|H&M's entry will diversify the fashion market for youngsters (Source: www.retaildetail.eu)|
|Zara to open store in Ha Noi this year|
|Affordable fashion brands get it on in Vietnam|
|Vietnamese spend big on foreign high-street clothes|
This is the same mall where Zara opened its first store in Vietnam last year. In particular, H&M’s representative in Vietnam told newswire vnexpress that the store covers about 2,200 square metres across two floors of the mall. Along with the debut, H&M also introduced its 2017 autumn-winter collection.
H&M’s debut in Vietnam was expected, but the company’s latest announcement in February named Hanoi as its initial destination, making the launch in Ho Chi Minh City a big surprise to many people.
H&M was preceded by several affordable international fashion brands, such as Zara, Topshop, and Mango. The participation of H&M will diversify the fashion market for youngsters, while at the same time increasing competition among different brands, thereby benefiting customers.
According to H&M’s 2016 financial report, its sales (including VAT) increased by 7 per cent to nearly SEK223 billion ($25.6 billion), however, its after tax profit was only slightly over SEK18 billion ($2.06 billion), a decrease compared to the nearly SEK21 billion ($2.4 billion) in 2015. Explaining the reduction of profit, H&M said that it was negatively affected by increased markdown and higher purchasing costs due to the strengthened US dollar in 2016.
2016 witnessed strong expansion by H&M, with a total net addition of 427 new stores and 11 new H&M online markets worldwide. As of the end of 2016, there were 4,351 H&M stores in 64 countries across the globe.
In 2017, H&M set a 10-15 per cent target for sales growth, with continued high profitability. It also scheduled opening about 430 new stores and expanding to Kazakhstan, Colombia, Iceland, Georgia, and Vietnam.
One rival of H&M in the affordable fashion segment is Zara. According to MarketWatch, Inditex, the retailer behind the Zara fashion chain, reported a 10 per cent jump in full-year net profit and record-high sales. In particular, Zara’s net profit in 2016 rose to EUR3.16 billion ($3.36 billion) from EUR2.88 billion ($3.2 billion), and sales increased by 12 per cent to EUR23.31 billion ($26.1 billion). Notably, Zara alone was responsible for 66 per cent of Inditex’s total sales.
In 2017, Zara plans to open 450-500 new stores, while absorbing 150 to 200 smaller ones. If more Zara stores are opened in Vietnam, competition will be more intense.