Can TopShop conquer the Big Apple?

This Thursday (2nd April) sees the UK's best loved fast fashion brand open its doors in New York. The much anticipated launch of Top Shop and Top Man at 478 Broadway is the culmination of Sir Philip Green's dream to bring the jewel of his retail crown to fashion hungry New Yorkers.

For years, New York fans had to rely on their British friends and family to snap up the latest offerings from TopShop's flagship Oxford Street Store, until “capsule” collections were made available at Opening Ceremony (2004) and more recently Barneys (2007). In September, a US website was launched, no doubt in part to quench the thirst of US consumers after the store's opening was delayed.

While some commentators (reported in Drapers) warn that now is not a great time to be launching a new brand stateside - US Census Bureau figures show clothing and accessories spend last month fell by 6.5% to US$15.1 billion(£10.3bn) against February 2008 - others say TopShop's inexpensive trend-led fashion is exactly what New York's recessionistas are looking for. Quoted in the New York Observer TeenVogue fashion news director Jane Keltner says: "We’ve been waiting with bated breath. “It’s just what the recession-weary New York City fashion girl wants and needs right now—great clothes at a good price.”

TopShop's publicity director, Andrew Leahy, has acknowledged that the offering will be tweaked to cater for the NYC girl. He said "We know that in New York there are a lot of brands offering great basics,” he said. “So ours will be a little more fashion-heavy, more fashion specialties per square meter in a way. We don’t buy huge bulk of any one style, we don’t buy millions or even hundreds of thousands; we might buy 5,000 or we might buy 50.” This is reported to include new collections by top British designers Jonathan Saunders and Preen, alongside the successful Kate Moss collections. Sir Philip Green's US ambitions don't start and end with the Big Apple. In yesterday's Sunday Times' Style magazine, he lists Miami, Los Angeles, Las Vegas, Boston and San Francisco as possible locations for new branches.

Fashionista hopes very much that New Yorkers' love affair with our much loved brand was not dependant on its inaccessibility and therefore exclusivity. Let's hope the love affair continues and builds a broader fan base now that the Big Apple will have its very own TopShop on its doorstep.

Bling is dead . . . . .

Fashionista does not want to end the week on a down beat note but is saddened to learn that bling is no longer acceptable - or so says Karl Lagerfeld who has told us to embrace an era of "new modesty". The credit crunch spares no -one - and that includes the luxury brands. Hugo Boss this week reported growth in sales but decreased profits following one off management re-structuring charges. Hermès, PPR and LVMH have reported good results - but they are for last year and this year may be a very different story. Christian Blanckaert of Hermès International speaking at a conference in India this week said that the company was working on a month by month basis with "absolutely no visibility into 2009". And what makes the outlook bleaker still is that in this new era of modesty or even austerity luxury can be seen as provocative when so many people are so poor.

So, how will the luxury brands maintain their appeal during the economic downturn? Sustainability (as everywhere) is important. And Fashionista is pleased to hear that investment in a classic, timeless leather handbag may be justifiable on this basis - just one that is and she must make it last. As for those who still have money to spend, one answer may be to present the goods to them in such a way that the customer does not feel embarrassed to be seen going into an upmarket store. Fashionista predicts that a new trend for home shopping, not just on-line, is arriving. Tanner Krolle now sells from discreet offices in Mayfair so why not a personal home visit with a selection of must-have pieces for the valued luxury client? Fashionista is up for this but is not sure if her post code will make the grade.

Style Insider: inside the brand

Fashionista is impressed by the initiatives that brands are taking to reach wider audiences and, ultimately, attract customers at a time when consumers are watching their spending and brand loyalty is being threatened as a result.

Fashionista has read reports that buoyant high street brands - whose primary targets are teens and young twenty some-things - are relatively unaffected by the economic downturn, but is impressed by brands that are not complacent. In particular, Fashionista loves high street favourite River Island's recently launched "Style Insider" website.

