Topshop remains under pressure from its UK high street competitors, needing to justify its midmarket prices to convey value for money.
Despite its much heralded fashion ranges, Topshop remains under pressure from its UK high street competitors, needing to justify its midmarket prices to convey value for money.
The revival of its collaboration with model Kate Moss is deemed to be the solution and, providing the range lives up to the significant fashion hype and sufficient product is available to meet demand, it will protect its market share from being eroded by rivals.
Topshop has proved to be a successful UK retail export: its international stores in the US and Hong Kong opened to great fanfare, with crowds eager to get their hands on its on-trend clothing and regular newness. Its ranges are still held in high regard by UK consumers, particularly the fashion press, in part due to its focus on innovation, but it has come under increased pressure over the last few years as rivals play catch up in terms of shortening lead times for high fashion lines and better interpreting catwalk trends.
Verdict believes that Topshop’s UK sales have been somewhat lacklustre in the past five years, and while it has fought hard to maintain its womenswear market share, forecast at 2.8% in 2014, it is not achieving the growth that its competitors are. With more regular promotions both online and instore needed to drive footfall and encourage sales, it is clear that Topshop has come under fire from its fashion rivals. Value giant Primark, Zara and H&M, the latter of which has authority in producing designer collaborations, have further encroached upon its territory, leaving Topshop in need of a retail boost.
Cue Kate Moss returning to work on a new collaboration with the high street retailer – her first with Topshop in four years. As her first collection back in 2007 took £3m in one week, the range will undoubtedly provide Topshop with a sales lift this time round. The partywear range, including dresses and kaftans with prices from £30–£600, ensure that it is both affordable and aspirational, enabling the retailer to target a broad range of consumers who want to emulate the style of the fashion icon.
But without a recognised fashion designer at the heart of the collaboration there is more pressure on Topshop, and it will need to ensure that it justifies the high price points through quality and design, rather than solely relying on the Kate Moss name.
Topshop is once again striving to broaden its brand appeal and reach out to a new consumer segment- luxury shoppers.
Luxury online pureplay Net-a-Porter will sell 38 styles from the new Kate Moss collection, and will be the only stockist of the £600 sequinned dress. This brings a new level of exclusivity to the offer, appropriate for targeting high-end consumers. Additionally, resting the collaboration for four years has built more anticipation and demand ahead of the launch, favouring sales growth in the last quarter of its 2013/14 financial year.
With the success we expect the range to achieve, Topshop may be tempted to repeat the collection as soon as possible, but it should hold off in a bid to protect the exclusivity of the range or else risk shoppers becoming less reactive to such collections.
With UK share growth proving a challenge for Topshop, the Kate Moss collaboration is a chance to revisit a period of strong sales and emulate H&M’s recent success. While Topshop leads the way in terms of innovation in the clothing sector, it must focus on justifying its price points to grow sales and maintain its market share.
Kate Ormrod is a retail analyst at Verdict