British fashion group Arcadia announced on Monday that it has fallen into administration, leaving 13,000 jobs at risk. The downfall of the London-headquartered company has been creeping up in recent years, as its extensive portfolio of brands – which includes British high street staples like Topshop, Dorothy Perkins, Burton, and Miss Selfridge – have come to feel outdated compared to the likes of faster, digitally-native mass-market names, such as Boohoo and ASOS, and Arcadia Group’s market share, as a whole, has slumped from around 4.5 percent in 2015 to 2.7 percent in 2020.
Yes, Arcadia’s hold on the high street has waned over the years with dozens of outlets closing nationwide, and many industry experts and past employees, alike, laying the blame at Arcadia owner and chairman Philip Green’s feet, citing lack of investment in online retailing and outdated ways of sourcing product. And against that background, Topshop, a stalwart of teen and 20-something fashion, and the jewel in the Arcadia crown, has become the latest fatality of this crumbling empire and undoubtedly the one that tipped it into administration.
The legacy of the Topshop women’s fashion chain started in Sheffield and London in 1964, in the basements of the Peter Robinson department stores. The aim was to sell fashion made by young British designers. Crucial to the brand’s early success was Topshop’s buyer Diane Wadey, who was known in the business for having a keen eye for young talent.
In 1974, parent company Burton Group made Topshop a standalone store. Within two years, the brand’s primary target market became 13 to 24-year-olds, it opened 55 standalone stores and garnered £1 million in profit. The brand was so successful that Burton launched its male equivalent, Topman, in 1978.
The 1980s and early 1990s saw a fragmentation of the UK mass market as the emergence of value retailers – such as Matalan, New Look and George at Asda – put pressure on price reductions for fashion retailers. To maintain a competitive advantage, Topshop handed its reins over to Jane Shepherdson, who was hailed as the “most influential person on the British high street” during the mid-1990s. Credited with democratizing women’s style and changing the way they buy and wear fashion, under Shepherdson reign, the Topshop brand was transformed into a style mecca, known for offering up well-designed, style-savvy clothing.
By the early 2000s, the retail landscape was changing again. The advent of the internet meant that designer catwalk collections, which had previously been a closely guarded secret, now became readily available at the touch of a button. Clever high street design and buying teams were able to use these catwalk images, interpret them swiftly for production, and cut down the six-month wait for high street “versions” of much-desired designs. Shepherdson and her team excelled in exploiting this opportunity by delivering up-to-the-minute and competitively priced fashion to the masses in a matter of eight weeks.
After 20 successful years at the helm, and with turnover more than £100 million per year, Shepherdson abruptly departed Topshop in 2006. The press blamed a fall out between her and Green over decisions to allow supermodel Kate Moss to design lines for the chain. However, industry insiders and Shepherdson, herself, deny such speculation.
What is without debate, from the moment that Shepherdson left, the road ahead for Topshop – now under new management – was a tough one.
Where it all went wrong
Ironically, Topshop’s unique selling point as “the closest a high street shopper got to catwalk fashion” was its demise. The more fashion lines the retailer gave to its consumers, the more demanding they became. The competition was also becoming fierce as the high street exploded with world-class international retailers, including online upstarts like Boohoo and ASOS, and extra value retailers like Primark, which combined low prices and savvy digital marketing techniques.
As more people started to shop online, Green failed to invest in digital retail channels leaving them unable to compete with competitors. Online sales are increasing year on year, driven by Topshop’s key demographic – the 14-24-year-old market.
As people have increased their dependence on e-commerce, foot traffic to local high streets has massively decreased in the last ten years and dropped massively during the pandemic, in particular, with a whopping 80 percent drop nationwide in the UK in April. Topshop’s fixation on physical retail and its unwillingness to let go of its network of brick-and-mortar shops was also a setback. As of June 2020, Arcadia’s rival Inditex, for example, maintained 107 stores in the UK, including those for Zara, Massimo Dutti, and Pull and Bear, among several other brands. By contrast, Topshop, alone, has more than 300 physical locations across the UK.
At the same time, Topshop suffered following Shepherdson’s departure, as under her watch, Topshop had been nimble in its reaction to catwalk styles, and the company seemingly lost this ability after her departure. Fashion companies need to react quickly to emerging trends. Bringing suppliers of products closer to home ensures that companies can capitalize on what’s “hot” in a speedy manner. The closer the supplier, the shorter the lead time, making a retailer more flexible in its stock turnover.
Zara’s parent company Inditex, for example, has mastered this method, whereas Green’s lack of strategic supplier relationships and his proclivity for buying from Asia, on the other hand, have meant that it takes a relatively long time for Topshop to get a product from concept to shop floor.
Still yet, the group’s sales also took a hit in 2018 when shoppers boycotted Topshop after Green was accused of sexually harassing and racially abusing staff. The boycotts went so far that activists pressured mega-star Beyoncé, who had launched her popular activewear brand Ivy Park under Topshop in 2016, to cut ties with Green and Arcadia. (The star’s company Parkwood ultimately bought out Green’s 50 percent stake in Ivy Park, and has since relaunched the venture with adidas).
The collapse of the Arcadia group marks the UK’s largest corporate casualty of the pandemic so far. However, Topshop’s is unlikely to disappear altogether. Strong heritage and high brand awareness in the UK – two keys elements that investors and acquiring companies look at in instances of retail bankruptcies – means it will probably continue to exist, even if that means only online.
Julie Hodson is a Senior Lecturer in Fashion Business at Manchester Metropolitan University. (This article was initially published by The Conversation).