Style Insider is a community site and a blog aimed at encouraging interaction between the brand and consumers. It has a "we're friends - lets talk about fashion" feel to it, and features River Island employees who write about their personal style and what's hot in fashion. This sense of familiarity with brand "insiders" will no doubt cement the foundations for brand loyalty amongst visitors to the website.

Fashionista thinks this is a clever marketing strategy. The string of consecutive Christmas No.1 singles for the last 4 years by X Factor winners illustrates the rewards of such interactive initiatives only too clearly. Allow the audience to interact and "get to know" the people behind a product - and with a bit of luck and a measure of talent - the audience will be drawn to the product more than it might otherwise have been which, irrespective of whether or not times are tough, can only be a good thing.

Agent Optimism

Fashionista is excited at the news that Agent Provocateur has released plans for growth. Lingerie appears to be outperforming clothing in the current climate and in response, Agent Provocateur intends to more than double the number of its stores and concessions up to 2012. The retailer has at present 43 outlets in total, including 13 new outlets that have opened since 2007.

Another retailer, Supergroup with its brands Cult Clothing and Superdry are also reported to be planning expansion. The company currently has 22 stores in the UK and plans to open another 40 stores over the next three years. Commenting in the Guardian, Rupert Eastell, head of retail at accountants BDO Stoy Hayward (and a friend of Fashionista) pinpoints Superdry as one of the biggest retail recession-busters. He says "Mainstream fashion is all about who is doing least worst at the moment. Sales are likely to go down 15% this year. Success is about niche players and those two [referring to Superdry and Jack Wills] have really found a niche".

There also appears to be further movement in the market at Westfield, the recently completed shopping centre in White City, London. Footwear retailers, Deichmann and Foot Asylum and Bebe Bisou, a luxury children's fashion chain are all committed to taking leases. Since Westfield's launch in October 2008, more than 40 new stores have opened.

Fashionista thinks it nice to hear some good news stories in these troubled times!

This is not just Code...this is M&S Code

On 18 March 2009, the FRC published a call for evidence, as part of its review of the effectiveness of the Combined Code ("Code"). The FRC is seeking views on both the content of the Code and the way it has been applied by companies and enforced by investors using the "comply or explain" mechanism. The FRC is inviting comment on any aspect of the Code, including the respective roles of the chairman, executive and non-executive directors with comments requested by 29 May 2009.


Fashionista imagines that Marks and Spencer's shareholders will be one group that will have strong views on the way that the Code has been applied by companies. As reported in the Sunday Times on 22 March 2009, it seems that institutional investors have met with Jan Du Plessis (an independent non-executive director of M&S) recently to raise concerns that Sir Stuart Rose, the M&S boss, has too much power. They want Rose to split the role of executive chairman and chief executive, a position which is contrary to corporate governance best practice - and appoint a new senior independent director. The meeting comes almost a year after 22% of M&S investors abstained or voted against Rose's appointment to executive chairman.

The Code Provisions state that:

• The roles of chairman and chief executive be separated and the division of responsibilities between them set out in writing by the board (Code Provision A.2.1).


• A chief executive should not become chairman of the same company; and if the board decides otherwise, the major shareholders should be consulted in advance of the appointment and the reasons should be set out in the next annual report (Code Provision A.2.2).


• At the time of appointment, the chairman should meet the independence criteria set out in the Code ( Code Provision A.2.2). In addition the board needs to agree a high level statement of which decisions are to be taken by the board and those that are delegated to management.

Companies admitted to listing by the UK Listing Authority and incorporated in the UK are required to "comply or explain" their approach to corporate governance by including a statement in their annual financial reports confirming their compliance with the Code or giving reasons for any non-compliance.

