Asos: New Business Strategy

best practices

Sarena Foster Tiffany Chan

table of contents Executive Summary Company Profile Competitor Analysis Best Practice Strategy Financial Appendix Citations

executive summary Asos has a goal of being the worlds number one fashion destination for 20-somethings. Their strategy includes three core pillars, providing the most engaging experience, becoming truly global and retailing efficiently. To reach that goal Asos must embrace all omnichannel opportunities and that includes physical brick and mortar stores. Asos will take notes from the best practices in the industry to successfully achieve their goal.

company profile

Asos is a British based company founded in 2009 by Nick Robertson and Quentin, creating a fast fashion destination available around the globe. Asos offers a variety of fashion-related content creating a strong fashion community. They sell more than 75,000 brands including private label through strong mobile and web experience. Asos multi-channel shopping experience

offers the opportunity for fashion lovers to network, share ideas

Asos continues to offer improved experiences

as it grows. They have

create their style and shop.

improved quality for mobile and tablet

experiences, that now account for over 45% of visits, launched the #AsSeenonMe campaign, extended deliver to Sunday next day service in the UK, launched a new Tall range to their private label ranges that include Petite, Curve and Maternity and began offer personal stylists onine that customers could receive personalized help.

Asos offers own label, thousands of renowned brand at asos.com and allows boutiques to sell new and pre-owned fashion through the Marketplace Channel. Customers can share ideas and inspiration about trends and personal style through the site’s Fashion Finder Section. Asos also offers fashion related competitions, feature articles and news and a magazine that is updated daily on the website and mobile app. Asos offers a one of a kind online experience that customers won’t find anywhere else and will begin to offer the same personalized, technology driven fun and informative experience in stores.

target market

The Asos

core customer is a twenty-something fashion-lover.

These millennial shoppers are heavily digital driven. They have access to information instantly and communicate and share their daily lives through social media. The Asos consumer is inspired by friends, celebrities and the media, they also aspire to be inspirations themselves. Some follow trends and some are trend setters, either way they use style and fashion to express their identity and individuality.

While e-commerce has seen significant growth 15.5% from 2013, the millennial generation still prefers to shop in store or at least use the brick and mortar experience as a showroom to touch and feel the product before buying it online. A study by OpinionLab which polled 1,103 consumers in April, found that 37 percent of millennials—defined as adults between ages 18 and 29—would rather shop at the mall While Asos has had extreme success online the potential for more growth and sales will come in the form of a physical store location. The store will offer the same great service found online, but now in person in real time with real people. Asos Store will become a hub of fashion.

swot

Asos biggest strength is their online presence. Their website and apps are completely interactive and offer features that go beyond selling clothing. They can be found on twitter, facebook, instangram, tumblr, youtube, pinterest and google+ and update their information and products daily. The product range Asos offers is another important

strength. Aos offers more than 75,000 brands and

can therefore provide an enormous amount of styles to all of their consumers. If you enjoy fashion Asos has something that you’ll like.

Asos is a very strong brand however they do have weak points that they continually strive to improve. The biggest weakness at the present moment is that Asos is only available online so customers are unable to try on or see the products in person. Asos does offer the size of models and runway previews on the website as well as free shipping and returns. Despite these efforts 30% of merchandise is still returned.

Through a brick and mortar location Asos has the opportunity to solve many of their weaknesses. A physical store location will allow consumers to try on products and will lessen the chance for returns. Industry innovation is another opportunity that will serve Asos well, online, mobile and instore.

Asos also has the

opportunity to reach more customers than their competitors because they offer the widest selection of products and services.

At their current position Asos threats come from their competition.

Just as Asos plans to become more Omni-Channel by opening a retail location other stores are continuing to add and improve their e-commerce offering s to be

more attractive and convenient for

their target consumers. As competition becomes more intense, Asos will have to focus on their innovation both online and instore

As of Febrary 2015 57% of Asos sales came from outside the UK. The significance of that number means Asos relies heavily on tailored logistics that fit their global environment. Deliveries need to be quick, convenient and reliable to please consumers.

