Topshop opens in Australia at last: Five secrets of its business model

The queues on Chapel Street said it all this morning – Australians, particularly young women, are ready to embrace the UK fashion juggernaut.

Melbourne has the first Topshop store in Australia, and Sydney will be next.

But it’s about time, many say: Australia is one Topshop’s largest online markets, and has taken to the company’s nearest rival – Zara – with enthusiasm.

So why does this business inspire such excitement? SmartCompany has compiled five reasons its business model works.

Speed matters 

Like Zara, TopShop’s model is built on getting its product from the cutting room to the store faster than anyone else. This means it can respond to changing fashions quickly and also means it can keep a tight rein on inventory – instead of holding vast quantities of products that it isn’t sure will sell, it can adjust stock levels in what is as close to “real time” as the fashion sector gets.

Quality matters

Unlike in the food industry, fast doesn’t mean cheap when it comes to Topshop. Like Zara and H&M, Topshop is aimed at the affordable fashion market, but there is an accent on quality goods with reasonably high price points – think more David Jones than Target. It’s a smart mix. By remaining at the higher end of the affordable market, Topshop can build reasonably strong markets.

Cutting-edge marketing

Playing to its core audience of younger consumers, Topshop has worked hard to stay on the bleeding edge of marketing. In August, the chain ran a location-based marketing promotion whereby consumers who went within 500 metres of a store was offered the chance to get rewards (such as a 20% discount in-store or the chance to win a shopping spree) for completing tasks, such as taking pictures of their favourite back-to-school outfit.

Many ways to sell

Like most foreign retailers, TopShop has an impressive emphasis on online and mobile marketing. In fact, an impressive 8% of its sales are through mobile devices. Kate Walmsley, head of e-commerce at Topshop, is quoted saying last month that mobile sales, including iPad, had grown by factor of three or four over 12 months. The 8% figure is about double the industry average, says retail trade body IMRG, and is likely boosted by its younger clientele and popular rewards programs.

Location, location

Topshop aims for premium locations and in Australia it is no different. Chapel Street remains the number one shopping strip for the young, the beautiful and the cashed-up. It’s a smart place to set up in Melbourne and likely to lure shoppers back to South Yarra.