The Code provides that if a Board decides that a chief executive should become chairman, the Board should consult major shareholders in advance and should set out its reasons to shareholders at the time of the appointment and in their next annual report. M&S's statement indicates due to concerns over the risk of leaks and the sensitivity of the changes, the Board did not meet these requirements. However since the announcement, the statement explains that Lord Burns has consulted with a number of principal investors and shareholders to set out the detailed reasons behind the Board's decisions. Despite these efforts, one leading investor told The Sunday Times: “We retain concerns about the M&S board - and we know a lot of other shareholders do. It is difficult to point to evidence that Rose's combined role is benefiting the company and there are growing questions about the performance of the business.”

BRC budget submission 2009

Fashionista has just finished reading the British Retail Consortium's budget submission for 2009. As we all know, it has been a challenging time for retailers and the prospects for recovery in 2009 do not look good with many believing that it will be the toughest year in decades.

The BRC have therefore produced a document which has been sent to the Government setting out the measures which they believe need to be put in place to assist retailers to weather the current downturn and help put retail on the road to recovery.

The submission concentrates on preserving opportunities by avoiding the imposition of additional costs on retailing and promoting new opportunities by investing for the future to secure recovery. Fashionista has summarised some of the key points covered in the submission below:

Property

The BRC asks the Government to address property cost burdens which is clearly a high priority in a property intensive sector. The submission proposes an immediate freeze on all new business rate burdens and a reinstatement of Empty Property Rate Relief. In addition, the Government is asked to ensure that new development is not deterred as a result of new and heavy burdens following the introduction of the new Community Infrastructure Levy.

People

Retailing has always been a major local employer with around 3 million people, or 1 in 9 of the working population, employed by the sector. The submission therefore focuses on measures which can be taken in this area to support businesses. One such suggestion is that this year's National Minimum Wage increases should be kept to no more than 1-1.5% to enable retailers to maintain, and where possible increase, job opportunities. The Government is also encouraged to drop its proposed National Insurance increases.

Process

The temporary VAT reduction has cost retailers millions due to the short notice and timing. Further significant costs will result from the return to the 17.5% currently scheduled for 31 December 2009. BRC proposes that the reintroduction of the 17.5% VAT rate is postponed by at least one month so as to miss the important post-Christmas sales period.

Fashionista hopes that the Government takes some, if not all, of the proposals on board which will hopefully go some way to easing the pressure on fashion retailers over the coming year. Fashionista will be doing all she can to boost the retail market herself - as if she ever needed an excuse to do more shopping!

From "outlet" to "outnet"

Fashionista - in "Recessionista" mode - is excited by the news that NET-A-PORTER will launch "theOutnet.com" website next month: an online outlet of over 200 luxury brands sold at discounted prices. Fashionista is all too aware of the plight of many high street shops struggling to meet rent payments. Tenants are seeking to negotiate with landlords for rent to be reduced where rent at the normal rate may otherwise force shops to close. Whilst loss of income is an unattractive prospect for anyone, landlords may be convinced to reduce rents rather than risk having empty properties.

Many luxury brands already have physical outlet premises (whether independent factory stores or as part of "outlet villages"). However, the new virtual platform proposed by NET-A-PORTER paves a way for clearing old season or surplus stock at minimal cost. It also allows for those brands which do not have a physical outlet to sell surplus stock.

Fashionista thinks this is a great idea - and a "win-win" for brand owners and consumers alike. For the brand owners, the storage costs for the goods will be minimal and the target consumer group will be considerably wider, so there is a potential for stock turnaround to be much faster. For consumers, a discounted price tag in the modern economic climate is an undoubted lure for many, and the comparative ease of online shopping is undeniable in today's fast paced lifestyle where outlet premises are not always on one's doorstep. Sign-up today by clicking here!

Who says labels don't have pulling power?

Naturally Fashionista would only be seen wearing the best labels, and her good taste in clothes has never been impugned. She was however shocked to the core when she discovered that some of her men friends had been binge-spending on the latest brand fads which came from ... no, it can't be true ... Wal-Mart!

Right: is it a real Abboud, or a genuine Wal-Mart? Just tug the label ...

