Can Asos ramp up revenue after its sales decline?

Asos wants to reverse its sales decline, grappling with an 18 percent drop in revenue amidst intensified competition from brands like Shein, H&M, and Zara. This challenge is compounded by shifting consumer preferences away from exclusive online shopping, marking a stark departure from the gains Asos experienced during the pandemic, the Guardian reported.

To address these obstacles, Asos said it will embark on a comprehensive turnaround strategy. This strategy entails a concerted effort to reduce new stock volumes, liquidate old stock, and expedite the release of new products, adopting an innovative "Test and React" model. José Antonio Ramos Calamonte, CEO of Asos, has emphasised the ongoing transformations aimed at bolstering agility and operational speed by "becoming a faster and more agile business" to foster sustainable growth.

While Mr. Ramos Calamonte underscored these strategic shifts, the company must re-address its product development and speed to market. By emulating the Shein method of ultra-fast production driven by data analytics, Asos aims to infuse its offerings with the freshness and immediacy needed to reignite sales momentum.

However, amidst a backdrop of cautious consumer spending, particularly in the UK, Asos must go beyond merely offering fashion; it must deliver desirability. This necessitates increased investment in marketing and a concerted effort to streamline its logistics operations.

The modern consumer, who once shopped at Asos two decades ago, loving its convenience, now seeks more curated and nuanced product selections. The same shopper is also likely to eschew the exhaustive array of style options and endless scrolling. Younger consumers turn to platforms like TikTok and Instagram for trend insights and product recommendations, equally preferring a more tailored shopping experience.

While the allure of affordable apparel remains strong, Asos has also felt the financial implications of its liberal returns policy, which erodes margins due to the high volume of returned items per purchase. A turnaround strategy will take more than one season to take effect.