- Vivian Hendriksz |
London - Some may say that fashion retailer Asos is one of a kind. The British e-tailer has managed to steer clear of all the challenges faced by its high street rivals and achieved a 33 percent increase in revenues to 1.9 billion pounds for the year to August 31. Profits before tax grew 145 percent to 80 million pounds, as Asos increased its forecasts for the year to come.
But what is the secret behind Asos ongoing success? How is Asos able to continue succeeding while traditional fast-fashion retailers such as H&M and Forever 21 are struggling,? Retail analytics firm Edited compared Asos stellar performance against H&M and Forever 21 and found three main reasons why Asos has experienced quarter-on-quarter business success.
Two reasons behind Asos's success have been linked to price, which suggests success is not always about chasing the lowest price. Asos was found to charge more on average per any item across women's wear and men's wear compared to H&M and Forever 21. Average price for a women's wear or men's wear item was 57.16 US dollars compared to H&M's 29.68 US dollars and Forever 21's 24.15 US dollars.
In addition, only 71 percent of Asos's products are less than 50 US dollars, compared to an impressive 93 percent and 96 percent for H&M and Forever 21 respectively. The vast difference in pricing between the three suggests that consumers are not always swayed by the lowest price and are willing to pay more for an item they truly desire.
The final reason is linked to discounting, something many fashion retailers struggle with. Although Asos was found to have discounted the most number of new arrivals in the last 3 months (11.5 percent of new arrivals) is was also found to have replenished the lowest number of items, suggesting more product sellouts.
"Based on our analysis, it's clear the fast fashion is not synonymous with low prices, nor is it a winning strategy," said Katie Smith, senior retail analyst at Edited. "Asos is a clear example of a brand that’s tapping into the right data and insights to hone its pricing, discounting and assortment approach to win over the consumer."