Fast Fashion Online – What can others learn from the pureplays?

Source: Mintel 31-10-2016

“In an increasingly challenging sector, the fast fashion pureplays are outperforming
the market. Whilst clothing retailers struggle to navigate unseasonal weather
patterns and changing shopping behaviours, the online-only fashion retailers are
benefitting from their digital business models which enable them to respond quickly
to new trends. In addition, these retailers have proven their ability to create content
that resonates with their target market, setting them apart in a crowded sector.”
For more information see Clothing Retailing - UK - October 2016, Fashion:
Technology and Innovation - UK - September 2016 and Youth Fashion – UK -
December 2016.

What we've seen

• ASOS has released full-year results for the year ended August 2016, revealing a
26% increase in group revenue to £1.5bn.

• Boohoo’s latest half-year results for the six months ended August 2016 reported a
40% rise in revenue £127m.

• Missguided is yet to release figures for its latest financial year, ended March 2016.
However, the retailer’s results for the 2014/15 financial year revealed a 70% rise in
revenue to £87m.

• Missguided is also due to open its first physical store in London’s Westfield
Stratford Shopping Centre.

The success of the online-only retailers

Whilst retailers such as ASOS, Boohoo and Missguided all still have relatively low
consumer bases, all are registering impressive revenue growth. ASOS is the largest
retailer of the three with its latest figures reporting 12.4m active customers globally,
of which 4.7m are located in the UK. Whilst ASOS is maturing slightly in the UK, the
business continues to perform well, reporting robust sales growth and continuing to
gain a greater share in the online clothing market.

These retailers have all tapped into one underlying trend, understanding that what
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young consumers want is low-priced, fashionable clothing. This demand for low-
priced fashion is heightened by the shift towards leisure spending over product
purchasing – a theme that is particularly pronounced amongst young people as the
digital generation seeks to share their experiences online. ASOS, Missguided and
Boohoo have all used this trend to their advantage by using a social dialogue with
shoppers to encourage spending on trend-led clothing. 

Brand Research for Mintel’s Clothing Retailing – UK, October 2016 report shows that
these three retailers all have a brand image that is seen as vibrant, trendsetting and
stylish. Confirming their ability to tap into the youth market, they are also strongly
associated with being accessible. Furthermore, these positive associations are most
pronounced amongst their target market of 16-24s.

ASOS, Boohoo and Missguided all target a similar demographic with strategies
geared towards those in their late teens and early twenties. Understanding what
these shoppers want lies at the heart of all three retailers. As such, competitive
pricing plays only one part in their success. In addition to low-prices, the strength of
these retailers lies in their strong marketing messages and large product
assortments with frequent newness, alongside a strong online and delivery
proposition.

Leading digital innovation in the UK clothing sector

Given that the pureplay retailer’s roots lie in e-commerce, it is perhaps unsurprising
that they are leaders in digital innovation. ASOS, Boohoo and Missguided all have
developed e-commerce sites with the end user in mind with clear and easy
navigation. Engaging landing pages feature inspiring and creative content but also
emphasise important messages, such as free and fast delivery, secure shopping and
student discounts.

ASOS, Boohoo and Missguided have all discussed their use of data in driving
decisions. This is apparent in their initiatives to invest and increase personalised
content. An example is Missguided’s Tinder-style shopping app. In addition to giving
consumers a more compelling reason to download the brand’s app, the move will
also provide Missguided with additional data which it can use to spot trends and
personalise content.

The investments made in mobile e-commerce are a response to the rising number of
young people using smartphones to shop for clothing. Consumer research for
Fashion: Technology and Innovation – UK, September 2016 shows that almost half
(47%) of female 16-24s have used their smartphones to shop for fashion online.

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FIGURE: Missguided Mobile App, October 2016

Missguided / Mintel

Improving customer loyalty with annual delivery subscriptions

The pureplays have led the way in terms of delivery and returns, constantly
extending and improving options to attract young consumers with convenience and
speed.

In terms of delivery, ASOS, Boohoo and Missguided all have a range of click and
collect and delivery options, including evening, Sunday and precise services.
However, it is ASOS and Boohoo that stand out with their Premier memberships -
offering shoppers unlimited next day delivery for an annual fee (£9.95 at ASOS,
£9.99 at Boohoo). 

ASOS and Boohoo also offer free returns with a variety of options available.
Meanwhile, Missguided has a range of return options that include postal, drop-off
and collection services costing between £1.95 and £2.50. 

Using content and social influencers to drive sales

Consumers aged 16-24 are among the most prolific social media users. With no
physical presence on the high street to market themselves, the pureplays have been
innovative in their use of social media and digital channels, creating an almost
constant social dialogue with their fans.

Beyond ASOS, Missguided and Boohoo’s relevant and timely in-house content, they
all utilise their customer base to create user generated content. Such content from
engaged shoppers establishes a relationship of trust and brand loyalty amongst
young customers but also increases product engagement. All three retailers have
dedicated landing pages to highlight their Instagram following, with ASOS and
Missguided both making such content shoppable.

