TOPSHOP BRAND ROADMAP - Research 2

EXECUTIVE SUMMARY

COMPETITORS

High/low price – high/low quality

High/low price – high/low popularity

High/low price –

Online presence – strong/poor

Trend/age

High street/online

Both ASOS and Next Online have shown sales and operating profit growth, another indicator that consumers are choosing to shop online rather than in-store. In ASOS’s financial year ending August 2018 the company recorded its annual turnover as £2.4 billion, an increase of 24% at constant currency exchange rates, and operating profits increase to £101.9 million an increase of 28% from the previous year. Next’s third-party online website Next Online’s (previously Next Directory) 2017 annual turnover increased to £1,887.4 million a 9.2% increase from the previous year and its online profits rose to £461.2 million an increase of 7.4% increase year on year.

In 2018 ASOS introduced many additions to its online services including payment options such as Google Pay, Apple pay and Try before you Buy which allows customers to order products to be sent to their home, try them on and only pay for the ones they want to keep. ASOS also introduced same-day delivery to four UK cities.

ASOS has been constantly focusing on promoting a positive body image, diversity and inclusivity throughout its ranges. ASOS was involved with several collaborations in 2018 with ranges including handbags such as its ASOS x Hello Kitty and ASOS x Simpsons collections. See more in the Launch activity and innovations section of this Report.

Next has the benefit of the advertising from its high-street store portfolio, however, as its physical stores struggled, its online arm of its business showed healthy growth. Next has been improving its online services by launching incentives such as its unlimited delivery services, which enables customers to have unlimited deliveries for £20 per year in an attempt to compete with online competitors such as Amazon. Next has also made a strategic decision to charge its customers £1 for each parcel they want to return through a Hermes ParcelShop but offer free in-store returns as an incentive for customers to return in-store, giving the company the opportunity to convert those returns into exchanges or even capture new sales.

It is again apparent that the high street is struggling, with both River Island and Topshop/Topman’s figures for 2017 showing a decrease in turnover and operating profits. River Island recorded a turnover of £901.9 million in its financial year ending December 2017, a fall in sales of 2.3% year-on-year, the high street retailer also saw its operating profit drop to £88 million, a decrease of 33.8%. Topshop also saw a reduction in turnover in its 2017 financial year with its UK annual sales falling to £846 million a reduction of 7.6% year-on-year. Topshop/Topman’s total operating profits almost halved (-49.1%) in 2017 to £83 million as the company invested in its omnichannel services. Topshop has been widely criticised in recent years for not catering to the 25-34-year-old customer, particularly as such customers were loyal followers of the brand during its glory years. According to data from Mintel’s Clothing Retailing – UK, October 2018 Report, almost half (47%) of consumers that have shopped with the retailer in the last year were aged 16-24, but the retailer faces tough competition from cheaper, youth-focused pureplay retailers such as Missguided and boohoo and, judging by its financial results, Topshop is currently failing to create a compelling product offer for this customer.

Topshop used to be among the most trend-led, cool and innovative retailers, but it has fallen behind the curve as it has failed to keep pace with changes in how young women are shopping for fashion. In 2018 Topshop/Topman appointed Anthony Cuthbertson as its new global design director who has recognised that Topshop has not been providing for the women who were by its side in its glory years. Cuthbertson has been quick to admit that a good deal of what is on the shop floor in Topshop is designed with a ‘girl in mind, and he has been focusing on expanding Topshop’s premium Boutique line. Its new strategy is to reconnect with its older customers and rekindle their brand loyalty to get customers who shopped with Topshop when they were younger back in-store.

This summer, Topshop tapped into the beaded handbag trend with its own version called the Mini Mykonos beaded tote bags, with its £29 price tag the bag appear to be popular over social media platform Instagram.

As the pressure from its high street competitors continues, River Island announced in April 2018 that it would launch five new flagship stores by the end of 2018, the first opened in Leeds in April 2018. River Island has chosen to promote a positive message through its February 2018 campaign by choosing, six children with disabilities as its new faces to celebrate diversity. As of April 2018, River Island launched an online shop dedicated to third-party menswear brands in an attempt to capture a greater share of the menswear market. Brands included are Bellfield, Hype, Jack & Jones, Lee Jeans, Levi’s, Only & Sons, Schott, and Wrangler. River Island celebrated its 30^th birthday in 2018 with a birthday collection of clothing and accessories, the range featured an embellished cross body bag retailing at £25 to celebrate the occasion.

CONSUMER DEMOGRAPHIC

APPENDIX 

Mintel Academic. (2019). Handbags UK January 2019. Retrieved from: https://academic.mintel.com/display/939442/?highlight#hit1