Another Swedish giant IKEA non-committal of entering India----SME sourcing being the primary reason "If a supplier can meet the sort of volumes required by a global retailer the size of H&M, it will not be defined an SME," -Amit Bagaria, chairman of retail planning consultancy Asipac. The government has introduced the local sourcing norm to expand domestic manufacturing.

Primary concerns for H & M


It is not a tall order for multi-billion dollar global retailers to source as much as 30% of their India sales from domestic manufacturers.
H&M, for instance, already sources finished goods from the around Rs 2,200crore Bombay Rayon and Rs 1,100-crore Gokaldas Exports.

It's the size of manufacturers they are now expected to work with that has caught foreign retailers in a bind SMEs are defined as those whose initial investment in plant and machinery is between Rs 25 lakh and Rs 5 crore Anonymity regarding uniform quality standards Tough competition from international fashion brands in India such as Tommy Hilfiger, Esprit and Spanish brands Zara, and Mango.

Economic & Cultural scenario


Economic uncertainty in a number of markets has had a negative effect Western women's wear market in India is still not as big
Unlike Chinese women, Indian women are still in the process of switching from ethnic to western women's wear

India has only 4 ZARA outlets all over India compared to 9 outlets of ZARA in Beijing itself !!!!!

The Brighter Side


It could source high-fashion products or those that require hand embroidery from SMEs in small volumes and sell it at a premium in its international flagship stores Economic effect in long run Presence of Inditex's Zara and American competitor in India. India's growing economy, when compared to Europe and North America, is the biggest draw for foreign retailers Nearly 20 foreign fashion brands have being launched annually since 2005 - Third Eyesight

http://www.fashionunited.in/news/apparel/hmcautious-about-india-entry-060220123115 http://www.fashionunited.in/news/apparel/hm-stillmulling-over-india-foray-281120112804 http://articles.economictimes.indiatimes.com/201201-30/news/31005922_1_sme-sourcing-foreignretailers-raghav-gupta http://www.reuters.com/article/2012/01/26/hmresults-idUSL5E8CQ0I020120126 http://www.hm.com/us/

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