Fashion Weekly

H&M is hot, cheap 'n' chic

August 27 - September 2, 2008
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There are no Henneses or Mauritzes behind H&M: just the Perssons, a no-nonsense Swedish clan who have conquered the cheap-chic market.

When it is on the fashion pulse the consequences can be dramatic: the Stella McCartney range turned sane women into 'shopzillas', wrestling to get their hands on her cut-price designs.

When it opened its first store in Hong Kong in 2007 customers camped outside for 48 hours.

It will be interesting to see the reaction in Bahrain when the outlet opens in the new City Centre complex.

H&M's name is a reflection of the dynasty's pragmatic founder Erling Persson, who chose the name 'Hennes' - Swedish for 'hers' - because the first store sold only women's clothes.

Persson, a salesman, got the idea on a business trip to the US just after the Second World War. The H&M credo was born when he visited a retailer that appeared to balance high sales volumes with low prices.

Persson opened the first Hennes store in his native city of Vasteras in 1947.

H&M grew steadily during the 50s and 60s, adding 'Mauritz' in 1968 after buying hunting and gun store Mauritz Widforss.

But it was under the leadership of Erling's son Stefan, who took charge of the international business in the late 70s, that the seeds of global success were sown.

Today Stefan's personal fortune is estimated at $17.1 billion while his sister Liselott - Lottie to her friends - has $2 billion.

Stefan oversaw a period of rapid expansion before stepping up to be chief executive in 1982. H&M is now a global powerhouse with 1,500 stores in 28 countries. Last year it made £1.6 billion profit on sales of £7.8 billion.

Unlike Zara and Mango, the UK is important to H&M and has become its second-largest market in sales terms after Germany. In a further sign of its fashion mettle, H&M has managed to make a go of the US, a market that has defeated many European rivals. It opened its first store in New York in 2000 and now has 150 shops.

After a turbulent year that has seen sales vary dramatically from month to month, H&M cheered analysts last week by reporting a better than expected three per cent increase in underlying sales for July.

H&M has opted to collaborate with big-name designers and celebrities on clothing collections. In addition to McCartney, it has worked with Karl Lagerfeld and Roberto Cavalli as well as Kylie and Madonna.

The strategy is very different to that of Inditex, which spends very little on marketing.

Although not as nippy at 'fast-fashion' as Inditex, H&M, which does not own any factories, says it meets demand for new styles with daily deliveries of stock to its stores.

Despite the retailer's association with celebrity, it does not seek fashion PR at any price. It dropped supermodel Kate Moss from ads in 2005 after photos of her allegedly taking drugs were published in the British press.

The move was said to reflect the family's staunch anti-drug stance - Stefan is on the board of a substance abuse charity.

A keen sportsman, the 60-year-old is a fan of downhill skiing, golf and tennis. His only vice is thought to be Savile Row suits. Stefan stepped up to the chairmanship in 1998 but there is evidence that fashion is in the genes.

Of the new generation now involved in the business, his son Karl-Johan is tipped for great things.

He is the business's development director, a role that sees him heading its fledgling chain Cos, the first new brand in its 60-year history. Cos targets more affluent shoppers - handbags at dawn as the Swedes head for a high-street showdown with Inditex's Massimo Dutti chain.







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