The supermodel’s return is helping to spread the chain’s ‘Brit cool’ message, says managing director Mary Homer.
After fighting through the chaos of a Tube strike, shoppers surface at Oxford Circus, but if anyone was hoping the crush might ease, they have forgotten the pulling power of Kate Moss.
Hordes of fans have brought this part of Oxford Street to a standstill to greet the unveiling of the supermodel’s 15th Topshop collection - her first in four years. And let’s face it, Moss knows how to throw a party. Model Cara Delevingne and actress Jaime Winstone are among the celebrities adding to the buzz, while DJ Duke Dumont and presenter Nick Grimshaw set about building the anticipation.
As the doors fling open and shoppers flow through, it’s clear Topshop has another success on its hands.
While the crowds are the same as before, it is the changes since Moss’s last collection in 2010 that show just how the business is looking to differentiate itself. A tie-up with luxury etailer Net-A-Porter, with an exit-price dress at £600, underscored its designer credentials. An online countdown to a live stream of the big reveal - and simultaneous digital launch - was testament to its innovation. That it was rolled out into 346 stores in 41 countries shows just how much of a global force Topshop has become.
Several of the lines - including the £600 dress - sold out within 24 hours. And in the first five days, the range had achieved 75% sell-through.
“That makes it one of the best collections we have ever had,” says Topshop managing director Mary Homer. Although she will not be drawn on the impact of the range on the bottom line, or whether there is the appetite for another collection, the Moss effect is arguably about more than one sales period.
“She is such an icon, the amount of excitement we had from everyone - our franchise partners, dotcom around the world - there are not many people who could do that,” she says. “So for our global brand awareness, it’s a huge plus.”
Topshop is very much focused on international growth, which is understandable given how tough the UK market continues to be; this year it will expand in existing territories including the US, Vietnam and Australia, as well as launching in new countries such as Azerbaijan.
Arcadia boss Sir Philip Green had hinted that the Kate Moss collection could be used to spearhead Topshop’s China launch, but that is turning out to be “pretty complicated”, say Arcadia insiders. While conversations about the Chinese mainland are ongoing, Topshop will increase its presence in Hong Kong with a further two stores this year: in Queensway and Causeway Bay, the first of which will be a joint unit with Topman.
Topshop’s international expansion has certainly gone up a gear, particularly in the US, since private equity firm Leonard Green & Partners acquired a 25% stake.
The highlight for Topshop this year will be its expected arrival on New York’s Fifth Avenue in early November. At 40,000 sq ft, the store opposite the Rockefeller Center and department store Saks will be the retailer’s second largest in the world, its second flagship and its biggest US shop.
“It will allow us to do a slightly smaller take on what we do at 214 [Oxford Street, which is 90,000 sq ft],” says Homer. “We have the corner, so with the windows on the front and the side, and throughout the store, we will be able to create that drama.”
About a quarter of products will be adapted to suit local tastes. This is the rough formula that Topshop applies to all its international stores, but Homer says the philosophy originated in the UK.
“The core will be the same but you have to adapt without losing sight of what Topshop is,” she says. “It’s the same in the UK - what we do for a store in the South would be different to what we do for one in the North. They all have local differences.”
As well as Fifth Avenue, Topshop will be opening a further two US stores this year, with another couple in the pipeline for next year and plans for more.
It also plans to grow its partnership with American fashion retailer Nordstrom, with which it has 52 concessions and a presence on its website.
Homer believes Topshop has further potential to expand around the world, saying the UK slice of its total turnover is “naturally going to decline [because] the world is a far bigger place than just the UK”.
According to analyst Verdict Retail, Topshop’s UK womenswear market share has declined by 0.2% in the past five years to an anticipated 2.8% by the end of this year, dropping one place in the sales rankings to seventh, with TK Maxx sneaking above. Even so, analyst Kate Ormrod says this broadly flat performance is “still an achievement because the market has been so challenging”.
According to Ormrod, the list of Topshop’s successes is long and varied. Key to this is its marketing, as evidenced by saturation coverage in glossy magazines in the run-up to the Kate Moss launch. Topshop’s inclusion in the London Fashion Week line-up also helps boost its brand appeal. And the retailer’s multichannel offering, which some competitors have failed to keep up with, ensures it remains a go-to place for mid-market consumers.
However, one retailer tells Drapers there are some chinks in Topshop’s armour, identifying Asos as a particular threat.
“Topshop and Topman should give a young person everything they want, they shouldn’t need to go to Asos, and yet [Asos] is really giving them a run for their money,” he says.
“There is no question that Topshop has managed to get where it is because it’s a credible, global brand, but sometimes it feels as though it hides behind the power of that brand.”
Ormrod acknowledges this could become a factor but says the business is getting better at competing with rivals, and that its digital arm gives it one over on the likes of H&M and Zara.
Ormrod also believes it is “one of the UK’s most exportable brands”. That is certainly what Topshop is banking on.
“Our success so far has given us confidence to keep opening stores, as long as we can offer something different,” says Homer.
“It’s a case of having your ear to the ground for what is really going on out there, making sure you are giving the customer what she wants, while having a USP. That is what equals success.”
The UK, of course, remains an essential part of what Topshop does, not only in exporting ‘Brit cool’ around the world. But Homer admits it is challenging “for any retail business right now”.
“The market is far more crowded than it was [when I started here]. It used to be that you could only shop what was on your high street. But with the rise of digital, you can shop any business, and with [pure-play etailers] and international businesses, there is more competition. And the customer is more savvy than ever before. They live in a more instant world than we used to,” she says.
“I speak for everyone in retail when I say that things are 50 times more complicated now than they were 10 years ago, and that is not going to change. It’s challenging, but it’s what keeps us on our toes.”