‘Asos ticks the boxes for success in turbulent times’

While Asos has particular advantages in a Covid-blighted environment, it also displays strengths applicable across the industry. They are prerequisites of retail success today – and probably tomorrow.

Asos stumbled 18 months ago when it issued a stream of profit warnings that some thought would cost chief executive Nick Beighton his job. But its star looks as if it is safely in the ascendant once again.

While industry sales have gone into freefall, Asos’ are up. Where profits have evaporated, at Asos they will come in at the top end of expectations. While some survive on furlough cash, Asos is repaying what it took from the government.

Triple threat

Its success is fundamentally down to relevance and closeness to its customers. That relevance is down in part to its pureplay structure, there’s no getting away from it. Ecommerce demand and spend has risen steeply since the world went into lockdown, evident in the performances of retailers from Amazon to Ocado.

But while that may not be replicable by others, one overriding aspect is – relevance of proposition. 

The etailer’s agility has enabled it to remain relevant in the most turbulent of times. Occasionwear, for instance, is Asos’ bread and butter. Falling demand has affected performance but the retailer was able to switch to the sort of product that customers wanted, such as activewear and loungewear. Those trends played out internationally and that was a testament to Asos’ relevance to young people who share characteristics no matter where in the world they live.

“One factory, Nick Beighton said, is on the etailer’s ‘red critical’ list and if swift remedial action is not taken it will be dropped”

Such switches, backed up by increased engagement with customers through social media, through which communication was “pivoted to reflect realities of lockdown living”, were made possible by Asos’ operational prowess. 

Warehouse capacity was limited by requirements such as social distancing but the associated restrictions were managed well – it navigated its way through what could have become an ugly showdown with unions and kept its workers happy. Capacity is now being ramped up for peak and Asos is working with suppliers to ensure the flexibility necessary in the months to come.

Operational and logistical strengths were always part of Asos’ success. It was warehouse failures in the US that threw it off course a couple of years back, but it looks as if it is on form again.

Values proposition

The third element of Asos’ fundamental appeal is values – a sometimes cloudy notion in business, paid lip service to but often appearing disconnected from the day-to-day. 

The travails of Asos’ competitor Boohoo, whose valuation has been decimated following allegations about sweatshop labour in Leicester, show that the right values need to run through a business from top to bottom. 

On that score, Asos comes across well, too. Chief executive Nick Beighton was able to talk in detail about how it monitors the supply chain. He would have anticipated questions on that when the Boohoo controversy was making headlines but it’s something he’s talked about for years and his familiarity with Asos’ supply chain was evident – warts and all.

“Relevance, operational excellence and values – they’re not exclusive to Asos but they are surely fundamental to contemporary retail success”

One factory, Beighton said, is on the etailer’s “red critical” list and if swift remedial action is not taken it will be dropped. Asos’ transparency is evident in that the retailer is considering regular publication of supplier audit findings.

Relevance, operational excellence and values – they’re not exclusive to Asos but they are surely fundamental to contemporary retail success, especially in tumultuous times when working out what the future may hold is even more taxing than usual.

Other successful retailers display the same characteristics. Relevance? Primark has it in spades even though it does not trade online, evidenced by the queues that greeted its store reopenings.

Operational and infrastructure strengths? Next is the past master, a well-oiled multichannel machine.

Values? Retailers ranging from Marks & Spencer to The Entertainer have been built on them for decades.

The combination of all three is surely the grail, as the retail industry faces into a hurricane.