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How Asos approached peak discounting – and boosted its sales by 20%

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Asos has reported a 20% rise in sales in the run-up to Christmas, turning over £1.1bn in the four months to December 31. The upbeat first-quarter figures come as many other retailers have reported falling or flat sales in a challenging retail environment. What lies behind this success?

The retailer, ranked Top50 in IRUK Top500 research, reported a 20% rise in retail sales to £1.07bn across its markets. UK sales of £408.9m were 18% up during the quarter, while international sales were 20% ahead of last time. EU sales of £332.5m were up by 21%, and US sales of £139.3m up by 23%, while rest of the world sales of £194.2m were 23% up. That’s a recovery to the kind of growth figures Asos last saw in 2018. The intervening year, to August 31 2019, was characterised by growth of 13%. 

Asos says its figures reflect a “record Black Friday”. InternetRetailing reported at the time that Asos stood out for high levels of discounting on Black Friday, when it offered customers up to 70% off. 

That level of discounting was part of the retailer’s plan to rebuild customer momentum. Total orders were 20% ahead to 27.7m, while visits were up by 23%. The number of active customers rose by 1.4m during the period. But the push to gain more customers by discounting came at a cost, with gross margins down by 170bps. This, says Asos, reflects the cost of US duty as well as its planned investment in customer acquisition. 

Asos chief executive Nick Beighton said: “ASOS has delivered an encouraging start to the year. Strong customer acquisition activity supported by robust operational performance has driven good momentum in all our markets. As we said in October, the focus for this year is to further enhance our capabilities and leverage the investments we have made. It is still early in the year and much remains to be done, but we are encouraged by the progress we have made so far. We remain confident in our ability to capture the substantial opportunity ahead of us.”

Asos sells to more than 200 markets and has fulfilment centres in the UK, US and Germany.

Commenting, Andy Halliwell, retail expert at digital consultancy Publicis Sapient, said: “Asos’ performance is indicative of the continuing move by consumers to digital channels for clothing and gifts. Asos’ strong performance is not surprising given the trends seen pre-Christmas for consumers to be spending more on themselves as well as gifts.”

Paul Kirkland, director of retail and hospitality at Fujitsu UK said: “ASOS’ continued growth is a result of its successful brand building and that has positioned it as one of the go-to fashion retailers during peak sales season. It has been able to capitalise on the desire for speed and convenience, and invested in its technology offering to deliver a truly seamless and connected experience.

“The fortune of ASOS is no fluke – it has created a good online experience that is coupled with a somewhat physical presence with its Collect+ service. This has allowed its customers to shop when they want and how they want. With just 20% of retailers admitting their primary goal is to provide brilliant services, retailers should take a leaf out of ASOS’ book. By delivering the best service to its customers, ASOS has created customer loyalty that draws shopper in during the peak sales period. For retailers to survive during tough trading periods, building connections with their customers will be critical to success.”

Image courtesy of Asos

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