Asos ships to more than 240 countries and territories around the world from the main distribution warehouse in the UK. The warehouse is located in Banse, Yorkshire, the original building was the size of six football fields and recently Asos has added 150k square feet to accommodate their growth.

Because the retail store will be located in the UK logistics will be an easily accomplished

challenge to overcome.

competitors

Nasty Gal is an American based, global online destination for fashion-forward, free-thinking girls. Founded in 2006 by Sophia Amoruso through an eBay store of curated vintage pieces.

The name Nasty Gal was insprired by the album by Betty Davis about unapologetic, badass women. In 2012 Nasty Gal was named the Gastest Growing Retailer by INC Magazine.

Nasty Gal targets female consumers in her late teens and early twenties. Nast Gals are confident and take risks in life and in their style. She wants to have amazing experiences, at afoordable prices and look good while doing it. Nasty Gal values integrity, impactfulness, responsiveness, mentorship and innovation.

Nastly Gal was a pure play retailer and have since opend two brick and mortar locations in Melrose and Santa Monica, California. Nasty Gal offers a wide range of products but not as extensivley as Asos and they also don’t offer menswear.

Stylenanda is a South Korea based clothing brand which was founded in 2004 by Nanda. as on pure play online retailer. Since then Stylenanda has opened several brick and mortar stores, namely Hong Kong, CHina, Singapore, Japan and Thailand.

Stylenanda is a private label

company that

exclusivley sells womenswear.

Stylnanda has a very stong social media and online presence. They can be found activley on facebook, instagram, twitter, youtube and weibo. Stylnanda is best known for their use of popular models as the face of their company and spokes people.

They use the same models for everything and so consumers can easily recognize them and relate.

Asos considers Stylnanda as a competitor because inolved

Asos in the

has

become

more

asian and chinese market.

Boohoo is a Manchester based pure play fashion retailer.

They have evolved into a global leader

for fast fashion

at an affordable price.

Up

to 100 new pieces ht their website everyday.

Boohoo is well known for their collaborations and pop up shops. Although they don’t have a physical permanent space pop ups are important sales venues. Asos also shares a huge percent of the UK market share with Boohoo making them a main competitior. Boohoo’s website is also almost identical to Asos including layout and fonts. Providing a permanent retail store in the UK will give Asos a competitive advantage of Boohoo.

strategy

Asos will open their flagship retail location on Oxford Street in London. Asos is a UK brand and their headquarters, customer care office, central distribution center and IT support are all located in the United Kingdom. The UK alone accounts for +35% of total sales at Asos. According to Comscore, the UK ranks at number one besides Australia for monthly online visitors aged 15-35. The conclusion gained from this information is that the majority of people shopping at Asos come from the United Kingdom and therefore if the store was located there it would receive the most foot traffic and result in the most sales. As far as choosing Oxford Street as the location for the flagship store, Oxford Street is the premier location for shopping in London, including stores like Zara, Primark, Topshop and Mango. While Asos may be seen as a competitor, they will likely attract many of the customers these stores service as well. Not only will locals revel in the opportunity to shop at their favorite street, so will tourists. According to MasterCard Global Cities Index 2014, London was forecast to receive 18.69m visitors in 2014, and rising each year. London is a world class city (see appendix f)

As Asos delves into the brick & mortar world, they will continue to focus on technology because it is the roots of Asos and the reason they have become such a strong brand. Just like online, Asos physical store will offer personal styling, incorporate social media and always offer an opportunity to connect. Asos’s physical store will be successful because they will employ the best practices that other companies have used to become successful.