The story (according to WalletPop) goes like this. Burlington Coat Factory ("Up to 80% off! Everyone Loves a Good Buy") has been caught passing off low-priced Wal-Mart coats as premium Perry Ellis and Joseph Abboud ("Style with substance") stock. This audacious ploy would have gone undiscovered if a rather surprised customer hadn't noticed that his designer label appeared to have been pasted on. When he gave it a tug, the truth was out. It was nothing but a Wal-Mart product going under a fancy nom-de-plume.

A full-price Perry Ellis coat ($200) looked like a snip from BCF at less than $70 -- except that the original Wal-Mart version, minus the designer label, sold for about $30. BCF denied all knowledge, blaming its suppliers, who in turn blamed a rogue employee who has not been named. Duped shoppers have been offered a full refund plus 20%, which, in the current market condition, they are more likely to spend at Wal-Mart, than BCF.

Online, cross-border: new report published

The European Commission has just published a new report on cross border trade in the EU which contains some interesting stats and information for fashion e-tailers thinking about wider European opportunities. Running at 75 pages, it isn't likely to be your bedtime reading of choice, but luckily you have Fashionista to tease out some of the juicy bits for you!

• The overall the conclusion is that consumers are still not regularly purchasing items over the internet from other European countries. Some of this is down to personal-based decisions, for example language differences, the efficiency of different postal or payment systems and just familiarity and trust.


• But it isn't just this, since 33% of EU consumers say they are willing to purchase goods and services in another language (good news for UK e-tailers given that English is so widely spoken as a second language in Europe).


• It seems instead that many e-tailers simply aren't wanting to take orders from outside their own country and so impose the barriers themselves. Sometimes this is because of concerns about mulitiple jurisdictional compliance costs and tax management and the Commission is going to look into such barriers further.


• 3/4 of all EU retailers only sell domestically but 1/3 of consumers said that they would consider buying from another country because a product was better or cheaper.


• The UK maintains the second highest user or e-commerce services, pipped by Denmark and closely followed by The Netherlands, Sweden, Germany and Finland so you might want to start thinking about the potential of Nordic markets although another option is where the fastest growth appears to be happening in France, Italy and Spain.


• Clothes and sports goods are the second most popular purchase (at 41%) after holidays and flights, with online retail sales for clothes and footwear totalling 7.3billion euros in their review period of 2002 to 2007.


• Luxembourg, Cyprus, Malta, Denmark and Ireland feature as the most open to cross-border online shopping. The report notes that in smaller and/or insular countries, cross border e-commece has outpaced domestic e-commerce because there is less domestic competition.

A fashion house that now houses people..

The renowned Italian fashion brand Missoni - famed for its rainbow catwalk prints which translate equally well to soft furnishings - is branching out into the hospitality industry. Part of a global licensing agreement in conjunction with The Rezidor Hotel Group, the first of 30 Hotel Missoni hotels is due to open in Edinburgh in June, with a second due to open in Kuwait later this year. A great showcase for Missoni, the hotel will expose guests to the Missoni brand and ethos in a way and to an intensity that traditional advertising simply cannot do.

This concept was embraced just over a decade ago with the opening of Charlton House Hotel in Somerset, after the property was purchased by the creators of the Mulberry brand and decorated with Mulberry soft furnishings - a great advertisement for the brand's ethos and products. Assuming this advertising strategy works (as it did in Fashionista's experience), the Mulberry factory shop is just a stone's throw away so hotel guests can continue to experience the brand at home.

Fashionista asks: is this an example of thinking outside the box in times of economic downturn? will branching out into the hospitality industry attract a broader consumer group, extending to those more likely to save up for an experience rather than an object: a mini-break rather than another addition to the wardrobe? After all, when times are tough, who knows when there will next be an occasion to wear said addition?

Don't be a prize criminal!

A common marketing tool is the competition and very successful they can be too (especially when they involve handbags in Fashionista's view!).

