Analytical Tools for Competitive Advantage in Fashion Retail for Asos Plc Case Study

Analytical Tools for Competitive Advantage in Fashion Retail for Asos Plc

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Introduction: Analytical Tools for Competitive Advantage in Fashion Retail for Asos Plc

This report is all about the discussion of an analytical tool that will be used to gain a competitive advantage for Asos Plc. Asos is primarily a fashion retailer founded in 2000 and headquartered in London. The company is registered with the London Stock Exchange as “Asos Plc”. Furthermore, it is reported that the company has online stores with over 84,000 products and is also available in 10 languages via a website or mobile applications (ASOS plc, 2023). It is reported that since the company's inception, it has been able to deliver impressive results because of its innovative marketing strategy.

Figure 1: ASOS Plc in the United Kingdom

Here in this section, the chosen case context is analytical tools for gaining a competitive advantage in the market. Therefore, competitive advantage goal of this company has achieved great success this year and it is done by positioning its brands at a competitive price point. For instance, Asos’s competitive advantage here is quite multilayered. In the report for gaining competitive advantage, both Porter’s five forces and SWOT analysis will be used to improve the company's marketing strategy.

Case Profile

Under this section, the discussion is on company’s form of business, which consists of its products and services, which they normally provide to its target audience. The section will also cover company’s market share along with a strategy that they require for building a competitive advantage in market. It is reported that company's main marketing technique is its use of a free return policy. It is reported from the company's annual report that its revenue stands at 5,015 USD Million and its employees are above 3,000 (annualreports, 2023). Therefore, this technique significantly provides industry with a differentiation strategy where Asos can significantly charge a higher price, along with putting huge pressure on its competitors such as Nasty Gal and BooHoo towards improving strategies.

Figure 2: Retail sales of Asos Plc in International market

For building a competitive advantage in market, it is analysed that company has got a lot of strength factors, such as customer engagement and operational network, along with strong financial performance over the year. To gain a majority of market share Asos has significantly created a wide social media presence, which boasts approximately 12 million followers collectively. For instance, utilising these platforms along with digital cookies mainly for advertisement purposes is quite effective. It is also reported that company’s market share was 7.6% in 2018 in the United Kingdom but it was reduced significantly in parts of Europe at 1.58%. Due to this, company significantly aims to increase its market share by incurring heavy investment in research and development programs for bringing innovative technologies into its business. Asos brand is globally strong and it will be quite feasible for them for adopting suitable marketing strategies for gaining a majority share in market. Moreover, Asos is a genuine e-commerce seller and it significantly occupies a unique position in the e-commerce platform, where it can play a similar league as that of global big names (statista, 2023). In 2019, it is reported that the company was among one of the “most valuable apparel brands” along with fashion brands that can sell its products both offline and online. Rather than being obstructive, the company’s online strategy seems to be a unique part of its success.

Literature review

This section will cover analytical tools that are used by Asos Plc in gaining a competitive advantage in market for gaining a majority of share in market. Therefore, the analytical tool that is used to discuss the market analysis of Asos Plc is Porter's Five Forces Analysis and SWOT analysis, which are discussed below:

SWOT analysis

Strength	Weakness
Asos Plc is primarily able to sell over 800 popular brands. Great employee management with a strength of 4000 (macrotrends, 2023). Company is planning for international expansion with its effective sales figure in the United Kingdom.	Asos Plc's free return strategy is not quite effective. It significantly cost over euro 10 million. Due to the free return policy, it will be quite difficult for the company to changing its strategy (bloomberg, 2023).
Opportunities	Threats
Improvement in technologies, which the company can significantly increase its value of sales. Planning for expanding business in China. Global online retail market. Apparel retail market primarily in Europe.	Poor working performance in 2017. Availability of substitute. Foreign exchange risk.

Table 1: SWOT analysis of Asos Plc

Analysis

The company‘s view towards strategic acquisition is one of the major parts of company’s growth strategy. It is reported that on February 2021, company significantly acquired Topshop, Miss Selfridge, and Topman as well as HIIT brands primarily from Arcardia Groups Ltd (arcadiagroup, 2023). For instance, this particular strategy will assist the company towards expanding its operation along with enhancing the reachability of the company mainly in the US, UK and Germany. Furthermore, it will also be going to assist towards providing a broad range of services and products to its target audience (retail-week, 2023). A major weakness of this company is its free return strategy, which significantly costs euro 10 million, whilst 29% of purchases are primarily returned to the company. On the other hand, free of returns is one of the unique selling points of Asos Plc's business plan. Moreover, it is pretty difficult and might become a problematic one. It is reported that the company can get benefit mainly from the positive aspects of international apparel retail market. For instance, market has witnessed significant growth in past years. Growing disposable income, increasing travel rates along with growing urban populations are considered key drivers that impel growth of Asos’s market.

