POST TYPE: MARKETING MINI CASE STUDY
#Storm7Consulting #Asos #retailfashion #marketing #minicasestudy
The online fashion retailer 'Asos' is set to reduce its reliance on promotions as its "continued transformation" to deliver a more profitable and cash-generative business is rolled out across the United Kingdom (UK).
KEY POINTS
◾ Historically, Asos has adopted a 'discount marketing' strategy that utilised discounts and promotions to generate sales revenues, and to grow its customer base across the UK.
◾ The difficulty with long-term use of this type of marketing strategy is that:
1️⃣ it creates expectations in customers;
2️⃣ it means profit margins remain depressed;
3️⃣ it may inhibit brand building; and
4️⃣ it may potentially damage customer brand perception as it repositions brand messaging (e.g., builds an association of "cheapness" or "low quality").
◾ In November 2023, Asos acknowledged that it was far too reliant on promotional activity and seductive performance marketing, and therefore it sought to reinvent its marketing efforts and to shift its focus towards building brand affinity. It invested £30 million in brand building.
◾ In 2024, Asos reported it had generated more than 60% of its online sales without any promotion or discounting during the first half of its financial year. This is a positive (but insufficient) development.
◾ However, it also reported an 18% drop in sales revenues year-on-year for the first 6 months (to 3 March 2024) down to £1.5 billion. Its underlying loss before tax increased by 32.7% to £120 million.
◾ In the UK, sales decreased by 16% year-on-year and the number of active customers declined by 13%.
◾ In the UK, Asos still continues to face:
1️⃣ continuing inflationary pressures;
2️⃣ difficult economic and market trading conditions;
3️⃣ strong competition from other online retailers (e.g., Boohoo, Shein, Temu);
4️⃣ strong competition from hybrid retailers (e.g., H&M, Zara); and
5️⃣ increasing competition from established retailer sales of third-party brands (e.g., M&S, Next).
◾ Overall, this illustrates the complexities of implementing a brand building marketing approach in an online retailer, and the need to adopt effective multi-disciplinary teams internally.
LINKS
🔺 Asos Plc Interim Results: https://lnkd.in/epGD38a6.
🔺 The Guardian: https://lnkd.in/gRhSmgEU.
🔺 Marketing Week (Nov 2023): https://lnkd.in/ee7vx8Xd.
🔺 Marketing Week (Apr 2024): https://lnkd.in/e8B9npbz.
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