American brand and pure play retailer Nasty Gal, has converted to an Omni-channel style retailing. The success of their brick and mortar stores is mainly driven by the fact that their customers wanted a physical location to try on their products. What Nasty Gal offers in return is a level of service that isn’t provided at other accessibly-priced fashion retailers. In their first location in Melrose, Los Angeles they highlight their mirrored dressing rooms as the focal point instead of shoving them in a hallway at the back of the store. The accessibility of the dressing rooms forces service to that area of the store. The ability to try on the product is a major difference between online and physical stores and so it is smart of Nasty Gal to focus on that area of service.

That however, is where their uniqueness as a newly offline store ends.

For originating as an online retailer they have completely skipped the technological opportunities to connect with their customers.

Following the footsteps of many of the luxury retailers, Topshop started offering personal stylist for their consumers to create personal bonds in store. Topshop began with ‘Style Advisors’ in the early 2000’s, and five years ago they built a personal shopping suite in response to the demand for the stylists at the Oxford Circus flagship store in London, according to the Business of Fashion. The service is now offered in all the U.S. locations. “We are excited to be able to offer our customers a service that has historically been the domain of the luxury market. Our customers feel they are getting an exclusive service, yet it’s open to all — we like to think of it as an accessible exclusivity,” said Soulmaz Vosough, head of global personal shopping at Topshop. Online, Asos already offers personal stylist that create curated product lists, inspiration and advice on current trends. Current consumers are accustomed to this service and Asos will be able to provide it even better in person. All sales associates will be able to assist in quick styling needs, but for the full experience customers can make an appointment online.

As proven by Kate Spade’s use of the eBay Connected Glass, providing technology in a physical space is a powerful tool. During a four-week trial period, nearly 450,000 people walked past the Connected Glass and almost 20,000 people stopped to use it. From the people that made a purchase, the average order was larger than typical orders made online. The connected glass offered a physical location that was an alternative to an actual store and also provided important data that Kate Spade used to learn about their customers. Asos will employ a similar technology in store however instead of data collecting it will be used to enforce their strong social media presence.

Taking a hint from Nine West who has used this system in their flagship store on Lexington Avenue in New York, Asos will install Postano systems into their store as well. “Postano integrates all the major social networks, allowing you to easily aggregate fan content wherever they decide to share it.� Asos is all about social media online and having their customers get involved with the brand. According to a KPMG survey, 71% of retailers pointed to social media, when asked which technologies have a significant impact on their business. Currently Asos has 857.8 k followers on twitter, 2.8 m followers on Instagram and 3.5 m fans on Facebook. Online, Asos has launched the #asseenonme campaign in which people that wear Asos products post themselves on social media using that hashtag. With the Postano system, #asseenonme and other content will be featured in store and encourage customers to Instagram and tweet their experience as it happens. It is important that Asos brings their online presence, in store to continue connecting with customers through a fully rounded Omni-channel experience. (see appendix g)

financial

Real estate in London comes at a premium these days.

According to London Evening Standard. Uniqlo signed a record high lease for their flagship store on Oxford Street. Uniqlo will be paying $1000 GBD per square foot for the 40,000 sq ft store; that’s a total of 40m for the lease. While Asos flagship London store may not be that large they could certainly afford it.

According to Asos annual report they made 36.59m in after tax profit.

However due to some unfortunate events, for example a warehouse fire in which they lost a significant amount of merchandise and had to shut down the website for two days, these numbers come at an 11% loss from the previous year. The warehouse expenses increased the most by 71% from 44.3m to 75.76m, that’s nearly as much as the Uniqlo rental lease for their flagship store. Although Asos profit was less than the previous year they still made a significant profit, therefore it can be surmised that a 40m lease price is achievable; however a compromise can be made for a smaller sq ft space and use the additional money for employee salary and the innovative technology that will be introduced throughout the store. Overall, the costs associated with opening an brick and mortar store will be outweighed by potential sales and growth opportunities for Asos. (see appendix c)

Appendix A

Appendix

Appendix C

Appendix B

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