Far from a potential barometer of consumer uncertainty, the latest Asos sales results indicate a proposition which is exceptionally well placed to meet the demands of a challenging retail landscape.
The online pureplay posted double digit growth across all of its markets, with growth from the US at 53 per cent. It is testament to the affordable, convenient and fashionable offer that far from weathering the challenging conditions, Asos continues a winning streak of strong growth.
The strong value credentials that Asos burnishes should allow the retailer to take advantage of consumers watching their purse strings as the economy stutters post referendum at the cost of undifferentiated competitors.
Further investment in fulfilment shows a lack of complacency – for example the retailer now offers one hour ‘precise’ delivery slots in the UK. This will further leverage the convenience proposition and continue to entice shoppers. However with gross margins down by 180bps owing to bringing discounting forward and price investment, Asos must keep a close eye on costs, particularly as the recent withdrawal from the Chinese market has incurred a hefty price.
A strong social media and marketing presence continues to stand this brand in good stead. This is despite recent controversies over its use of the term ‘plus-size’. Yielding this potent media presence, for example the ‘As Seen On Me’ campaign, will remain an essential factor to the continued momentum of Asos, increasing the relevance to the lives of young shoppers and subsequently driving traffic and sales.
- Andrew Hall is an analyst at Verdict Retail.