Porter's Five Forces

Threat of New Entrant	It is reported that in the United Kingdom, technology is increasing at a rapid rate and this increasing number of retailers can operate their business on online platforms. For instance, with new entrants, a huge amount of pressure is on old companies, who are dominating the market for many years (Caballero-Morales, 2021). Moreover, a threat from new entrants forces such companies towards reducing its cost, and prices as well as differentiates their products. Therefore, Asos can easily compete with the threat of new entrants via economies of scale. Most importantly, a company can significantly minimize the threat of new entrants by doing heavy investments in development and research backed with innovative technologies and preventing strategic drift.
Buyer Power	In times of alteration or recessions primarily in economic policies thus affecting disposable income. Due to this, Asos will be going to have a limited base of customers because of its selling price-elastic goods (Baghersad et al. 2022). Concerning this it can be concluded that buyers will be going to have a majority of power regarding negotiation. On the other hand, Asos Plc can also significantly minimize the power of buyers by uplifting its brand loyalty. Furthermore, via innovation, ASOS can significantly minimize the bargaining power of customers they are unable towards negotiating products, which are not significantly established.
Supplier Power	As Several suppliers are on a reducing note in the United Kingdom. Due to this purchases will have less room towards negotiating prices. This means larger retail platforms like Asos might experience an upwards trend of the cost factor and such threat can get effectively reduced by establishing significant relationships with its suppliers (Adesanya et al. 2020). When a supplier will increase its prices then the company will have more alternative options. Alternatively, a company can experiment with several materials to the company with rising prices by replacing them with alternative options.
The threat of Substitute	Asos can significantly minimize the threat of substitution by increasing the cost of switching primarily for new customers. A company can also offer frequent customer vouchers and discounts along with encouraging purchasing.
Rivalry	The company can significantly minimise its threat of rivalry via differentiation as it can significantly increase its selling price.

Table 2: Porter's Five Forces Analysis of Asos Plc

Research Methodology

Figure 3: Sales of Company

The analytical method that is developed over here is towards the transformation of business of Asos Plc for gaining a majority share in market. Concerning analytical approach, SPSS is used to show competitive advantage of Asos Plc. apart from Porter’s five forces analysis and SWOT analysis of the company, It is found that the products of Asos are more in demand among ladies as compared to gents. In the research methodology section, a discussion is not an analytical tool for analysis of what a company has gained or going to gain a competitive advantage in market (Sen and Yildirim, 2022). For the analytical model, it is found that company got a good amount of strength factor, which leads business of Asos Plc to be quite effective.

Figure 4: Profit of Company

Concerning 1500 consumers of the company it is found that euro 1,968 are ladies' clothes and men's clothes are euro 1, 1661 in 2013. In 2014, it is found that concerning 2500 consumers, euro 2,213 is ladies' clothes and euro 2, 2013 is men's clothing. This amount goes on increasing after 2014, both sales-wise and consumer-wise. For instance, the company experiences an increasing number of consumers after 2016, when Asos Plc got 5000 consumers and concerning this ladies' clothing cost euro 3,622 and men’s clothes amount stands for euro 3,094.

In 2018, the Company experiences 6500 consumers in terms of thousand whereas concerning this lady's clothing stood at euro 4,367 and men's clothing stands at euro 3, 722 in 2018. Moreover, it is seen from an analytical model that, company’s average profit increased towards 67% in terms of men's clothing, which sums to $296,334 in terms of sales. Before 2020, company’s average profit stands at approximately 21% in terms of men's clothing but there was a significant jump in sales regarding women's clothing, which stood at 28%. After 2018, the sum of sales regarding women's clothes was $157000, with an average profit of 20% and the other hand, men's clothing's sum of sales was $2, 14,556 with an average profit of 21%.

Results and Discussions

From the analytical model, it is found that several consumers of Asos Plc are more in terms of females than males for a series of years as provided in the SPSS model. It is seen that in 2020, sale volume of ladies' clothing is more than men's clothing. On the other hand, it is also seen that the company’s profit has significantly increased in 2021, which was 43% and its average profit is also quite impressive. For instance, in 2023 and 2016, company’s amount of profits was similar, which stands for the same 43%. Due to the adverse impact of Covid-19, company have witnessed a sharp fall in profit right from 36% in 2019 to 25% in 2020.

Figure 5: Average Profit of Company

From the above discussion, it can get analysed that Asos Plc is currently witnessing a significant amount of profit, which is a huge positive indication. Most importantly, it will be quite feasible for the company to adopt different pricing strategies and other marketing strategies for gaining a competitive advantage in local and overseas markets. Therefore, applying this proposed analytical model is quite feasible as it effectively shows all positive and negative sections of the company and also provides details about financial structure of a company. Lastly, it can be said that due to healthy financial performance over the last decades, a company can gain a competitive advantage in market.

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Conclusions and Limitations

It is concluded from the above section that Asos Plc is quite a successful company, with a plan toward increasing its profit. Moreover, the Asos Plc investment programme is significantly designed to cope with a changing environment. Additionally, the company's present marketing strategy regarding offering clothing to a young target market is quite successful. Apart, from being a successful industry, its marketing strategy is quite lacking. Company is also required to grasp more opportunities present in market towards initiating a loyal scheme for rewarding returning customers. This will significantly rate of retaining a majority of customers along with raising its store's lifetime value.

References

Journals

Adesanya, A., Yang, B., Bin Iqdara, F.W. and Yang, Y., 2020. Improving sustainability performance through supplier relationship management in the tobacco industry. Supply Chain Management: An International Journal, 25(4), pp.413-426.

Baghersad, M., Zobel, C.W., Lowry, P.B. and Chatterjee, S., 2022. The roles of prior experience and the location on the severity of supply chain disruptions. International Journal of Production Research, 60(16), pp.5051-5070.

Caballero-Morales, S.O., 2021. Innovation as a recovery strategy for SMEs in emerging economies during the COVID-19 pandemic. Research in international business and finance, 57, p.101396.

Sen, S. and Yildirim, I., 2022. A Tutorial on How to Conduct Meta-Analysis with IBM SPSS Statistics. Psych, 4(4), pp.640-667.