Asos has unveiled four strategic cornerstones to power through the next 12 months of uncertainty and put the business back on track

  • The retailer’s priority is to sharpen its operating model, to ensure tighter stock management and faster speed to market
  • It will implement shorter buying cycles and lead times, including more nearshore sourcing so it can react faster to trends
  • While Asos has seen a “disappointing” ROI in international markets, it highlights the success of its tie-up with Nordstrom in the US
  • Ramos Calamonte is keen to “push a culture of simplicity and transparency” in order to unify the business

Asos’ new chief executive José Antonio Ramos Calamonte has had what he jokes is the “longest week of his life” over the past four months after taking the reins of the struggling fashion retailer.

Jose Antonio Ramos Calamonte

José Antonio Ramos Calamonte, chief executive, Asos

Like many of its ecommerce peers, Asos has been hit by the shift of consumer behaviour back to in-store shopping, and further hit by macroeconomic headwinds such as supply chain issues, higher returns rates and the cost-of-living crisis.

The retailer has not been in the best shape to tackle these issues either. Asos swung to a loss last year amid a volatile leadership period that began with the shock departure of chief executive Nick Beighton in October 2021.

The business has also come under the microscope for its sustainability practices when the Competition and Markets Authority (CMA) announced an investigation into its claims earlier this year.

New boss Ramos Calamonte has had a chance to look closely at Asos’ operations to understand its strengths and weaknesses, and has laid out plans to turn things around.

Ramos Calamonte aims to renew and refresh Asos, building towards a more sustainable future. 

Renew and refresh

Previously Asos’ chief commercial officer, Ramos Calamonte’s priority is to sharpen the retailer’s operating model, to ensure tighter stock management and faster speed to market.

The retailer’s strapline and focus are to be the “world’s number one fashion destination for fashion-loving 20-somethings”. Ramos Calamonte reiterates that the aim remains the same, with an emphasis on “fashion” and trends.

“We want to make sure that the product we’re putting in front of the consumers is relevant to the season and to the trends that are happening right now,” he tells Retail Week.

To do that, Asos is implementing shorter buying cycles and lead times, including more nearshore sourcing so it can react faster to trends and offer a “more relevant and better-curated customer offer”.

Asos-Topshop

Ramos Calamonte is keen to ensure Asos’ products are “relevant to the season and the trends that are happening right now”

Honing in on its fashion credentials is what Ramos Calamonte believes will set Asos apart from competitors, including ultra-fast and low-priced fashion titan Shein, which was this week embroiled in controversy over its business ethics.

“We’re not interested in competing with Shein,” Ramos Calamonte boldly states.

“We want to offer consumers at every single point in time different price points where they can access fashion.

“Our obsession is not to be the cheapest like you could get from somewhere like Shein – we are trying to play a different game.”

While Ramos Calamonte hopes such qualities will bolster Asos’ sales, he also recognises that he has a stock issue – delayed stock due to supply chain issues led to increased markdowns to clear the excess, hitting margins.

Asos will look at multiple options to clear stock earlier in its lifecycle, lessening the need for markdowns and improving full-price sales figures.

“Our obsession is not to be the cheapest like you could get from somewhere like Shein – we are trying to play a different game”

José Antonio Ramos Calamonte, Asos

Ramos Calamonte suggests that third-party partnerships with businesses such as TK Maxx would be one route the retailer is exploring, as well as the possibility of a physical outlet store.

“We’re not removing promotions from our toolbox,” Ramos Calamonte adds.

“There will still be some markdowns, but fewer than there are now. There are always mistakes and it’s a very useful tool to eliminate those mistakes.”

Overseas ambitions

Looking at Asos’ international performance and ambitions, Ramos Calamonte laments the “disappointing” ROI Asos has seen in markets such as the US, Germany and France.

In its quest for international growth, Asos has become “excessively capital intensive, too complex and overstretched globally, which has resulted in a lack of meaningful growth and scale” in these regions.

He says Asos does not intend to exit any regions but instead may look to utilise different business models including third-party partnerships.