However, it is worth remembering there are laws which impact on how they can be structured and run. Many readers will have been all too aware of last year's furore about numerous TV phone in shows which kept the newspapers busy for months. But laws don't only apply to television competitions and phone-ins and could therefore bite on any website or print competition as well.

Below are some tips on what to look out for:

• If an entrant has to pay to enter (this could for example be by using a premium phone in line, purchasing a product or making another form of payment) and then the winner is selected based on chance, you could be deemed to be running an unlicensed lottery.
• If there is a payment to enter and the outcome depends on both chance and skill (for example you may have a qualifying question and then the winner is selected from the correct answers), you could be providing unlicensed gambling services.
• If entrants have to enter on the basis of deciding if something is true or not true or the outcome of an event, then you could be inadvertently providing unlicensed betting services.
• If in doubt, always make sure that there is a (truly) free means of entry to any competition with no strings attached that is prominently advertised or only run with the same format over and over again which you have had compliance checked.

Providing unlicensed services of the type listed above is in fact a criminal offence enforceable by the Gambling Commission and local authorities so it is worth taking that extra bit of time to check your competitions fall on the right side of the law.

Business rates to increase

Give the current economic climate, many retailers were hoping that the government could be persuaded to postpone the planned increase in business rates scheduled for next month. Despite Retail Week's "Rate Rage" campaign and Sir Philip Green's meeting with the Chancellor last week, it seems that the planned rate rises will go ahead.

In a letter sent to Retail Week (dated before Sir Philip Green's meeting), Alastair Darling makes it clear that "there are no plans to amend this system for 2009-10 and freezing rates for 2009-10 would cost almost £1billion in business rates foregone". The Chancellor goes on to say that "the Government recognises the difficulties being experienced across the economy. In response, at the Pre-Budget Report the Governement announced a decisive package of measures to provide an immediate benefit to business, including the cut in the main rate of VAT to 15 per cent, and measures that particularly help small and medium enterprises."

Many retailers believe that the VAT cut has done little to drive sales and criticise the government's decision to increase rates in the current climate. Quoted in the Sunday Times, Phil Wrigley, chairmain of New Look said "We have to make clear the damage [the government] is doing to the economy and to jobs. At best it is opportunistic- at worst it feels like a squeeze which is close to theft".

Fashionista notes that for once, retailers and landlords can be united in their opposition to the Government's tax policy (landlords have long been complaining about the requirement on them to pay rates on empty property), but whether such combined pressure on the goverment can force a review remains to be seen.

Data rules (if you know the rules)!

It is well accepted that marketing efforts are better directed at customers who have already shown an interest in your business, than in constantly looking to win over new customers. But how can fashion businesses tempt one time customers to return and spend again and again?

Fashionista attended the Sheerluxe E-tail Conference last week and heard some interesting views on the subject from a range e-commerce experts. One, Kevin McSpadden of direct marketing agency more2, was explaining the importance of analysing your customer data so you can segement it, and identify those customers who are regularly spending the most and reward them for their loyalty, as well as spotting those who have recently lapsed and seek to win them back.

But before you can do any analysis, you have to build a critical mass. Kevin explained that in his experience, most businesses fail to understand the legal framework around data protection, and as a result miss out on marketing opportunities. For example, many businesses will only record and retain consumer details (and in particular email addresses) if the customer has opted-in. In fact (as is confirmed by the Information Commissioner's website) an etailer can record and send marketing emails to all new customers advertising their own goods/services provided they give them an opportunity to opt-out. Lethargy ensures that most don't and as a result the etailer's database thrives.

While all of us (Fashionista included) bemoan the quantity of marketing emails we receive, how many of us haven't been tempted by an email offering us a promotion on our favourite brand or an exclusive event at our favourite retailer? In these credit crunch times, promotional emails are a proven way to persuade us ladies to flex the plastic, and tailored emails are the most persuasive of all!

Straight to the Top!

