Photo/Shetuwang

Aug. 28 (NBD) -- Arcadia Group, the parent company of British multinational fashion retailer Topshop, and its Chinese partner Shangpin, an e-commerce platform offering branded and seasonal luxury products, have reached a mutual agreement to an early termination of their franchise agreement.

The British company formed an exclusive partnership with Shangpin in 2014 that made Topshop and Topman fashions available to Chinese shoppers.

NBD tried to reach out to Shangpin for comments via phone calls and e-mail on Monday, but no response has been received as of the press time.

Footwear and clothes industry commentator Ma Gang said that the breakup with its Chinese partner basically signals Topshop's withdrawal from the Chinese mainland. 

However, a spokesperson for Topshop held the company is seeking new business partners and considers China a hugely significant market for development. 

The spokesperson said in a statement, "Customers can still shop Topshop and Topman products via Shangpin and Tmall.com until November 30, 2018, and will continue to be serviced via Topshop.com and Topman.com."

After entering into the deal with Shangpin, Topshop planned to open 80 stores in mainland China. The first Topshop store is expected to open at New Hualian Mansion in Shanghai in September this year, according to media reports. NBD found in an onsite visit that the store's decoration had been suspended. An informed source who claimed to be one of the mansion's tenants told NBD that Topshop has dropped the store plan, and four to five brands including Zara are now making a bid for the storefront. 

Decoration of the Topshop store already suspended (Photo/NBD) 

Data shows that Arcadia is not in a pleasant situation at present. 

Underlying operating profit at Taveta Investments Limited, the holding company that owns Arcadia, fell 42 percent from 215.2 million pounds (282.7 million U.S. dollars) to 124.1 million pounds (163.0 million U.S. dollars) for the year to August 26, 2017, on sales down 5.6 percent to 1.91 billion pounds (2.5 billion U.S. dollars), according to Reuters. The holding company blamed the impact of e-commerce platforms and intense competition in the UK for the falling profits. 

Commentator Ma Gang told NBD that Topshop started late in mainland China and is not as well-known as the four other fast fashion brands - Zara, H&M, Uniqlo, and GAP. Plus, its pricing is relatively higher, which further weakens its competitiveness. 

Not only so, Topshop's marketing and distribution strategy is also much-maligned. NBD noticed that fashions sold by the British retailer on Chinese e-commerce platforms are not as many as those available on its portal, and the size chart doesn't fit the preferences of Chinese consumers. 

Industry insiders pointed out Topshop didn't provide sufficient resources and capital to boost the cooperation with Shangpin. 

Cao Lei, director of the China E-Commerce Research Center, said to NBD that to expand in the Chinese market, foreign fast fashion brands must have the capability to compete with other foreign labels as well as emerging indigenous fashion marques, and meanwhile, they should single out the right partner for sustainable development.

Email: lansuying@nbd.com.cn