Ramos Calamonte highlights the success of Asos’ partnership with Nordstrom in the US, through a joint venture to offer Asos own-label brands including Topshop and Asos Design both online and in the department stores.

Asos-display-in-Nordstrom-store

Asos has partnered with Nordstrom in the US to offer its own-label brands including Topshop and Asos Design, both online and in-store

“We’re not saying that we don’t want to be international by any stretch of the imagination, but from where we’re standing, we want to be smart about our capital allocation, and that means improving and increasing the number of tools in our toolbox,” Ramos Calamonte explains.

“So today, when we go international with one single monolithic business model, we own the merchandise and we take all the risk. 

“What we’re saying is that we need a more flexible approach to be able to adapt to different realities.”

This flexibility could come in the form of more partner fulfilment options, wholesale deals, joint ventures, or even using partner warehouses, Ramos Calamonte says – all allowing Asos to trade internationally in a more capital-light way.

The returns headache for fashion retailers is also yet to be solved, but Asos is sticking to its guns and keeping free returns as part of its core offer.

“We consider free returns an integral part of our market position so we are not considering charging for returns,” Ramos Calamonte confirms.

“We consider free returns an integral part of our market position so we are not considering charging for returns”

José Antonio Ramos Calamonte, Asos

When asked what the business is doing to help reduce returns, Ramos Calamonte says he wants to try to educate the consumer on what returns mean, and encourage them to both return less and, if they are going to return something, return quicker.

Ramos Calamonte also says that Asos is seeking to be more consistent with its sizing in order to help customers order the right fit in the first instance.

Asos5-header

While it’s important to Asos to offer free returns, the retailer is keen to educate the customer to return less

Considered investments

With plans to tighten up cost controls, Ramos Calamonte aims to be more considered about where the business invests its capital – whether that be in its international business or at home.

The retailer said in its results today that future investments will be made in technology and improving supply chain efficiencies where necessary.

Ramos Calamonte intends to strip back international investment and simplify its supply chain, including closing its European warehouse in Swiebodzin, Poland, and rephasing the opening of its automated facility in Atlanta in the US and Lichfield in Staffordshire in line with capacity requirements.

The retailer adds that it intends to make investments in improving the customer experience online, which includes plugging funds into its marketing.

Asos says that customer acquisition slowed last year, while the cost to acquire a new customer increased, so it intends to prioritise new marketing strategies, especially in international markets.

Elsewhere on Asos’ balance sheet, the retailer confirmed today that it has renegotiated its core banking covenants and secured additional financial flexibility with cash and committed facilities of over £650m at year-end.

A unified business 

Following a period of instability at the top, it comes as no surprise that Asos needs to drive home a cohesive approach and unify the business to a common goal.

Ramos Calamonte outlines key steps for Asos to overhaul its culture.

“Number one is that we really want to push a culture of simplicity and transparency, with the means to do fewer things and to do things simpler,” he says.

“It’s probably quite obvious, but I want to reinforce that because simplicity is very, very important in everything we’re trying to do. 

“The second thing is that we’re pushing this idea of ownership and entrepreneurial spirit. We really want to get back to an Asos where people are continually trying new things, and that should foster innovation. 

“And last but not least is excellence: excellence in execution. I think it’s very difficult to be a successful retailer without excellence in execution.

“I think it’s very difficult to be a successful retailer without excellence in execution”

José Antonio Ramos Calamonte, Asos

“All the other successful retailers that I know have amazing commercial models and spotless execution, and this is why we really want to strive for excellence in our operations.”

Ramos Calamonte adds that the retailer will be seeking new hires, both external and internal in order to bolster its capabilities.

There’s no doubt that the former stock market darling has had a tough time of late, but reactions to Ramos’ plans have been positive – its share price had jumped 11.37% at the time of writing.

It will not be “business as usual” at Asos for the next year, but the measures unveiled by Ramos Calamonte should help the business get back on track to what it does best – fashion for 20-somethings.