Fashionista has been listening to the wise words of key players in the industry by courtesy of Radio 4. Yesterday's broadcast in the series Straight to the Top featured interviews with Sir Philip Green, Jane Shepherdson and Celia Birtwell. Fashionista was particularly interested in the discussion about value retailing - apparently it is very much here to stay and the spending power in today's troubled times rests with the 16-24 year olds who want speed, quality and variety when it comes to fashion buys. And this accounts in part for the increase in the on-line sales - and Fashionista has commented on this recently. So, there are lessons to be learnt from the Top Shop experience and Fashionista intends to "listen again" and you can do so too - at least for the next 6 days. Or if you prefer the written word try here

Mosaic is latest to go down "pre-pack" route

With the news at the weekend (reported in the Sunday Telegraph) that Mosaic

Fashions had debts of more than £400 million, and only three months left within which to arrange refinancing, it is heartening to learn the Mosaic group has gone into administration, with the UK business and assets of Warehouse, Oasis, Coast, Karen Millen, Anoushka G and the overseas shares of Karen Millen acquired in a pre-pack deal by a newly formed group called Aurora Fashions, owned by Kaupthing with a minority stake held by senior management. According to the Draper's report, through the administration the group has been able to streamline its operations putting it in better shape to cope with the economic downturn.

Deloitte, as administrators will continue to trade Principles and Shoe Studio, which are both in discussions with potential buyers. These will also continue to trade as normal pending sales. Former Rubicon diector Peter Davies confirmed at the weekend that he was interested in Principles, and Debenhams is also thought to have held talks. Deloitte are said to be confident that an announcement about sales of these remaining brands will be made in a couple of days.

Given the importance of the Mosaic stable to our high street and the number of jobs that were at risk, Fashionista thinks its great news that a deal has been done and hopes the newly formed Aurora Fashions makes it through what will undoubtedly be a rocky first year of trading.

Beverly Hills and the German shopping question

Is Beverly Hills known as a place to go shopping? This question recently troubled the Court of First Instance of the European Communities in Luxembourg in a decision, dated last December, that was published only last week.

Way back in January 1997 Giorgio Beverly Hills Inc (GBH) applied to register as a Community trade mark the words GIORGIO BEVERLY HILLS for, among other things, "clothing, footwear, headgear". In July 1998 WHG Westdeutsche Handelsgesellschaft mbH opposed this application, based on its existing registration for the word GIORGIO in Germany for "clothing (with the exception of hosiery)". The Opposition Division upheld the opposition since the similarity of the marks and goods was likely to confuse consumers.

GBH then appealed unsuccessfully to the Board of Appeal. Said the Board, since ‘Giorgio’ was the dominant element of each mark, they both looked and sounded similar and conveyed similar conceptual content. In particular, since designers and manufacturers of clothing and other accessories often opened stores in various locations, the words ‘Beverly Hills’ would be viewed by most consumers as an indication of the nature of the goods themselves, being

"a reference to the famous shopping quarter of Los Angeles, in the United States, one of the preferred places of famous designers and manufacturers",

rather than as helping to designate clothing as originating from GBH.

GBH next tried its luck with the Court of First Instance -- and this time it won. The Court held that since the earlier mark was registered in Germany, the key question was whether a reasonable well informed, observant and circumspect German shopping for clothing, footwear and headgear would be confused between the two Giorgios.

A German shopper confused?, certainly not! The Court decided that the words "Beverly Hills" were not, as the Board had suggested, of only weak distinctive force. Had not the Court already said so as long ago as 2003? Evidence submitted by the WHG that Beverly Hills was known as a shopping district was rejected, not because it was irrelevant but because it had been submitted for the first time at the appeal, depriving the Board of Appeal of the opportunity to review it.

The lesson from all of this? Fashionista suggests that brands take care when choosing their trading name and conduct full trade mark clearance searches before they commence use to avoid any confusion (actual or perceived) occurring. And if you are unfortunate enough to find yourself embroiled in a dispute, seek a early resolution. If your opponent as persistent as WHG, it could be a long haul - in this case over 10 years' worth of legal fees!