Asos to launch budget brand as 20-somethings face economic impact of Covid-19
Asos is planning to launch a budget brand, the fast fashion retailer announced this morning as it warned that its core 20-something audience were vulnerable to losing their jobs during the coronavirus pandemic.
The online retail giant said today that the new brand called “As You” will meet the gap in its portfolio for lower-priced products.
The new line, which will be priced between £8 and £28, is an acknowledgement of the “recessionary impact” of the pandemic on Asos’ core customers, chief executive Nick Beighton said.
Asos posted profit before tax of £142.1m for the year to 31 August, up from £33.1m the year before, as it served an additional 3.1m customers.
However the e-commerce firm’s shares fell more than 11 per cent this morning as it warned of the economic impact of the pandemic on young people
“The economic impact on Covid-19 hasnt yet filtered through to 20-somethings in terms of unemployment,” Beighton said.
“During lockdown lots of those people were supported by furlough schemes around the world.”
Asos, which previously relied on dresses and going-out wear for a large chunk of its sales, had pivoted to lockdown-friendly products, such as casualwear, sportswear and beauty products, during the pandemic.
Beighton said this morning that its customers had focused on “laptop dressing” and “looking as good as they can for a zoom or team call during lockdown.
The retailer’s mens fashion division sold 2m units of hats, chains, earrings and male grooming products before restrictions were lifted.
Going forward its product focus will be based on “what people are allowed to do”, the company’s boss said.
Elliott Jacobs, EMEA commerce consulting director at LiveArea, said: “The success of Asos is yet another example of the importance of agility in times of uncertainty.
“The pandemic shifted the balance of shopping, wiping out an entire season of social events, including holidays, parties and weddings.
“In the age of ‘at home retail,’ digital is simply more resilient, more efficient and more agile – Asos, lacking physical real-estate, showed supreme agility in terms of adjusting its offering to meet changing consumer behaviour.
“Catering to the transition to widespread remote work, its merchandising strategy took a distinct pivot to sportswear, loungewear and beauty.”
Sarah Riding, logistics partner at Gowling WLG, added: “Asos’ significant online footprint was a USP that suited lockdown fortunately, but the shift in product choices and buying habits will still have kept them challenged during the pandemic.
“Their robust supply chain and warehousing network supports their ability to quickly reconfigure their operations to meet new customer needs and ultimately succeed – showing there is more to retailer success than online visibility alone.”