Shangpin may raise up to US$150 million to bankroll Topshop’s brick-and-mortar China foray
Topshop, regarded as being late in building a global retail network, is set for an aggressive expansion in mainland China beginning in 2017
Topshop’s Chinese partner Shangpin.com is seeking to raise between US$100 million and US$150 million to support the British high street chain’s first brick-and-mortar push into mainland China with a goal of opening more than 100 outlets in five years.
David Zhao, founder and CEO of the Beijing-based online fashion retailor, said the money will be used to lay a solid foundation for the opening of Topshop and Topman stores and the inaugural launch is expected to be in the fourth quarter of 2017 or early 2018.
“The early-stage investment [for the offline stores] will be made by both of us. For the future expansion, we haven’t ruled out the possibility to set up a joint venture for the mainland business,” Zhao said in an interview with the South China Morning Post.
Topshop, recognised for its youthful designs and collaboration with fashion icons, including supermodel Kate Moss, announced in London last week its partnership with Shangpin.com to set up offline chain stores in the world’s fastest-growing retail market. Topshop apparel has been available online in China since 2014 via Shangpin, which has 30 million registered users.
Fast fashion brands Zara and H&M entered the mainland market about 10 years ago and each has hundreds of outlets. Topshop, which has been comparatively slow to take its brand global, has 140 stores outside the United Kingdom. The company debuted in Hong Kong in 2013 and now operates three stores in the city.
Despite its late arrival to the mainland market, Zhao described the brand as having significant potential appeal among mainland shoppers. “Topshop, which has unique DNA in design, has been endorsed by many celebrities in the west. I can see that it has the potential to hit annual sales of 10 billion yuan in China,” Zhao said.
Zhao said when he first approached Topshop for an online cooperation four years ago, he had eyed the franchise opportunity to expand the brand’s business via brick-and-mortar stores.
Shangpin said its retail strategy featuring online-to-offline synergies such as “click and collect”, “ship from store”, and “scan and buy”, helped set it apart from rivals seeking to work with Topshop in China.
Data and technologies hold the key to Topman and Shangpin’s multi-channel adventure.
With a heavy investment to boost Topshop’s brand, Shangpin has seen online sales of the British fashion brand more than doubled between 2014 and 2016. Zhao said his company managed to sell 1 million pieces of Topshop merchandise year to date.
“We are the only company in the world that has a deep knowledge about how Chinese shoppers think of Topshop and its products,” Zhao said.
He added that brand is popular in China’s major cities as well as smaller inland cities like Wuhan and Chengdu.
Shangpin, founded by Zhao in 2010, has raised funds from prestigious businessmen and venture capital firms, including Lei Jun, head of Chinese headset manufacturer Xiaomi and Morningside Ventures. Its latest fundraising closed at the beginning of the year, raising 250 million yuan.
The company in 2015 dismantled its variable interest entity structures, which is often a sign a company is planning to a public share listing in China. However, Zhao said there is no timetable or specific location in mind for a share listing.