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Topshop takes on local retailers

UK fashion retailer Topshop has opened its second store in Australia, in Sydney today, following its first store in Melbourne’s Jam Factory last December. That store was a massive hit, and media reports suggest the Sydney store could be just as popular. So much for retail bricks-and-mortar stores being dead.

Topshop is looking to open seven stores in Australia over the next two years, expanded into Brazil and Chile earlier this year, and is planning to set up shop in South Africa and Canada.

The overseas invasion of international fashion retailers is set to continue, following in the wake of Zara and Forever 21. Swedish retail giant H&M is also coming to Australia in the near future.

Chief Executive of Topshop Topman Australia, Hilton Seskin, has told the Australian Financial Review that “Retailers have to think differently and I think that landlords have to start adjusting their thought process,” adding, “You can’t just charge rents until somebody goes broke.

Local retailers are worried, with their sales and profit margins falling. Department stores David Jones Limited (ASX: DJS) and Myer Holdings Limited (ASX: MYR) recently reported big falls in annual profits.

But retailers could take a page out of the book of their overseas rivals. Topshop is reported to have more than 280 floor staff in the Sydney shop alone, fitting rooms are on every level and there’s even a free personal shopping service, where a Topshop stylist will assist shoppers pick styles according to taste and body shape.

Rather than ordering product months in advance, Topshop relies on distributing product to stores twice a week from a central warehouse, and frequency may increase depending on demand.

For fashion retailers like Premier Investments (ASX: PMV), the company behind names like Jay Jays, Dotti and Portmans, and Speciality Fashion Group (ASX: SFH) with its Katies, Millers and Crossroads brands, Topshop could provide a retailing model to aspire to.

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Motley Fool writer/analyst Mike King owns shares in David Jones. The Motley Fool’s purpose is to help the world invest, better. Take Stock is The Motley Fool’s free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. Click here now to request your free subscription, whilst it’s still available. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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