Last Wednesday, administrators announced they were working with the UK owners of the Topshop and Topman brands on “supporting and right-sizing” the Australian franchise after it collapsed six years after launching into the local market.
The post-mortems of the fashion imprints have been vicious, with some retail analysts questioning why the brands even entered the Australian market in the first place.
At a time when local retailers simultaneously bemoan tough local conditions and look over their shoulders at international competitors like Amazon, will this latest collapse warn global retailers not to try their hands in Australia?
Here are three things the experts say others can learn from Topshop’s troubles.
1. It was too late to the party
Last week expert in consumer behaviour at Deakin University, Paul Harrison, told SmartCompany the brands were up against it from the very start because Topshop entered Australia too late.
“The first thing was that H&M has first mover advantage — they were able to establish a market here. Topshop didn’t have an established brand, a lot of the placement of their stores was kind of strange, as well,” Harrison said.
2. Nobody knew what it was supposed to be
Citing Uniqlo, H&M and Zara as the three current pillars of international fast fashion in Australian retail, Harrison said Topshop also struggled to adapt its fashion offerings to the local market, and give something different to what was already here.
“Topshop was last to market and my risk–averse side of things would say that is a bad move … [as was the decision] to not necessarily change the brand feel to this market,” Harrison said.
Others agree on this front, with retail analyst Peter Ryan telling news.com.au last week he believes the brands also displayed a “substandard” quality given they were fighting so many competitors.
In recent weeks retail experts have championed the importance of an “X Factor”, or iconic product, when it comes to battling the myriad of mid-market offerings across the country.
When discussing revenue troubles at handbag imprint Oroton two weeks ago, RetailOasis strategist Pippa Kulmar observed the brand hadn’t been able to secure a must-have look to capture customers.
“What’s a bag that’s Oroton’s brand that everyone really wants?” she asked.
3. Australia’s shopping market is small, really
Despite the carnage, international players continue to try their hands at expansions down under. One of the most recent entrants has been athleisure and sports shoe brand JD Sports, which is being led by retailer Hilton Seskin, who is also at the head of Topshop in Australia.
However, retail analysts continue to warn that the local market simply can’t sustain so many new entrants, even though there might be initial enthusiasm from shoppers about new brands.
Bettina Kurnik, senior retail analyst at Euromonitor International, said last week Topshop and Topman have been just one example of brands trying to spin profits while “established domestic brands and overseas entrants are vying for market share against a backdrop of weak consumer spending”.
Meanwhile, retail experts have previously told SmartCompany fast fashion brands are also duking it out with the country’s several mid-market department stores. Over the past five years, shoppers have watched to see which of Big W, Kmart, Target and Best and Less will emerge as dominant player.
Euromonitor estimates the Australian apparel market will be worth more than $19 billion in 2017, but given this range of factors, the sense is that Topshop and Topman have been operating in a space where things are already full.
“Despite arriving to Australian shores to much fanfare in 2011, Topshop/Topman has not been immune from competition from H&M, Zara and Uniqlo, with the brand’s combination of demographics, affordability and range contributing to its undoing,” Kurnik said.