H&M opens 50th store, on track to hit 120 stores by 2020

H&M is proving to be one of the fastest growing overseas apparel retailers ever in Japan. It now plans to open more small stores in city centres. Once it has worked out issues with its other chains here, these plans could make it one of the top 10 specialty apparel retailers in Japan in the next five years.

H&M Japan opened its 50th H&M store in Japan in April, just seven years after opening its first, and continuing one of the fastest rollouts ever among foreign fashion retailers. As well as H&M, the Swedish retailer operates its Cos, Weekday and Monki chains here too. According to company reports, at the end of FY2014 in November, H&M operated 51 stores in Japan across the various chains, up from 39 the year before, and reached sales of 3,356 million SEK (¥47 billion), up from 2,945 million SEK (21% on a local currency basis). It employs more than 1,600 people.

H&M is expected to accelerate the pace of rollouts, which means it will likely have 120 stores for the H&M chain alone by 2020, and at its 15th anniversary in Japan as many as 200. With current stores averaging around ¥1 billion in annual sales, this would mean Japanese sales of ¥120 billion, all things being equal.

Based on FY2014 rankings, this would make the Swedish firm one of the top 15 apparel retailers in Japan and one of the top 10 specialty apparel retailers.

This is already a seriously impressive achievement, all the more so given that H&M’s own annual report says it is not Japan, but the USA and China that are its main priorities over the next few years.

The only blip in this impressive record is a relative lack of success in secondary brands, Monki and Weekday. The single Weekday store, located in Osaka’s Shinsaibashi, closed at the end of May, with the company saying the location will be reopened as a menswear only H&M store more suited to the location. Weekday may open in new locations more suited to the younger merchandise range, although plans remain unclear.

This setback doesn’t dent H&M’s significant potential. Japan is still only H&M’s 16th largest market, and while China and the US dazzle with sheer size, Japan offers promise despite its declining population. Here consumers demand innovative overseas fashion, and the market offers stability and a relative ease of doing business. H&M has 260 stores in the UK and 210 in France, both much smaller markets, so Japan should easily match these figures.

H&M will reportedly focus store openings on large scale SC tenancies and smaller city centre stores. In this way it will be able to balance between reaching national coverage across the key SC market, while also drilling down into city centres through smaller stores, both stand alone and within station and fashion buildings.