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Retail Review – Emma Robertson, Managing Director, Transform – Score 25/25 (IRM50)

Topshop is a brand and product led business, differentiating from competitors and engaging with consumers through its high-fashion, yet valuebased, product proposition. However, does this mean that the channel experience loses out as the business focuses on “what the customer buysrather than “how the customer shops”?

There are a number of strands to the Topshop strategy, they revolve around winning in fashion, expanding internationally and driving digital. From an outside-in perspective, it seems clear that Arcadia is much more comfortable in the product and place elements of the mix whereas the customer experience and digital agenda have some catching up to do.

Looking at the mission to win in fashion, the 2014 Kate Moss line is a return to the high profile, high fashion mission that drives the brand – and is one of many celebrity associations this year including Cara Delevingne and Beyonce. The combination of celebrity and product really works for Topshop, delivering cash in the tills and extensive PR coverage and strategically the celebrity fashion proposition is expanding beyond simply providing product for the Topshop range. The Kate Moss line ranged from £30-600, with the £600 dress only available through high-end fashion etailer Net-a-Porter. In a separate move, the deal with Beyonce will support the creation of her activewear brand that will be ranged by Topshop, but not exclusively.

Topshop is sitting at the top table of fashion and its worth reflecting on what a bold strategy that is. As a high street brand previously associated with fast fashion for under 30s Topshop was a viable also-ran in a crowded market. Today, however, the brand is discussed by fashionistas alongside Burberry and showed its Unique brand at London Fashion Week.

In terms of International, the strategy is an interesting benchmark for taking a brand overseas in a pragmatic yet strategic way. Arcadia has long discussed making Topshop an international brand and “breaking” America, initially achieving this through a combination of international online deliveries from the UK and in-store franchises with Nordstrom amongst others.

The differentiating move came with the decision to open up fully-owned stores in the US; selling off 25% of the combined Topshop and Topman brands to US private equity firm Leonard Green & Partners. The launch of its flagship US store, Topshop 5th Avenue, earlier this year again achieved the winning combination of customer and press engagement, and is the 7th owned store to open in the US. As a model for expansion, this strategy looks set to continue; taking the same approach in Europe, Topshop is already present through franchises with Galleries Lafayette and others, and is planning its first owned store in Amsterdam. Of course, no UK fashion strategy would be complete without a plan to land and expand in the volatile but lucrative Asian market.

Finally, looking at the digital and multichannel story, Topshop is arguably more challenged both internally and externally. From an internal perspective, when looking at IT and operations, the group structure is far more evident than in the buying, merchandising and marketing functions. An even partially shared group infrastructure drives cost and complexity, and as with all retailers adapting to the digital age, Arcadia has its fair share of legacy systems to cope with. Where this is most evident is in the supply chain and distribution, with the current setup not providing Topshop with a competitive offer in the world of fast fashion and demanding consumers. Taking Click & Collect for example, the inability of Topshop to see its store stock and manage single-pick inventory into store efficiently results in a poor customer proposition, with the standard collect-from-store offer coming with an imprecise 3-7 day delivery window.

Earlier this year Arcadia announced a £50m deal with Oracle through to 2017 to overhaul its digital systems, along with Manhattan Associates, focusing on global inventory and warehouse systems, and ranging and merchandising. Clearly this investment is well placed but given the size of the group and the scale of ambition for Topshop internationally, this will need to be the first investment of many if Topshop is to compete in the medium to long-term, and focus equal resources on front-end, data and customer experience, not just backend systems.

The digital experience delivered by Topshop currently is comprehensive, but disjointed. In many ways the various sites and experiences do exactly what is expected – combing ordering, browsing and sharing across web, mobile, apps and social platforms. However, the experience is not differentiating, and more crucially in the multichannel age, not joined up. The Topshop blog is a stand-alone site not integrated into the web. The personal shopper experience online shows great promise offering a range of shopper “types” and then defaults to the same generic web form. The area where Topshop is digitally most successful in standing out from the crowd is within social. Across all channels there is a big emphasis on sharing and talking about the brand, and a number of digital marketing initiatives are anchored to social; London Fashion Week activity included guest bloggers and early previews through Instagram drove customer engagement at an event which may otherwise have been a vanity play removed from the real Topshop consumer. Instead, by socially connecting the event, the Topshop customer came along for the ride.

Looking externally, Topshop may be breaking the mould, but it does not lack competition in the fast-fashion world. From a multichannel perspective, key competitors for disposable fashion spend such as Primark, H&M and Zara have equally poor online fulfilment offers. However, when looking at pure-play alone the continued success of ASOS is a more fundamental threat – offering a similar customer product proposition (sans celebrity), but supported by a far more rounded delivery proposition. And with the growth of convenient pick-up locations facilitated through Collect+, Doddle and others, the Topshop bricks and clicks advantage it should have over its pure play rival is being eroded.

Although the strategic communication coming out of Arcadia is around building for digital and customer experience, the PR and activity remains anchored in fashion, press and product. Until Topshop put the customer experience at the heart of the digital experience, it will continue to miss out on the full potential of the market.

The simple scoring from Transform is based on whether or not five services are offered by the retailer in the UK with a score of 0 for no and 5 for yes. On this basis, Topshop scores 25/25.

Collection in-store: Yes
Mobile app: Yes
Mobile web: Yes
iPad app: Yes
In-store tech: Yes

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