But Will It Play in Manhattan?
By RUTH LA FERLA
New York Times
Published: June 21, 2006
Jean-Phillipe Defaut for The New York Times
At Topshop in London, the merchandise is extensive, and ever-changing thanks to the company's strategy of refreshing supply lines every few weeks.
Ticking off the days before her departure for London last month, Victoria Thompson, a news associate at CBS, checked her itinerary. The National Gallery, for sure, she said, and maybe the Serpentine, another gallery. But also on the don't-miss list was Topshop, the cavernous fashion emporium in Oxford Circus that has become a mecca for disposable chic.
When they visit London, Ms. Thompson and her sister, Antonia, prowl the store for the stovepipe jeans, bubble skirts and granny boots and the Stella McCartney and Marni look-alikes that they scoop up by the armload. "My wardrobe is largely Topshop-based," Antonia Thompson confided. "I cannot wait for the day that the store is here."
She may get her wish. Philip Green, whose company, the Arcadia Group, owns Topshop along with several other British retailers, was in New York in late April to scout a site for a New York flagship. The store could open as early as next spring.
With their sensitive fashion antennas and tight grips on their purse strings, the Thompsons, both in their 20's, represent the kind of American consumer Topshop plans to court: knowledgeable and demanding, with a near insatiable appetite for novelty and a bargain.
Topshop feeds that appetite with multiple daily deliveries that capitalize on a stepped-up fashion cycle, in which new trends emerge and reach stores within weeks, not months, of their debut on runways.
The chain is not the first to offer those attractions. Its chief European-based rivals — Zara, Mexx, Mango and H&M Hennes & Mauritz, which already have branches in the United States — also sell inexpensive, fresh-looking fashion. But Topshop offers a wider selection of cutting-edge styles, clothing that is better made, though somewhat more costly, than its competitors.
The proposed New York store would be 60,000 to 90,000 square feet, Mr. Green told reporters in April, a fashion outpost on a scale unmatched in any American city by any specialty clothing store.
The Oxford Circus flagship is a four-level, 90,000-square-foot behemoth that draws an average of 28,000 people a day, more than half of whom buy something. That is eye-popping when one considers that Bloomingdale's, which sells more than just fashion, gets 45,000 visitors a day in a space more than 10 times that size.
Mr. Green and Jane Shepherdson, the brand director for Topshop, have been somewhat reticent about their plans. But they have made no secret of their endgame: to turn Topshop — which across Europe operates about 290 stores, and an additional 165 Topman stores, as well as 30 franchised stores — into a global brand.
The venture is risky, Ms. Shepherdson acknowledged. "I'm not at all sure that there is a truly global merchandise mix, and I'm also not sure that Topshop is a global brand," she said. "But I think that certain markets have a lot of similarities."
Both New York and London, she said, "have a real love of fashion and a very demanding customer base that wants something new all the time."
To succeed in New York, Topshop needs to replicate the heady experience of the hunt at the Oxford Circus store. That store is in the most heavily trafficked shopping district in London, an area that is home to Marks & Spencer, Debenhams, John Lewis, Boots and a string of specialty shops.
Finding a suitable location in New York is crucial. Ideally, it would be in a popular shopping area like Herald Square or near Bloomingdale's at the intersection of 59th Street and Lexington. And making sure Topshop can duplicate the Oxford Circus experience requires overcoming an "enormous number of logistical challenges," Ms. Shepherdson said. Topshop may even consider hiring its own cargo plane to ensure a flow of merchandise that can keep pace with the London operation.
At peak shopping periods, the Topshop at Oxford Circus ferries in goods by the truckload, with two to three deliveries of fresh merchandise a day and 7,000 distinct looks each season. It operates on the models of Zara and H&M, which refresh supply lines every other week, in striking contrast to mass merchants like Gap, which operates on a cycle of 10 weeks or more.
Like those mass merchants, Topshop's manufacturing is mostly done abroad, about 25 percent in China, 10 percent in Mauritius, 5 percent in India. Much of the rest comes from European factories.
Jean-Phillipe Defaut for The New York Times
Topshop's flagship store in London has thousands of square feet of fashions.
Ms. Shepherdson said Topshop was able to move so quickly because its orders were much smaller than other retailers' and its manufacturers were "prepared to be very flexible." In addition, she said, "our internal processes are streamlined, and the decision-making is fast and direct."
