Asos industry assignment

Written By Shannon McKenzie

ASOS photo-­‐shoot with Sky Ferreira-­‐ celebrity endorsement

Launching in 2011, ASOS created ‘ASOS Fashion Finder’ in which they post celebrity outfits and link their own branded items to it, his report will be focused on keeping their initial name relevant the pure play retailer ASOS, (Fashionfinder.asos.com 2014, Asos.com researching into various aspects such 2014). In 2005 ASOS had to close their as; the history, statistics and strategies, business for 6 weeks due to the Buncefield considering both the strengths and Fuel Depot explosion, in which lost them 5 weaknesses of the retailer. ASOS are a million pounds worth of stock (Mathiason, British online retailer founded by Quentin 2005). In 2006 ASOS became the first UK Griffiths and Nick Robertson in 2000 fashion retailer to launch an online catwalk (Asos.com, 2014). They originally launched video, displaying most clothing items on as ‘As Seen On Screen’ with the sole purpose their site (Asos.com, 2014). ASOS give free being to supply the consumers with outfits delivery to over 240 countries and for similar to their favourite celebrity styles. By subscribed customers a free monthly ASOS the end of the first trading year, almost magazine, in which launched in 2007. immediately they were being referred to as ‘ASOS’. Therefore from October 2000 they began using ‘ASOS’ as their trading name (Mintel.com 2014, Asos.com 2014). ASOS sell over 75,000 branded products recently adding brands such as Reiss and Pull&Bear.

All alongside their own brand in which they describe as ‘cutting edge fast fashion’ (Asos.com 2014, Mintel.com 2014).

Background to Retailer

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‘We are confident the ASOS promotion will also prove hugely popular by combining one of many women's favourite activities, shopping, with their favourite soft drink, diet Coke’ (Cokecce.co.uk, 2010)

rom 2010 onwards ASOS became more involved with social media as they launched ASOS Facebook, Instagram and also the iPhone and iPad app. In addition launching ASOS marketplace in which allows consumers to sell their own clothes and accessories (Asos.com, 2014). This suggests that over the years social media and technology have become increasingly more important to the promotional aspect of a retailer. In 2012 ASOS opened their first international office in Australia followed by an international office in New York. Then by the end of 2013 they had already opened international offices in France and Germany alongside launching a Russian and Chinese language site (Asos.com, 2014). In June 2013 Primark began selling 140 products on ASOS’ site, which ended in September (Mintel.com, 2014). ASOS’ ambition is to remain the world’s no.1 fashion destination for 20somethings, suggesting the integrity and passion of ASOS (Asosplc.com 2014).

Current Financial Trading

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ike every fashion retailer ASOS are constantly under pressure. If they don’t have the latest trends and if their sales fall, so could their marketshare and this means their competitors could gain advantage, consequently taking customers away from ASOS. The pure play retailer market grew by over 165% between 2009 and 2014 (Lea-Greenwood, 2014). The International sales rose 22%, with ASOS reporting ‘strong growth’ in the EU (+44%) especially in Germany. However the operating profit fell 14% to £46.6m during the whole year, in which ASOS attributed to investment in infrastructure and a ‘difficult international trading climate’ (Mintel.com, 2014).

Figure 1 displays ASOS’ profits, revenue and gross profit since 2012. As shown, ASOS’ 2014 profits have decreased by 11% (Asosplc.com, 2014). Nevertheless they are still in a good position due to this years sales increasing by over £200m, considerably bigger than Boohoos growth of £67.2m.

More than £190m was taken off the value of ASOS in September 2014, after the retailer had issued its third profits warning in six months, as it struggles to conquer new territories (Butler and Rankin, 2014). The Investments in the new warehousing and Chinese business contributed to the decline in operating margins from 7.1% to 4.8%. ASOS reported an £8.5m negative impact from stock loss (20% stock damage in Barnsley fire) and other costs related to the Barnsley fire in June, offset by insurance reimbursements of £11.5 million (Mintel.com 2014, Farrell and Wood 2014).

