The British (retail) invasion
Deejays, personal style advisors, and Kate Moss frocks have all helped make Topshop a British shopping destination. Now Sir Philip Green, the billionaire behind the affordable fashion brand, has his sights set on America.
(Fortune) -- Sir Philip Green spreads his arms wide inside the 40,000-square-foot space that will soon become the first U.S. location of his retailer Topshop. "This is awesome," he says, his voice echoing around the guts of the Lower Manhattan landmark building. Sunlight streams through the windows onto his broad face as his architects show him where the deejay booth will hang from the ceiling. "This is everything you would want in retail," he crows inside the cavernous space.
Suddenly the mood shifts as Green notices that the triple-height ceilings are airy, yes, but out of proportion. "When you come in, there's nothing worse than seeing a load of air," he says before lashing out at the real estate broker, who has been accompanying him on his inspection tour. He wonders aloud why construction has not yet begun, when the store's opening is scheduled for October. (It turns out that the permits haven't yet been received.) Clapping his hands over this reporter's ears, he shouts at the broker, "Get your f*@#ing act together, and get on this 24/7 - seriously!" If things aren't fixed, he points out, "we ain't going to make any money."
In today's tense retail environment, making the kind of money Green deems worthwhile is no easy feat. But it would be a mistake to bet against the former stock boy, who has used his unique abilities as a dealmaker, cost cutter, and retail turnaround artist to change British shopping. Today he is the CEO of two privately held retail companies - Bhs, formerly British Home Stores, and Topshop's parent, Arcadia Group. He is also Britain's ninth-richest man, worth roughly $8.6 billion. He socializes with Kate Moss and Simon Cowell, but he also knows how much each button costs on the dress you're wearing. "I love what Philip does," says Millard "Mickey" Drexler, CEO of J. Crew (JCG). "He's constantly breaking the rules, has no fear about taking risks, and is a shrewd businessman and merchant." The jewel in his crown is Topshop, a chain of 310 stores and 116 international franchises whose brand generates as much excitement from its style-obsessed fan base as Virgin Airlines or Apple (AAPL, Fortune 500) does from loyal customers.
At age 56, Green could easily be relaxing in his Monte Carlo penthouse, playing tennis with Prince Albert, or planning more parties like his 55th-birthday bash, where he flew 100 pals to the Maldives for five days of champagne-soaked revelry and a concert by George Michael. Nowadays, though, he's motivated by the challenge of turning Topshop's store in New York into the first of several in the U.S. "I always wanted to [do business] in America," he says, "and now, bluntly, I can afford to." Green is betting that Topshop, with its singular mix of English street fashion, reasonable prices, and fun services, will make it big. A higher-end, quirkier version of fast-fashion chains such as H&M or Zara, with party clothes, accessories, and daywear, Topshop offers middle-market consumers the chance to dress like their fashion idols - many of whom shop there too.
Yet American markets can be tricky for pond-hopping merchants. While IKEA and the Body Shop found a niche, Laura Ashley burned hot, then faded fast. Marks & Spencer bought Brooks Brothers in 1988 for $750 million and sold it for $225 million 13 years later. "The classic mistake is [assuming] a cultural affinity that isn't quite there," says Nicholas Alexander, a professor at the business school of Aberystwyth University in Wales.
Green, an expert at bucking conventional wisdom, pooh-poohs all that, saying that Topshop will succeed because it offers something fresh at good prices in tough times. "You've got to be quite brave, haven't you?" he admits. "But we've got a reason to be."
Like Green, Topshop is a throwback to an era when retailers took their cues as much from P.T. Barnum as Jack Welch. Walk into Topshop's flagship store on Oxford Street in London and you feel as if you've fallen into what Green calls "a world of make-believe." There's a salon offering blowouts for 21 pounds (about $42), a manicure station, a Willy Wonka-esque sweetshop, and a concierge who can get you Jonas Brothers tickets. Bouncing around with armloads of clothes are style advisors, professional stylists who, for no charge, will spend two hours helping literally anyone update their look.
Which is how I ended up standing in my knickers, as the English say, in a private room with a zebra-skin rug and a rackful of clothes that don't exactly scream working mommy: Am I really going to wear a skintight gray pencil skirt with extra material in the derrière? Jessica Wright, my 26-year-old style advisor, who is wearing a tiny black skirt and towering heels, couldn't have been more encouraging. (She even lets me peek at some microscopic items selected for pop star Ginger Spice.) "It's fine if you say, 'It's disgusting!'" she says of my new wardrobe. "We're just trying to show [customers] the brand and then adapt it for that person."
With Jessica's help I do end up buying a tight pair of jeans (that will sell in the U.S. for $80), a few peasant blouses, and a black dress (also $80). The merchandise works, but given the current weakness of the dollar, Topshop is not the bargain it was a few years ago: A billowy white pleated shirt similar to the one I bought for $64 retails for $35 at H&M and $59 at Banana Republic, where the cotton is thicker. But then again, you don't get style advisors at H&M. Or anything like Topshop-to-Go - a Tupperware party for fashionistas in which a style advisor shows up at your home with outfits for as many as ten people - or Topshop Express, a delivery-by-Vespa service for fashion "emergencies." "What they bring is that unique sense of British wit and audacity," says Andy Bateman, CEO of the New York office of Interbrand. "I think they're going to hit it out of the park."