Asos has had an exceptionally strong financial year, with overall group retail sales growing £291.5 million to reach £1.4 billion and operating profit rising 49.6 per cent to £63 million.
Asos sales in the US market were up 50 per cent to £179.2 million, owing to investment in pricing and fulfilment making its offer more compelling. Customer engagement continues to drive the success of the Asos brand globally, helping it to remain top of mind among clothing and footwear shoppers – vital given the fierce competition online.
A potent mix of a highly responsive product offer, competitive pricing and a sophisticated fulfilment proposition sees Asos weathering the challenging conditions of the UK clothing market – in stark contrast to its brick-and-mortar rivals such as New Look.
We forecast Asos will continue to outperform the UK online clothing & footwear market in 2016, resulting in a 0.6 percentage point market share rise to 6.7 per cent – impressive given Asos’ relative maturity. The addition of its UK loyalty scheme, Asos A-List, will further drive purchase frequency and minimise customer attrition – especially for branded goods that can be bought on other retailer sites. Remaining price competitive and emphasising value for money will be key over the coming years as shoppers’ discretionary spending will be hit.
Asos is not one for complacency, as its continual investment in fulfilment shows, with the addition of later four-hour time slots, and later order cut-off times and new pick up locations in the UK – despite its existing market leading delivery offer.
While the failure of its Chinese operations is a reminder that success is not always guaranteed, Asos rightly enters its new financial year with confidence. Given the strength of its product offer and planned range expansion into sportswear, loungewear and men’s big and tall, alongside well-placed investment in mobile, technology and logistics, further UK market share growth is inevitable in the 2017 year.
- Kate Ormrod is a senior analyst with Verdict Retail.