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Too big, too fast, too expensive: six reasons why Topshop failed in Australia

Melissa Singer
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Six years after entering the Australian market with much fanfare, the local arm of the British fast-fashion giant entered voluntary administration on Wednesday. How did it go so wrong?

It grew too fast

Since starting out in Australia in 2011, Topshop expanded its footprint to nine standalone stores and 17 concession outlets in Myer, employing 760 people.

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Topshop Australia collapses under debt

Fashion retailer Topshop Australia goes into voluntary administration due to mounting debts. Vision: Seven News.

But in a crowded retail market and tough trading conditions, some have argued the overseas behemoth grew too fast. 

In seizing opportunities to secure space in new centres such as Emporium Melbourne, the company set up stores with large footprints that demand big sales to pay their way.

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In some cases, the presence of a standalone Topshop store and a Myer concession in the same shopping centre may have been a case of doubling up, without any tangible benefit.

Bricks and mortar before online

Urban rents in Australia are among some of the highest in the world, and Topshop opened up stores in some of the priciest retail strips in the country.

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The store on Melbourne's underperforming Chapel Street - previously home to Borders, the book and music chain that pulled out of Australia in 2011 - is a classic case of a large store without enough shoppers to sustain it.

Arguably Topshop's massive investment in its e-commerce platform, which became fully operational in April, was also part of its undoing. It was a case of too little, too late.

Understocked stores

People I know, myself included, are big fans of Topshop's jeans, and they are regularly voted in lists of the best denim for less than $100.

But several Topshop customers have told me they grew frustrated with the company's poor stock levels, often not carrying common sizes for months on end.

"I have wasted hours of my life looking for my size jeans," one said this morning.

Before the arrival of the online shop  - where stock availability can still be patchy - customers were unable to order in sizes or obtain certainty around delivery dates, meaning many eventually voted with their feet.

Topshop is often more expensive than its fast-fashion rivals for comparable garments.

Topshop is often more expensive than its fast-fashion rivals for comparable garments. Photo: Supplied

Overpriced compared to rivals

Topshop competes for the same customers as H&M; and, to a lesser degree, Zara, but has failed to exert the same pressure on prices as its rivals.

A survey of fast-fashion retailers by Fairfax Media in 2014 found that on the whole, Australian customers were paying up to 35 per cent more than their UK counterparts for equivalent items, often receiving them in store months later.

Deakin University's Steve Ogden Barnes told 3AW on Thursday that some of the pressure on Topshop's Australian operators was likely attributable to the high cost of doing business in Australia compared to overseas.

He said freight, labour, rents and taxes are all higher in Australia, which may account for the higher prices of goods at the fast-fashion chains' local outlets.

Strange choices ... Topshop's all-plastic jeans drew ridicule across the globe .

Strange choices ... Topshop's all-plastic jeans drew ridicule across the globe . Photo: Supplied

Bad press for strange range 

While H&M; was grabbing headlines – and news camera-ready queues – for its designer collaborations with the likes of Balmain and Kenzo, Topshop has failed to create buzz. Or, more to the point, when it did it was often for the wrong reasons.

Most recently, the company received universal ridicule when it released a pair of totally see-through plastic pants.

One small silver lining has been Topshop's signing of Beyonce's active wear line, Ivy Park, because everything the singer does crashes the internet. 

Beyonce's active wear line, Ivy Park, has been one bright spot for Topshop, along with the popularity of its jeans.

Beyonce's active wear line, Ivy Park, has been one bright spot for Topshop, along with the popularity of its jeans. Photo: WeAreIvyPark/You Tube

Unpleasant stores

Let's be blunt. Compared to its rivals, Topshop's stores, in many instances, are unpleasant places to shop.

Stock is not well merchandised, lighting is poor and customer service can vary from patchy to non-existent, although the fitting room staff are mostly attentive. At Myer, which owns a 20 per cent stake in the Australian operation, Topshop is usually part of the youth section in the basement of stores. 

Compared to its rivals, Topshop's store can be unpleasant places to shop.

Compared to its rivals, Topshop's stores, in many instances, can be unpleasant places to shop. Photo: Scott Barbour

If Topshop Australia continues after the administrators finish going through the books, the company will need to close underperforming stores and invest in remodelling other sites to improve the brand's competitiveness against the likes of H&M; and Uniqlo, whose stores exude a sense of high energy, are well lit and, even if you hate dance music, grab the attention of shoppers.

Topshop for its part, has been asleep at the wheel. Now it's paying the price.

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