Topshop has reportedly signed a deal to open 80 stores in China, but the Arcadia-owned fashion retailer would be wise to tread with caution. 

The retailer needs to be sharp in terms of its location choice and product selection.

While the retailer already has an online presence in the region through ShangPin and Alibaba’s Tmall, Topshop is late to the party when it comes to a bricks-and-mortar presence, and even more so as store openings are potentially still a year away.

The market is already saturated by fast-fashion global retailers, with H&M having over 300 locations and New Look near to 100, providing multiple challenges for Topshop to overcome before winning over customers.

Whereas its competition is well established in their operational infrastructure, store technology, product selection and price range to ensure successful trading in China, Topshop will remain on unsettled footing during its first few seasons as its competition continues to revel.

Range selection

Therefore, range selection will prove key for the Chinese market, and Topshop should play on its more divergent collections, such as its Ivy Park collaboration with Beyoncé Knowles, to create a distinctive and individual presence compared with its ingrained competition.

Additionally, when entering a new territory, the retailer is likely to initially experience strong sales growth – especially at the scale it intends to with around 80 stores.

However, it is important that Topshop ensures the investment converts to profitability as its sales pace naturally slows down with maturity over a few years, especially given China’s unsettled economy.

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