Kate Moss made Topshop cool, but Australian shoppers have switched off. Picture: Gareth CattermoleSource:Supplied
Kate Moss made Topshop cool, but Australian shoppers have switched off. Picture: Gareth CattermoleSource:Supplied

Topshop Australia outrage after company collapse

ONCE the epitome of cool, Topshop is the latest fashion brand to fall victim to Australia's tough retail market.

The high-street chain, along with menswear label Topman, has gone into voluntary administration after failing to arrest its slide into multi-million dollar loss-making territory.

It joins a long list of troubled retailers with Herringbone, Marcs, David Lawrence, Pumpkin Patch and Payless Shoes all folding in the past 12 months.

There is talk of Topshop's parent company chairman, Britain's so-called "king of high street" Sir Philip Green, swooping in to save the Australian operation. But there are no guarantees for the 760 workers whose fates hang in the balance.

The brand's struggle has been interpreted as a worrying sign for the local retail industry given the collapse of a string of Australian fashion brands has been blamed on competition from overseas fast fashion giants.

If the British-born label that took Australia by storm almost six years ago with Kate Moss as its brand ambassador - and which turns over $90 million a year - can't make it here, then what hope is there for local retailers?

But while the news may have come as a shock to some, retail analyst Peter Ryan says he saw it coming.

"The whole Topshop thing I never thought would work here," Mr Ryan told news.com.au, dismissing its wares as "cheap clothing that really traded off its London cool".

He said the label's appeal was at its peak when Topshop opened its first Australian store on Melbourne's Chapel St "with great fanfare" in 2011.

Crowds lined the pavement waiting for Sydney’s first Topshop to open in 2012. Picture: Tim Marsden Source: News Limited
Crowds lined the pavement waiting for Sydney’s first Topshop to open in 2012. Picture: Tim Marsden Source: News Limited

At the time, Hilton Seskin - who brought the brand Down Under - described it as Topshop's most successful franchise opening ever. By the time its Sydney store opened the following year, young fashionistas were queuing around the block to get a first peak.

But it went downhill from there, Mr Ryan told news.com.au, blaming a "substandard" product quality that would soon be eclipsed by Topshop's international fast fashion rivals.

"Topshop has never really translated well outside of the UK," he said. "The clothing is overpriced. It has quite an expensive set-up, with big format stores that are now competing against Zara and H&M, who are doing disposable fashion better. I'm not saying that it can't be saved, but it will take a lot of work."

Topshop Australia's Facebook page is littered with complaints from customers who placed orders online, but are yet to receive the goods.

Two weeks ago, its social media staffer posted a note advising that, "due to an influx of customer service enquiries", there would be "a delay in response" to complaints.

The company, which has nine stand-alone stores along with 17 Myer concession outlets and is 25 per cent owned by the department store, only introduced an online store last year.

But Mr Ryan said this was unlikely to have brought the chain undone, as its store footprint gave it "plenty of coverage" in prime, high-traffic locations.

Unfortunately, this was not enough to stem the losses that saw Topshop/Topman's earning fall by $3 million, according to Myer's most recent financial results released in May.

Administrators Ferrier Hodgson said stores would continue to trade as usual and workers would continue to be paid, although it has not ruled out closing some stores as part of the eventual restructure.

Steve Ogden-Barnes from Deakin University's business school said Topshop's struggles highlighted the difficulty of succeeding in the local market.

"The retail sector in Australia has been a tough one to make work for a long time," Dr Ogden-Barnes told 3AW this morning.

"When you think about the cost base involved in retail, there are probably are some lessons to be learned - some very tangible, probably cost-based reasons for this news."

He said rents, shop expenses, wages, transport and distribution costs in Australia made it "an expensive place to do business."

And he agreed that rival fast fashion giants Zara, H&M and Uniqlo made it difficult for Topshop to stay relevant.
"You've absolutely got to lift your game in retail generally, but just so much more in fashion, the hardest part of the market to correct."

Fashion commentator and journalist Rachel Wells said Topshop's biggest problem was that it had failed to deliver on its biggest promise.

"They haven't delivered on cheap, high quality fashion," Ms Wells told news.com.au.

"They're certainly still delivering on-trend pieces but, from a fashion perspective, Zara has superseded them in terms of both quality and appeal of garments."

When Topshop first arrived in Australia, she said, local shoppers jumped on the "cheap, on-trend" brand that they'd loved to buy during trips overseas.

But it quickly became apparent that its local iteration was not quite the same. For one thing, it was more expensive.

"Because of local taxes, higher wages, higher rents - and the fact you had to express freight to Australia to be on trend - they had to raise prices, while the quality didn't change," Ms Wells said.

"They don't have the high volume of sales here that they do in the UK and consumers probably just felt they weren't getting value for money. The quality just didn't stack up."

Topshop Australia's majority owner Hilton Seskin did not respond to a request for comment.

News Corp Australia

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