A thrumming emporium that boasts its own radio station and regularly stages its own runway shows, the London flagship generates sales approaching $200 million a year, or more than $2,000 a square foot, the company said, double the average sales at other Topshop branches. Total sales for the chain from the third quarter of 2004 to the third quarter of 2005 were about $922 million.
Despite all the retailers already in the United States, the store would arrive in New York at an opportune moment, poised to make the most of a definitive shift in the way that many Americans shop. At one time, it was the norm for consumers to return consistently to the same handful of stores that catered to their style and budget.
Today, by contrast, "no one owns a customer anymore; everyone shops everywhere," said Howard Davidowitz, the chairman of Davidowitz & Associates, a national retail consulting firm. "And nobody minds mixing cheaper things with more expensive ones."
Indeed, among those who can afford it, it has become a commonplace to accessorize say, a $30 Luella Bartley dress from Target with a $1,450 handbag from Chloé or Fendi, the European luxury brands.
That openness to shopping in a variety of stores has been a boon for specialty retailers like H&M and Mexx, whose sales grew more than 7 percent from April 2005 to April 2006, according to the NPD Group, which tracks consumer spending patterns. In contrast, department store apparel sales were essentially flat in the same period.
Topshop plays to — and feeds — the fashion speed-up. "At no time in memory have we seen such an accelerated fashion cycle," said Robert Burke, a retail consultant in New York, whose clients include Bergdorf Goodman.
Ms. Shepherdson, who has been widely credited as the marketing wizard behind Topshop, insists on the multiple daily deliveries. By keeping manufacturing runs limited, Topshop has created what Ms. Shepherdson calls a "dynamic of desperation," that has customers feverishly zooming in on sought-after items, enticing them to visit all the time.
Some merchandise, though in plentiful supply at the time the store opens, tend to vanish by midday. The kaleidoscopic assortment is pitched to a 16- to 34-year-old urban woman. New shipments generate a frenzy much like the one at an H&M store in Manhattan last November, when customers lined up hours before opening time for a chance to buy a limited-edition bargain-priced trench coat or oversize sweaters designed by Stella McCartney. They picked the racks clean within hours.
Topshop appears willing to accept somewhat lower profits to achieve its goals. Mr. Davidowitz said he was not sure what Topshop's profit margins were but estimated them at about 7 to 8 percent, after all costs and before taxes. He compared this with H&M, which makes about 15 percent, and Abercrombie & Fitch, which makes 20 percent.
Though comparisons with H&M are inevitable, the two chains differ in telling ways. It is difficult, retail experts say, to compete with the sheer depth and breadth of merchandise at Topshop's London flagship. Even Topshop itself does not try: it dwarfs other stores in the chain, which average about 17,000 square feet.
To gain some idea of its scale and scope, "you have to imagine the total main floor of Macy's in Herald Square filled with a never-ending assortment of terrific, fresh fast fashion," said Arnold Aronson, the managing director of retail strategies at Kurt Salmon Associates, a consulting firm in New York.
The London flagship sells capsule collections from well-known and emerging British designers like Zandra Rhodes, Emma Cook and Jonathan Saunders, as well as the progressive Unique line, conceived by a team of internal designers.
The store also offers a maternity collection with its own entrance on Regents Street, tall and petites shops, a lingerie department and an entire floor dedicated to vintage fashions. There is the Topman men's shop and a children's line, Topshop mini.
And its services go beyond providing up-to-the-minute clothes. Topshop workers even deliver purchases by scooter to shoppers' homes, and a team of style advisers helps customers mix and match $70 capri pants and $20 T-shirts. It plans to offer similar handholding in New York.
Topshop's rivals say that they can hold their own against its expansion. "Our philosophy has always been to have fashion and quality and the best price," said Sanna Lindberg, the president of American operations for H&M. "I think we will continue to be popular even if Topshop shows up. They would just be another player."
To acquaint Americans with its wares, Topshop plans to expand its Web site in September, offering about 800 styles, or all of what is available in its London stores. The chain has already wiggled a toe in New York's retail waters, introducing a shop within a shop in partnership with Opening Ceremony, a boutique in downtown Manhattan.
Topshop's entering New York "will be a very big deal," Mr. Davidowitz, the retail consultant, predicted. "This would really be a powerhouse that would impact every fashion retailer in New York."
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