Why Did Topshop Go To Such A Position In Australia?

June 6th, UK high street, which has been operating in Australia for 6 years

brand

It failed.

Recently, Austradia, a local company that introduced Topshop into Australia as a franchisee, announced that it had entered bankruptcy proceedings.

It is reported that Topshop is the first (2011) entry into the Australian retail market, the global fast selling fashion.

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Prior to Austradia's application for voluntary custody, Topshop opened 9 independent stores in Australia and opened 17 counters in department store Myer with exclusive cooperation. Meanwhile, it operates a brand official website and employs 760 employees.

Myer holds about 20% of Australia's Topshop.

After the news of Topshop's entry into voluntary custody process, Myer shares plunged to a new low of strategic cooperation with Topshop in 2015.

(Myer) the announcement that Topshop has entered the voluntary custody process. The picture is from BMYG Australia finance.

Australian media reported that the annual sales of Austradia, which is responsible for Topshop's Australian business, was about 90 million Australian dollars, but it lost 3 million Australian dollars in the first half of fiscal year 2016-2017 (up to 6 months last December), which also led to Myer's loss of 600 thousand Australian dollars in Topshop business.

Of course, this does not mean that Topshop will withdraw from the Australian market and the current operation will remain normal.

Hosting companies, Myer and Austradia will conduct an in-depth review of the brand and reexamine the way the brand will go in Australia.

The best of course is that Topshop can find suitable buyers to take over during this period.

Topshop why does Australia business go to such a situation?

"Although there are certain fans foundation when entering the Australian market, Topshop still can not resist competition from brands like H&M, Zara, UNIQLO, etc., and has no advantage in products, pricing and other combinations."

Bettina Kurnick, an international analyst, said in a commentary on Topshop's bankruptcy news.

According to public information, Zara and Gap entered Australia in the same year as TopShop. In the following years, H&M, UNIQLO and Muji have also opened their own stores here.

Although Australia is a potential emerging market, competition is bound to be fierce due to the limited volume.

Moreover, compared with other competitors, Topshop's expansion speed is much slower, and its market share is not so satisfactory.

For example, in 2014, the Australian market H&M and UNIQLO, as of the end of 2016, has opened 22 and 12 stores, and the earlier Topshop has only 9 separate stores and 17 counters.

In terms of turnover, Zara, H&M and UNIQLO added 600 million of sales last year, while Topshop had only 90 million Australian dollars.

At the same time, Topshop's price has no advantage and its style is short, which has been criticized by Australian consumers.

Many Australians will even choose to go to Topshop's European and American station, rather than buy it at their local stores and official website.

Of course, apart from the brand's own business strategy, the bankruptcy of Topshop also reflects the reality of Australia's fashion retailing downturn.

This year, not only are Topshop, including Marcs, David Lawrence, Herringbone and Rhodes&Beckett, but also fashion brands have gone bankrupt in Australia.

After the early rapid growth of the Australian fast fashion industry, the turnover began to slow down. Many brands seem to have huge business income, but their profitability is not ideal.

Even the robust uniqo has to recognize the hardship of the environment - the brand achieved 200% sales growth in Australia in 2016, but it still couldn't stop losing money.

In addition, according to the data of Economic Indicator, Australia's consumer confidence index began to decline significantly in 2013, and has been on the decline of 100 in recent years.

The latest data show that Australia's household savings rate dropped to its lowest level in 10 years.

The weakening of consumer confidence, coupled with a marked slowdown in per capita disposable income growth, has been a drag on Australian consumers' spending on non essential consumer goods.

This has brought a negative impact on the apparel retailing industry and even the entire retail industry.

Topshop's parent company's crisis

According to the world clothing shoes and hats net, the Arcadia group of Topshop parent company has not been very well in the past two years.

Its share of the British clothing market of 42 billion 800 million pounds has shrunk dramatically, from 6.3% in 2012 to 3.8% in the previous fiscal year.

It is reported that in the 2015 fiscal year ended August 29, 2015, the Arcadia Group recorded a 5.5% profit growth, but the profit mainly came from the sale of the loss department store BHS; the annual sales totaled 2 billion 69 million 300 thousand pounds, an increase of 1.8% over the previous year.

During the period, the group's overall sales in the same store recorded a 0.7% decrease.

