The news this week of more upheaval at Asos, with senior leadership departures following a 12-month revenue decline, is a stark reminder of how challenging it is to remain relevant in today’s ever-changing retail world.
AsSeenOnScreen. The original name for Asos back in 2000. Its product design and price points immediately captured the attention of aspirational fashion fans seeking to emulate the style of celebrities on film, TV and magazines.
Under co-founders Nick Robertson and Quentin Griffiths, it quickly grew into an exciting, innovative, tech-fuelled ecommerce giant. Its mass millennial following silenced, once and for all, the critics who in the mid-noughties were still denouncing the notion of online fashion as an unworkable dream.
Fast forward more than 20 years and Asos is far from the darling of the UK fashion retail sector. Its following is not the cult it once was. Results last month revealed group revenue had fallen by 12% in its Q4, on the back of a 9.1% drop in the first nine months of the year.
Overtaken by rivals
One observation would be that Asos has neither brought its noughties customer base with it nor captured the hearts and wallets of Gen Z and Gen Alpha – though it markets itself as the go-to fashion retailer for young consumers, primarily targeting 16-34-year-olds.
Your average teen has all the time in the world to browse the virtual aisles, yet the job of trawling through Asos can, at its worst, feel like the digital equivalent of scrabbling through a fashion store’s chaotic Sale racks (it stocks more than 850 brands online).
Meanwhile, its original millennial fanbase has outgrown its largely very youthful product and prefers a less overwhelming online experience.
What’s more, young fashion consumers’ notion of aspiration has changed. Today, the brand-clad influencer demographic is shaping Gen Z and Gen Alpha’s wardrobe choices.
Where else to buy brands they can’t yet afford than Depop or Vinted? And for new clothes, Shein is proving indomitable among budget- and fashion-conscious shoppers with its agility and on-trend design continuing to eat away at Asos’ market share.
Change is everyone’s job
Chief executive José Antonio Ramos Calamonte, having taken over from Nick Beighton in 2022, is working hard to reverse the etailer’s fortunes, spearheading its Driving Change agenda that largely focuses on driving profitability and improving inventory management.
Some elements are paying off. Profitability has improved – albeit at the bottom end of its £40 to £60m guidance. Meanwhile, its Test & React model, which aims to reduce lead times to two weeks, is showing promise.
Still, the timing of Asos’ woes coincides with Retail Week’s in-depth of analysis of the unrelenting success of Next, which has remained relevant for more than two decades. In this analysis, it’s interesting to note the thoughts of Lord Wolfson on the very concept of change programmes:
“Change is everyone’s job. We do not have a ‘change’ department or a ‘transformation’ director, nor do we have a battalion of business project managers operating outside ‘business as usual’. Change and transformation are part of all our work,” he says.
The decline of any major brand is sad. Particularly one which predicted a change, transformed the world of online fashion and stayed ahead of the curve for so long. But Asos has failed to stay ahead.
It’s unclear where its new customers and sales will come from or if its change programme will be enough. Any focus on profitability and inventory may prove futile without consistent revenue growth to sustain it.
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