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...Europe, H&M has a formula that works. "We offer the best value for your money," says H&M chairman Stefan Persson. H&M is synonymous with the concept of "fast fashion"--trendy clothes at prices so low that the clothes are all but disposable. While the styles may be impulse buys, the company has maintained a disciplined, conservative approach to expansion that has turned H&M into Europe's second largest retailer in little more than a decade. Today H&M has 1,400 stores in 28 countries, including 114 in the U.S.; there it is still a small...
...China knows a thing or two about cheap clothing, and when its consumers buy foreign brands, they want what they can't find at home. "It's a fatal mistake to discount for the Chinese customer," says JPMorgan analyst Vineet Sharma. "Young people want clothes that aspire to luxury. H&M should concentrate on that mid-market, where there's still room to grow...
...H&M's biggest opportunity is in its pioneering use of celebrity designers such as Karl Lagerfeld and Stella McCartney. For the "M" line from Madonna, the singer worked with H&M designer Margareta van den Bosch, but it's clear whose name Chinese shoppers are looking for. "I'd buy almost anything Madonna designed," said Anne Yeung, 22, an architect trainee, as she waited in line in Hong Kong last month, "and so will all my friends...
Marketing expert Tom Doctoroff, head of greater China for ad agency JWT, says brand names are particularly effective in China as its nouveau riche try to emulate the West's fashionistas. "The halo effect can be very powerful here," he says. "Most retailers are just now following H&M's lead in this area...
Going upscale has worked well in Asia for H&M's main rival, Inditex's Zara, which opened its first store in Hong Kong in 2004. It carefully selects store locations in luxurious shopping centers, marketing itself as a rival to designers like Armani. Inditex's regional sales for its 59 Asian stores last year amounted to $1.1 billion, or 9% of the company's revenue, up from 7.5% in 2005. The Spanish company is often credited with inventing fast fashion, a business model that moves garments from the design table to stores quickly. Zara's clothing designers work closely...