H&M Tops Itself With New Giant Store
Wall Street Journal
May 19, 2015
by Suzanne Kapner
H&M’s Times Square and Fifth Avenue locations each were the retailer’s largest stores when they opened. Its new Herald Square shop now holds the title. Photo: Reuters
Fast-fashion retailer Hennes & Maurtiz AB is opening its largest store in the world—for the third time in three years.
The 63,000-square-foot store opens Wednesday in New York City’s Herald Square, across from Macy’sfamous flagship. It easily tops what had been H&M’s largest store, a 57,000-square-footer not that far away on Fifth Avenue that held the title for a mere seven months, and is more than 20,000 square feet bigger than a Times Square store that was the chain’s largest when it opened in 2012.
The race to build ever-more-cavernous shops might seem out of step with the Internet age. But they are a calculated bet by a handful of retailers that the wider selection and mere spectacle of enormity will make shopping entertaining enough to persuade people to make the trip.
“You have to excite customers by visually showing them how your products look,” said Daniel Kulle, H&M’s president for North America. “People are social, and if they have the right environment, they want to see and feel and touch.”
(Macy’s Herald Square store, which takes up an entire city block, remains far bigger, at 2.2 million square feet.)
H&M made a name for itself selling $10 dresses, shirts and jeans while rolling out new fashions at a furious pace. The Herald Square store will have a 35-foot-glass facade with LCD screens to showcase models clad in H&M outfits, as well as a 30-foot-high atrium on the second level. The company’s other flagships also host DJs who spin a mix of pop and retro tunes.
It is hard to tell if such efforts are paying off. Unlike other retailers, H&M doesn’t report sales excluding new stores or disclose its total square footage, making it difficult to gauge the productivity of its existing stores.
H&M doesn’t plan to close its other nearby stores, which means it will have more than a dozen in Manhattan, with many clustered in midtown, opening up the potential for cannibalization.
Overall, H&M is slated to add 400 stores this year on top of the 3,511 it had as of November, the end of its last financial year. It added 379 stores last year, when sales grew 18%.
Bigger isn’t always better. Fast-fashion rival Forever 21 expanded into giant locations in New York City and elsewhere before it had enough merchandise to fill them productively, which weighed on sales.
Analysts say that H&M doesn’t appear to be running into similar difficulties. The company has a wide offering of women’s, men’s and children’s clothes as well as plus sizes, shoes, housewares and beauty products.
Other retailers are also experimenting with turning stores into playgrounds. Restoration Hardwarehas pushed into larger stores as a way to better showcase its wares. Uniqlo displays T-shirts inspired by Andy Warhol, Keith Haring and Jean-Michel Basquiat like artwork. And Lululemon Athletica Inc.offers free yoga classes in its stores.
“In an online world, to persuade someone to get off the couch and come to your store, it better be a compelling proposition,” said Fraser Ramzan, an analyst with Nomura.