In line with this social-first strategy, influencers play a large part in marketing
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strategies. Boohoo’s ‘Style Squad’ includes more than 60 influencers across its key
markets. The retailer’s latest collaboration was the collection launched in partnership
with curve model and blogger Jordyn Woods. In a similar move, influential model
Barbie Ferreira was revealed as the face of Missguided’s plus size offer. Such moves
not only utilise a vast social following but also tap into the Serving the Underserved
Trend, which highlights how inclusive marketing is increasingly important.

Whilst Missguided and Boohoo partner with bloggers and social media influencers,
ASOS places greater emphasis on its in-house stylists or 'Insiders'. Team members
have dedicated Instagram accounts to showcase their styling expertise and images
are made shoppable via the ASOS website. 

FIGURE: ASOS Insiders Landing Page, October 2016

Asos.com / Mintel

Exclusive brand and collections

ASOS's strong mix of branded clothing sets it apart from Missguided and Boohoo,
both of which stock largely own-branded products. ASOS's curated brand
selection includes familiar high street names, premium brands and lesser-known
designers. The retailer has utilised its relationship with branded partners to create a
number of exclusive line and collections. Spanning a variety of price points and
categories, exclusive lines available at ASOS include Boohoo and Missguided
alongside brands such as Cheap Monday, G-Star, Puma, Skinnydip and Whistles. 

Meanwhile, Missguided has taken its use of influentials one step further. To boost it's
own-brand, the retailer has created a range of exclusive collections in collaboration
with famous models and bloggers. Recent partnerships include Amber Rose, Sarah
Ashcroft, Carli Bybel and Caroline Receveur. 

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FIGURE: Missguided Caroline Receveur Collaboration, 2016

Missguided / Mintel

Extending brand reach with new categories

The pureplays have also extended their reach by moving into new product categories
that go beyond their traditional offer. As Mintel’s Extend My Brand discusses, while
price plays an enormous role in where the consumer decides to shop, so does trust.
As such, established brands are increasingly leveraging that trust in new ways;
namely, by extending it into new categories. Recent examples in the pureplay
fashion sector include ASOS’s move into plus-sized and tall menswear, with further
plans to launch an own-brand sportswear line and extend its beauty and grooming
offer. Missguided has launched beauty products, maternity, bridal and activewear.
Meanwhile, Boohoo has used new petite, tall and plus-sized ranges to drive sales.
Furthermore, Boohoo has also launched its standalone menswear website and has
extended the offer on its original site to include childrenswear. 

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FIGURE: Boohoo Kids Landing Page, October 2016

Boohoo.com / Mintel

Experimenting with physical stores

The pureplays are also experimenting with developing a bricks and mortar presence
to increase consumer exposure and awareness. Missguided in due to launch its first
standalone retail space in November 2016 with its store opening in Westfield
Stratford. This follows the launch of a concession within Selfridges at the Trafford
Centre.  In addition, Boohoo recently launched pop-up shops in Los Angeles and
Paris during 2016 to drive further awareness of the brand and support growing sales
in these markets. However, in contrast, ASOS has previously stated that it has no
intention of moving into physical retail in the near future. 

How will Amazon Fashion change the market?

Mintel’s consumer research for Clothing Retailing – UK, July 2016 shows that Amazon
has moved up the list to become the fifth most popular retailer for clothes – up from
ninth place in 2015. One in five consumers (22%) used Amazon to buy clothes in the
last year. This confirms the retailer’s ability to rapidly grow its market share. The
retailer’s dominance in other sectors places the business in a strong position to
disrupt the clothing market.

The move to grow the Amazon Fashion business will come with challenges. Amazon
is less experienced merchandising emotional products – something crucial to attract
clothing shoppers beyond replacement purchasing. As such, Amazon Fashion may
struggle to capture the trend-led shoppers that the youth retailers attract. However,
Amazon has potential to help young brands scale up through its established
infrastructure and giving such up and coming brands reach and exposure could tap
into the more fashion-forward consumers.

Amazon also has strong associations with discounting. The retailer’s success lies in
its business model - rejecting the traditional retail strategy aimed at maximising
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margins. Instead, Amazon evaluates price elasticity by constantly altering prices to
maximise sales. Whilst this reduces over-pricing & high discounting, it also deters
brands for selling via the platform due to the inconsistency, which can impact brand
perception.

What it means
• The fast-fashion pureplays will continue to grow at a fast pace due to their ability
to react to changing trends and shopping habits amongst their young consumer
base.

• The move into physical retail stores will help Missguided and Boohoo extend their
reach and will generate brand hype.

• The UK high-street market for youth fashion is highly competitive with a number of
established players. As such we expect the online retailer’s to leverage their digital
innovation prowess to create a more engaging store experience.

• As Amazon Fashion continues to improve its offer and credibility in the sector, the
online clothing market will become increasingly competitive - particularly due to the
retailer’s expertise in online order fulfilment.

• As social media usage becomes more pronounced amongst older consumers (see
Digital Trends Summer – UK, July 2016), the opportunities for retailers to leverage
social media will grow.

• To leverage social channels fully, retailers need to understand not only who their
core customers are but also what media they consume and where and how they
consume such media.

• Retailers also need to understand the value of producing content that is not overly
commercialised and engage with shoppers on another level.

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