Chief executive of ASOS, Nick Robertson said ‘we outperformed our peers; we’re not worried about our competition in the UK’ (Geoghegan, 2014).

(Figure 1)

(Figure 2) Figure 2 displays the leading apparel retail websites, by unique visitor numbers, August 2014. The figures suggest how ASOS rank highly amongst other online retailers. This also displays ASOS’ competitors ‘Missguided’ and ‘Boohoo’ below them in the rank, suggesting how ASOS are the most popular pure play retailer (Mintel.com, 2014).

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Retail Strategies eing an apparel retailer ASOS are likely to have a 1year strategy plan. Fashion is constantly changing, mainly due to seasons and also variations in climate and colours (LeaGreenwood, 2013, p.138) and because of this a fashion retailer needs to be flexible and responsive.

Retailers need to have a strategy to match the needs and demands of their target consumer (Jackson and Shaw, 2009 p.86).

As stated on (Asosplc.com, 2014) ASOS ‘want to be synonymous to fashion for twenty something’s as Google is to search and Facebook is to social networking’. They want to get their success through, amongst other things, share of online traffic, the amount of followers on their social networking sites and all of their sales (Asosplc.com, 2014).

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ocial media and digital technology is a growing commodity in which is becoming one of the best ways to not only sell to consumers, but to advertise and promote. This mainly targets ASOS’ youngadult target market. ASOS have; 762K followers on Twitter, 3.5m likes on Facebook and 2.5m followers on Instagram (authors observation, 2014). ASOS have developed an IPhone and IPad app, ASOS Facebook shop and ASOS fashion finder. Also bringing the total to 9 language specific sites using globalisation to their advantage (Asos.com).

Ben Richards (as cited in Jackson and Shaw, 2009, p.272) states ‘We are witnessing a profound consumer communications revolution, with a declining sense of trust in advertising...Media is the new creativity’.

ASOS have recently started ‘asseenonme’ which allows consumers to share photos of themselves wearing Asos products via social sites such as Instagram and Facebook using the #asseenonme hashtag or directly uploading their image onto the Asos site (Stocker 2014, Mintel.com 2014). ASOS are part of a wider competitive environment, Missguided and Boohoo remain ASOS’ main competitors as they target the same consumers and also

like ASOS themselves are pure play retailers. Recently Boohoo opened a pop-up bricks and mortar store for their consumers in New York (Chapman, 2014) raising brand awareness. ‘A pop-up store also gains press coverage’ (Lea-Greenwood, 2013, p.28). It can be suggested that ASOS could follow a competitive strategy, if Boohoos sales rise, they might choose to do the same (Ryan, 2014).

Future Strategies

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t (Asosplc.com. 2014) they state that ‘While credit and debit cards are the UK’s favourite payment method, other countries do things differently. We are working to make our systems more userfriendly for customers, wherever they are.’ This could suggest that they want to concentrate more on countries outside the UK and this could be due to the fact there international sales growth has slowed to 22%, half of the 44% growth reported from earlier in the year (Financial Times, 2014).

There is a growing interest that ASOS could be bought by Amazon. ASOS issued its third profit warning in 7 months in September. Now Amazon could pay up to £50 a share, helping push ASOS 107p or 5.5% (Fletcher, 2014). ASOS have begun trialing a ‘click-andcollect’ concept at their head office in London, which allows consumers to try on their items and return them immediately (Thomson, 2014). This includes changing rooms next to the pickup point, meaning customers can try clothes on without having to take them home first and then immediately return if not wanted.

(Mintel.com, 2014)

Market level

Market & Retailer analysis

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roadly positioned towards the fashionable middle market, ASOS offer lower cost products, usually through their own-brand, and luxury items through various other labels (Mintel.com, 2014). The middle market represents around 1.5% of all companies and yet generates one third of private sector revenue (Gecapital.co.uk, 2014).