According to market forecasts, in the 2016 fiscal year ended August 2016, Arcadia group's profit dropped from 222 million pounds in fiscal year 2015 to 140 million pounds, a decrease of 40%, which is also far below the group's original target of 175 million pounds.

In the 7 weeks between black Friday November 2016 and the first week of the new year in 2017, Arcadia group's same store sales fell by about 6.5%, while Topshop, the core brand of Arcadia group, dropped almost 11% of its same store sales.

(pictures from Shang pin net)

What happens is that while the performance is not good, the top of Arcadia is ushering in a turmoil of personnel in April this year. Mary Homer, who has been the general manager of Topshop for the past 11 years, resigned and joined the The White Company of the UK home brand.

This is seen as a great blow to Topshop by the outside world, especially when Topshop is struggling with many high street brands.

However, Arcadia's new ways to save its performance are endless.

For example, at the end of last year, the group announced that it will deepen cooperation with Tesco, the largest British retailer, and may open more Tesco Dorothy Perkins, Burton and Evans&Wallis brand stores in the group's supermarkets.

Not long ago, Arcadia joined the famous American pop singer Beyonc ye (Beyonce) to set up a clothing brand Ivy Park, hoping to explore in the new field of sports and fashion.

In addition, Topshop/Topman, the most international brand of Arcadia group, wants to develop offline business in the mainland of China. It is also regarded as a new growth point.

China's mainland market expansion plan

According to the world clothing and shoe net, last year, during the Christmas season, Topshop announced that it will officially enter the Chinese retail market and plan to open 80 physical stores in the 123 tier cities in China. The first stores are expected to open in Beijing or Shanghai this spring and summer.

It is reported that Topshop has chosen to design the offline retail market with its partner, Shang pin Wang.

At that time, Chinese consumers can buy Topshop products through Shang pin and Topshop Tmall flagship stores, and try to buy them at their stores below the line.

(pictures from Shang pin net)

In fact, the globalization of Topshop started after 2012, and the first stop chose the United States, but the pace of expansion has not been fast.

In 2013, the number of Zara stores in the United States was 45, and H&M was 350 newly opened, while Topshop only had 4 independent stores and 14 discount stores with Nordstrom.

Its development of the Chinese market is even more cautious.

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As early as 2012, Topshop opened a flash store in Shenzhen golden Guanghua Plaza and co operated with Beijing buyer shop "non space", hoping to "test the water in this preheating way before entering the Chinese mainland market".

It was not until September 2014 that Topshop handed over the exclusive online authorization to the Shang pin network in mainland China.

In October 2014, Topshop officially entered Tmall and was run by Shang pin network.

According to the world clothing and shoe net, the sales performance of Topshop on the China line reached two times the contract stipulated in the first year of the cooperation between the two sides, and the sales performance in 2016 was three times the contract number.

In 2015, Shang pin sold 600 thousand orders and 1 million items for Topshop, and accumulated 3 million fans.

After more than two years of online exploration, Topshop plans to open shop under the mainland of China until late this year.

In this regard, Zhao Shicheng, President of Shang pin network, has publicly stated that Topshop will set up shop in China to follow the "four TOP" principle, that is, Top location (the best place to start a shop), Top people (the best talent), Top image (maintain the brand image globally, ask the best quality star and supermodel endorsement), Top service (the best service, including the introduction of the branding and tailor-made service in the UK).

Zhao Shicheng believes that localization improvement is crucial to the expansion of Topshop in the Chinese market.

To this end, the Shang pin network team has won the Topshop customization and improvement permission for Chinese consumers.

For example, suitable for winter clothing, more in line with the Chinese style of style and tailoring.

However, the saturated clothing market, fierce peer competition and declining shopping mall passenger flow are all challenges that Topshop will face.

More importantly, the brand seems to have missed the dividends and popularity of international fast fashion brands such as Zara, H&M, UNIQLO and Gap in the past few years. It is one of the few world-renowned fast fashion brands that have yet to enter China.

Therefore, many commentaries have pointed out that "Topshop may be just one more choice for the Chinese middle class with a growing habit of consumption and maturity.

Whether it can emerge from a large number of competitors is still unknown.

Topshop himself seemed quite confident.

"The slowdown in China does not mean a downturn in the economy," said its official in an interview with the media. "Chinese consumers are still the strength guarantee in the retail industry."

At present, the number of Topshop stores is far less than that of competitors such as Zara and H&M.

More interesting reports, please pay attention to the world clothing shoes and hats net.