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Nordstrom’s Asos Joint Venture: What to Know and Why it Matters

Nordstrom Inc. is taking its connection with the Topshop and Topman brands to a deeper—and global—level.

The department store has taken a minority stake in Asos Holdings, which owns the two labels, along with Miss Selfridge and HIIT. Asos acquired the millennial and Gen Z-loved brands in February.

The Nordstrom-Asos joint venture also gives the American retailer the exclusive multichannel rights to all of North America, which means it’s the only retailer that can sell Topshp and Topman brands in a physical store. Nordstrom doesn’t yet sell either Miss Selfridge or HIIT.

Pete Nordstrom, president and chief brand officer for the Seattle-based department store, said the arrangement helps Nordstrom “create newness and excitement for this important dynamic customer segment.”

“We could not have found a better partner in Asos, the world leader in fashion for the 20-something customer, and are thrilled to have the opportunity to work with them to reimagine the wholesale/retail partnership,” he added.

Joint ventures and collaborations have been the new “deals” taking hold in the fashion world. HSBC luxury analyst Erwan Rambourg in May said that by banding together, companies can learn from their new partners’ strengths. Earlier this year, Giorgio Armani said that his eponymous company could someday link up with a joint venture partner. Mytheresa entered the circular fashion world by teaming with luxury fashion resale platform Vestiaire Collective. Kohl’s has its groundbreaking partnership with Amazon.

“The pandemic has changed how these companies operate and opened the door to new ways of leveraging their brand that we have never seen before,” Dana Telsey, chief investment officer of Telsey Advisory Group, said last month of the rise in new tie-ups. “There will be more unexpected alliances as the creative search for enhancements to gain greater sales dollars from existing customer and attract new ones is underway.”

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The shared-ownership structure, a first of its kind for Nordstrom, enables the duo to closely collaborate, given that Asos retains operational and creative control of the Topshop brands. And Nordstrom, in turn, will take a seat on the Asos board. A Nordstrom blog post said its “investment will help drive the growth of these brands globally,” adding that the joint venture is “a great example of our alternative partnership model” scale its customer offerings from 300,000 products today to more than 1.5 million over the next three to five years.

“Ultimately, Asos is really good at what they do and really understands the young fashion customer. They come from a total digital-first mindset, understand how that platform works and can help us deliver greater convenience and connection to our customers,” the blog post said.

Moreover, Nordstrom’s investment “paves the way for the potential of a wider strategic alliance between Asos and Nordstrom as they seek to leverage their complementary retail models to give even more 20-somethings the confidence to be whoever they want to be,” the North American retailer said.

Nordstrom and Asos are in discussions to create a multi-channel showcase for a handful of Asos brands for Nordstrom customers. Moreover, customers will be able to pick up orders at both Nordstrom and Nordstrom Rack stores this fall. It’s a good move for Asos because it gives the British e-tailer a foothold into the U.S. market, while working with a well-respected American retailer.

“With its long-established connection to Topshop, extensive U.S. consumer insight and unparalleled reach right across North America, Nordstrom is the right partner to help Asos accelerate the growth of our Topshop and Asos brands in this key market,” Asos CEO Nick Beighton said. “Asos is all about giving customers the confidence to be who they want to be. Partnering with Nordstrom will support our U.S. strategy, allowing us to offer that to even more 20-somethings in North America. We’re excited about the opportunities ahead, collaborating to deliver the best product through engaging, friction-free multi-touch experiences and we can’t wait to see the growth in our brands in Nordstrom stores.”

Nordstrom has over 350 Nordstrom, Nordstrom Local and Nordstrom Rack locations, and operates digitally through its Nordstrom and Rack apps and websites. Nearly 100 physical stores currently offer the women’s Topshop and men’s Topman brands. The retailer has been the exclusive U.S. distributor of Topshop and Topman since 2012, when it became the first to bring the brand to America. The new agreement with Asos also gives Nordstrom the right to sell the Topshop and Topman brands in Canada at its Canadian stores and website. The current Topshop and Topman arrangement with the Toronto-based Hudson’s Bay department store chain will be phased out.

Nordstrom has been moving forward on a strategy to appeal to the younger consumer. Full-line Nordstrom department stores cater to a slightly older customer, compared with its Rack locations, which have become a favorite of millennial fashionistas. And both Topshop and Topman fit the bill, although their presence at Rack varies depending on the weekly merchandise flows typical of the off-price model.

Forrester analyst Sucharita Kodali sees the joint venture as a “great” step forward in Nordstrom’s effort to digitally diversify. “Asos is growing faster than most apparel retailers and is essentially an online department store so the synergy makes a lot of sense,” she told Sourcing Journal. “It’s also big enough that it could even eclipse Nordstrom in a few years anyway.”

Still, “Nordstrom may have been better served spending money or making minority investments outside apparel retail,” added Kodali, who is “highly skeptical of any investments made to acquire 20-something consumers.”

That’s because “price and deal conscious” Gen Z and millennial consumers “aren’t loyal,” she said. “Warning signs should be flashing” whenever companies say they’re chasing this “terrible goal” of courting young consumers, Kodal continued, adding that Nordstrom should want to be on “top of digital signals,” no matter how old or young the cohort. “You can acquire and reacquire shoppers that are valuable at any age,” she said. “It’s more important to target lucrative segments irrespective of age.”

Topshop got its start back in 1964 when the Peter Robinson store chain rebrand as a part of Burton Group plc, a retail conglomerate that spun off Debenhams in 1998. After the separation, the company was rebranded Arcadia Group plc. and then was purchased in 2002 by Taveta Investments, controlled by Sir Philip Green and his family. Topshop has always been known for its modern fashion ethos that appeals to young women. Its on-trend assortment was later expanded to include Topman in 1970, offering young men the same fashion appeal that also reflected the rise of casual clothing.

Green eventually closed some of the retail doors across Arcadia’s brands—like Evans, Burton and Dorothy Perkins—around late 2013 as online shopping rewrote the retail landscape. There was talk in 2019 that Green was considering a company voluntary arrangement to restructure operations amid losses. Following the coronavirus outbreak in early 2020, Arcadia eventually fell into administration—the U.K.’s version of a U.S. bankruptcy filing—in November. Asos began discussions to acquire the Topshop, Topman, Miss Selfridge and HIIT brands in January without its brick-and-mortar assets, and the deal closed a month later.

Terms of the Nordstrom-Asos deal, including the value of Nordstrom’s investment, were not disclosed.

Additional reporting by Jessica Binns.