Retailers trading at mid-market level are increasingly being pressurised into performing well and to move the business internationally. Also with the added pressure of shareholders who expect good return with their investments (Trottier, 2009). Segmentation can be used as a method of dividing customers up to understand their wants and needs. This makes it easier to target consumers in the middle market, and plan marketing strategies and position products more accurately (Jackson and Shaw, 2009, p.53).

The main segments used are age, gender, income and lifestyle. £1

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‘Asos are the 20-something fashion lover’s website’.

(Asosplc.com, 2014)

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Asos target both women and men in their 20’s. They provide their target market with good, better and best apparel items therefore having a wide price range, from red pricing, cheap to expensive. This can raise them above competitors such as Boohoo and Missguided. This is also due to the wide brand range they have to offer.

Consequently this suits their 20’s targeted market of university students, the unemployed and employed. Student consumers will be living in halls, student houses or flats and will have little income other than funding their time at university (Acorn.co.uk, 2014). Some consumers will have part-time jobs whilst at university, or the ones who have finished may be in full time jobs therefore will have enough money to spend at ASOS. ASOS having a wide price range means they have something that everyone can afford.

ithin every fashion retailer there are external and internal influences known as macro and micro impacts. External influences include the political and legal environment. This year the rise in minimum wage means that more than 1 million people will see their pay, rise by £355 a year (Gov.uk, 2014). It can be suggested that retailers such as ASOS will benefit from this, as the consumers that are in a part-time or full-time job will have more disposable income to spend on apparel items. In contradiction due to tax and the recession within the economic environment, it could have the opposite effect on many consumers. Yet the clothing sector survived and this was mainly due to the young consumers love of fashion and carefree attitude to the recession in which continued to drive sales, consequently not affecting ASOS (Mintel.com, 2014).

Technology is an external influence and this also corresponds with media within internal Influences.

Media is a very important internal influence for ASOS as it involves; ASOS magazine, ASOS Twitter, Facebook and Instagram, ‘asseenonme’ and also ASOS blogs. ‘Blogging has become the fashion commentary of the moment’ (Lea-Greenwood, 2013, p.184). ASOS pick consumers alongside staff to create content for the website, including blog posts and other social media content about products and their outfits (Mintel.com, 2014).

‘The power has shifted from the retailers to the consumers’ (Yurchisin and Johnson, 2010, p.39). ASOS target consumers in their 20s, having the youngest age profile with a third of their audience under age 25 (Mintel.com, 2014). They have become increasingly more popular amongst ages 2534 and a declined popularity ages 16-24 (Mintel.com, 2014). These consumers are demanding, they want trendy and cheap apparel items and will go somewhere else if they don’t get what they want, This is a very competitive market for this consumer.

ASOS’ employees are of a similar age to their targeted consumers, the average age is 27 or 28 (Mail Online, 2013), and this is due to wanting staff that understand the targeted consumer, who are young and entrepreneurial.

Sourcing and CSR Strategy

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SOS have named their corporate responsibility framework ‘Fashion with Integrity’. ‘Fashion with integrity means managing all aspects of our brand transparently so that our customers can enjoy their fashion in the knowledge that they are not harming people, animals or the environment’ (Asosplc.com, 2014). ASOS have launched ‘The Green Room’ on their website to target ethical minded shoppers and boost their ethical credentials (Berwin, 2009). ASOS’ ethical trade vision sets out commitment to be a responsible retailer where every worker in the supply chain is respected and protected. ASOS have focused their ethical trade programme on three strategic objectives; workers, sourcing and suppliers. ASOS source garments and other products from around the world including China, India, Turkey, Eastern Europe and the UK, where over 85% of factories making ASOS’ garments and products are based. The sourcing is reviewed against ethical standards and are continuously improved. ASOS don’t own the factories making their products, but state that they are ‘committed nevertheless to ensuring manufacturers operate in a way that respects workers rights, maintains safe working conditions, upholds local employment laws and protects the environment and animal welfare’ (Asosplc.com, 2014).

