Asos grabbed headlines last year when it revealed it was building capacity to achieve £4bn in sales, more than twice the revenue it racks up at present.

But when presenting the annual results today of Asos’s 18th year in business, chief executive Nick Beighton said the retailer was “eyeing up a significantly bigger prize than £4bn” and that it would continue to invest to make that happen.

Asos had previously been met with stony glares from the City when it said that it planned to increase capex to record levels, investing between £230m and £250m per year. That investment will peak this year and next and then begin to decline as a percentage of sales, so long as revenues perform as expected.

The etailer plans to achieve its aim through product innovation, winning greater market share in regions such as the EU and US and investing in pioneering technology.

Beighton spoke about three key projects that demonstrate those tenets today.

Innovation

Asos’s new label, Collusion, is aimed at Gen Z. The gender-neutral product line was designed in collaboration with six Gen Z influencers, or ‘founding members’, and launched with a national campaign featuring 100 people living in the UK who turned 18 in 2018, as Asos has.

The etailer is clever to tap into gender and non-binary issues, which are much more front of mind for many consumers, especially younger ones, than ever before. Brands such as Zara have previously created ‘unisex’ collections but such efforts have always been much more about styling - boyfriend jeans and men’s shirting - than identity. Asos has tread new ground here and that innovation gives it real kudos.

The 200-piece range is “built for a new generation united in their pursuit for inclusivity and representation” and centres around athleisure and casual. Beighton refused to be drawn on sales figures for Collusion, which launched two weeks ago, but he did say that it had been the fourth best performing brand on the site. The etailer sells 850 brands in total.

Market share

Asos is reaching relative maturity in the UK market although it continues to grow quickly for a business aged 18. However its market share in key regions such as Europe and the US is still minimal. In Europe, it holds 1.6% of the market and in the US just 0.5%. Looking at Asos’ current market share in the US and Europe compared to the market size and growth of these regions, and their increasing online penetration, it is clear that Asos is well-placed to win in these regions.

Asos regional projections, source Global Data
 UKEUUS
Apparel market size 2018  £48.1bn  £287.9bn  £303.7bn
Asos market share 7.40% 1.60% 0.50%
Forecast apparel market CAGR 2018-23 2% 4% 4%
Online penetration 2018 24% 16% 21%
Online penetration forecast 2023 32% 25% 29%

Asos opened a distribution hub in Atlanta that will allow it to improve its delivery proposition significantly, offering faster fulfilment to US customers. In Europe, it is improving its Berlin-based logistics hub.

A key focus for Asos’ logistics and customer services teams is its returns process. Beighton has spoken previously about his vision of making returning something as easy as buying it and the retailer is now actively working on this. Asos’s millennial and Gen Z customers are often cash-strapped and the business is now able to refund customers early in 18 markets as well as offering status-tracking on returns.

Asos became one of the first fashion retailers to launch voice search earlier this month.

Customers in the UK and US can start conversations with chatbot Enki by saying “Hey Google, talk to Asos” to their Google Home smart speaker or Google Assistant app on Android or iOS.

Enki will help customers discover and shop from six Asos product categories across menswear and womenswear.

The first iteration of this tech is relatively basic, as Retail Week found when it tested it out, but Asos will use customer feedback from the initial launch to refine and enhance the experience over the coming months.

Beighton insisted that voice search was one of a number of ways that customers wanted to interact with it. He said that customers “loved” Enki and insisted the process took friction away from the process, allowing a more natural shopping journey.

The three examples demonstrate just how Asos thinks it can bag its ‘bigger prize’. Product and customer innovation, pioneering, early-to-market tech and under-exploited key markets all add up to winning big.