Blog: Asos hits fashion's sweet-spot
Leonie Barrie | 10 June 2010
Achieving a 44% jump in full-year pre-tax profit and a 35% surge in revenues during the worst recession since the Second World War would be seen as quite a result by most retailers. But for online fashion firm Asos, the feeling is: "We could have done more."
Faced with fears of increased unemployment and a slowdown in spending among younger consumers - the retailer's target market is fashion-savvy 16-34 year olds - the company took a cautious stance on buying last year. But it seems it underestimated the propensity for girls and young women to shop, and has since been working to get more stock back into the business - not an easy task given that a lot of its branded product lines work on a six to nine month lead time.
The fact the company could have grown faster had it had the right inventory levels in place seems to be substantiated by its strong current trading, with sales in the first nine weeks of its current financial year surging 58% - including growth of 36% in the UK and a leap of 118% in international revenues.
"Last year was a good year, but it could have been better. This year, we're a lot more confident and are not going to make the same mistakes thinking the world is going to fall off a cliff," Asos CEO Nick Robertson told a media briefing in London yesterday (9 June).
And why is he so confident? "Younger customers [the average age of the Asos shopper is 22] are more immune to what's going on in the big wide world. It's all about Thursday, Friday and Saturday night; that's far more important to them than the bigger wider issues."
Warming to his theme he continues: "Our UK fashion buying customers are all over the internet like a rash. If you look at that younger demographic group they're on the Internet 90% of the day. And that's the fact and that's where we benefit."
There's no doubt Robertson and his team have found a 'sweet-spot' in retailing: combining the fast-growing internet shopping channel with a young market whose demand for fashion seems to know no limits. Add to this a range of 36,000 branded and own-label lines (expanding at the rate of around 1,300 new lines a week), 1.6m active shoppers, initiatives like free delivery and returns, and dedicated new websites for France, German and the US due to launch in the autumn, and it's easy to see why the company's winning the online fashion race.
Asos started out 10 years ago this month as As Seen On Screen, with its original business model all about emanating celebrity looks and styles. Another delicious irony for Robertson is that today it's the celebrities who are wearing Asos own-buy fashions.
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