‘To provide young people with life-changing opportunities, support and inspiration through longterm partnerships with established charities’ (Asosplc.com, 2014).

ASOS have provided investment and advisory for a local factory in London, supporting British manufacturing. Their sourcing team consists of young British workers that produce 5,000 garments a day also having a 200-garment a day specialist workshop, ASOS want to develop lost skills like pattern cutting and machining (Thomson 2011, Asosplc.com 2014). Equality is of the upmost importance at ASOS. ‘Our people are our greatest asset so naturally their health, safety and wellbeing are our top priorities’ (Asosplc.com, 2014). Workers in ASOS’ supply chain have good worker-management relations, have improved financial security and work in safe environments.

ASOS have signed up to the UN Global Compact in 2012, therefore commit to the ten principles that include six commitments to labour standards and human rights (Asosplc.com, 2014).

(Figure 3) Store Appraisal (or equivalent)

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SOS being a ‘pure player’ retailer, don’t have a ‘bricks and mortar’ store. A store appraisal on the website took place on Friday 28th November (Black Friday) and Monday 1st December (Cyber Monday). Firstly on Black Friday the website crashed due to the amount of people trying to access the website and buy discounted products. The website displayed their ‘30% off discount’ making it eye catching with animation and bright yellow font as shown on (figure 3), also on Monday displaying a new discount ‘20% off everything’ (authors observation). It is said that ‘Asos must change its approach to discounting to avoid future profit warnings’ (McGregor, 2014). Due to it being Black Friday most retailers choose to discount, but this is an ongoing criticism for ASOS. ‘ASOS will have to tread carefully to appease consumers, suppliers and maintain its brand image, according to retail specialists’ (Faull, 2014). On the women’s section of the website toward the left side of the page it states ‘ASOS Christmas gift guide’ in which targets not only their consumers but also everyone celebrating Christmas. Towards the right there is ‘fashion news’ about celebrities and what they’re wearing and they link their related products to it, in which presents ASOS using celebrity endorsement to their advantage. Towards the bottom of the page ‘#want’ was placed by specific items, this is ASOS using social media to promote their items (authors observation).

Upon buying four ‘ASOS own, casual, bodycon black mini dresses’ ranging from £12 to £20 with free standard delivery. It became apparent when delivered 4 days later that ASOS have very sufficient delivery service, arriving before the expected time. Having free delivery raises ASOS above their competitors, having the advantage of no extra costs making them more appealing to consumers.

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he little black dress is a timeless product which is also versatile for any occasion whether it be casual or not. This is an apparel item in which can be purchased in most retailers, suggesting the market is very competitive. Comparing ASOS to the likes of their competitors, ASOS have a lot more to offer, having more than 900 black dresses than Missguided and over 1,100 than Boohoo (authors observation). Upon trying the products it was noted that the cheapest dress at £12 material was very thin and static, suggesting the quality was poor. The next dress at £15 was slightly thicker, having texture, adding to the feel of the product in which was compared to the £18 dress in which also was thick and textured making it more secure to wear. Leading to the final dress at £20, being high neck and just above the knee it was very simplistic and sophisticated; the material was thick with a ‘lightweight waffle texture’ (Asos.com, 2014, authors observation).

on Dress ASOS Mini Bodyc Texture with High Neck in texture -­‐lightweight waffle -­‐funnel neckline -­‐cap shoulders fit -­‐close cut bodycon -­‐machine wash Elastane -­‐94% Polyester, 6%

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‘Directional, exciting and diverse, the ASOS Collection makes and breaks the fashion rules’ (Asos.com, 2014).

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rom researching ASOS, it became apparent that they have gone to extents to ensure their brand is promoted in a positive way, even though every retailer has negative impacts ASOS always tries to overcome them.

ASOS’ ambition is to remain ‘the worlds no.1 fashion destination for 20-somethings’ (Asosplc.com) and if they carry on improving their downfalls they will do so.

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