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ASOS is one of the UK’s most popular online fashion retailers, but they have recently seen a sharp decline in sales, with reports revealing a worrying 18% drop in the first half of the financial year, resulting in pre-tax losses of £120 million from £84.7 million in the last financial year. This is clearly a worrying time for ASOS, but they are sticking to their guns in terms of their “marketing transformation”, which began three years ago. ASOS remains confident that they can turn things around and state that underlying earnings in the 2024-2025 financial year will be “significantly” higher as they look to cut costs and reduce stock levels.
A Marketing Model Transformation
Despite a sharp dip in sales, ASOS remains committed to reshaping its marketing strategy to drive efficiency and reach customers in a more cost-effective manner. This has involved refining its investment across paid search, social, and affiliate marketing. The company has plans to spend £30 million on marketing and states that it will be going “back to fashion” with products “geared around fashion and excitement”. Executives are confident that these efforts will help the brand to reconnect with its target audience - a predominantly young customer base.
Changing Consumer Behaviour
There are many reasons why ASOS's sales have slumped in recent times, and they are not the only major retailer to be struggling. One of the main challenges that brands like ASOS are facing is what is being referred to as the “Shein effect”. This refers to a Chinese fast-fashion label that offers a huge range of styles at astonishingly low prices, which drastically undercuts other rivals. There are environmental and reported human rights concerns with this, but the numbers speak for themselves. Briony Lewis - senior behavioral analyst at consumer insight agency Canvas8, commented:
“Last year, Shein saw record sales and even bought the UK online brand [and Asos competitor] Missguided,” Lewis says. They’ve benefited from “the proliferation of clothing hauls on TikTok, collaborating with influencers and celebrities, and responding quickly to fashion trends with social content”.
In addition to this, the rise of reseller platforms like Vinted has changed the landscape by offering high-quality, vintage items at more affordable prices - these platforms have become even more popular as a result of the cost of living crisis. ASOS was once the go-to for fast access to fashion micro-trends, but this is now changing, and they are struggling to keep up.
Looking Ahead
ASOS is confident that its marketing model transformation will help bring the brand back to the forefront of affordable fashion. Chief executive Jose Antonio Ramos Calamonte is confident that they can turn things around: “Our progress over the last six months means we can feel confident that from 2024-25, we’ll have the right level of newness to excite our customers again. While it remains to be seen how ASOS will compete in this new landscape, it goes to show the importance of a smart marketing strategy that will help you stand out from the crowd and get noticed.
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