“We’ve opened three stores since the beginning of the year but more will follow,” Ralf Wein told ZF in his first interview with the local media.
If the retailer finds suitable space it will continue expansion at the same pace as in the previous years (ten stores a year i.e.). There is potential for 75 to 80 H&M stores in Romania, but there is no guarantee the company will actually open them, it depends on new developments and the trend of the economy, Wein said.
Shopping in Romania is 99% done in malls, which is why retailers prefer malls, Wein added. The same goes for the entire region, where 95% of the people do their shopping in malls, except for Prague and Budapest, which have their main streets. The architecture of the two cities helps, as does the fact that they are more touristy than Warsaw or Bucharest.
H&M tried street front retail in Romania, too, by opening a store on Lipscani, a street in Bucharest’s Old Town. The store operates a building specially built for it in an area surrounded by old buildings, some of which not renovated yet.
The Old Town is rising, but slowly. Lipscani might turn into a shopping street in a few years, but it will take a while. Some buildings have been renovated and other retailers are coming, Ralf Wein said.
According to ZF’s calculations, Romania has been among the top performing markets since the beginning and is the ‘champion’ of the region by average sales per store, which were 50% higher than in the Czech Republic for instance. Although average wage in Romania is half the average wage in Poland and Czech Republic, sales of the H&M stores are higher, driven by the local consumers’ appetite for fashion.
Romanians are more willing to spend money on clothes than people in the Czech Republic and Poland are, the H&M executive said.
This is why H&M opened its largest store in Romania in Bucharest and in the region at the end of last week. The decision to open the 4,300 square meter store was because of the financial results of H&M in Romania. At the end of last year, H&M had grown to about 40 stores in Romania and EUR118 million revenue, an increase of 40% on 2013. Expansion is driving the growth of the business, but the executive says the retailer also saw strong like-for-like growth. H&M’s largest store in the region is actually a reopening in the Unirea Shopping Center in central Bucharest, following expansion to three levels.
“Our best stores are those in Unirea, AFI Palace Cotroceni and Baneasa Shopping City.” Next in the ranking are the stores in Promenada and Mega Mall, the latter having recently opened and being ‘fantastic’ in terms of performance, as Wein said without going into details.
According to ZF data, the H&M’s Unirea Shopping Center store was generating EUR10 million revenue before the reopening.
The stores that generate the highest sales are located in Bucharest, and they are also the networks’ largest in the country, followed by those in Cluj, Timisoara, Brasov, Constanta and Iasi. Smaller cities perform beyond expectations, too, the H&M executive says.
(English version by Loredana Fratila-Cristescu)