Over the last week there has been a raft of updates from fashion retailers, from Primark to M&S.
The results have highlighted the different strategies fashion retailers are deploying to stay ahead in a fragmented and challenging market.
From agile inventory models to premium positioning, each retailer has its own distinctive plan to drive growth amid shifting consumer behaviours, economic pressures, and rising competition.
Asos
Becoming more trend-responsive
As the online fashion giant continues to grapple with widening losses and declining sales, it is doubling down on its ‘test-and-react’ model to keep pace with fast-moving trends favoured by its younger customers.
This strategy aims to keep inventory fresh and responsive, catering to younger consumers’ demand for must-have trends.
Expanding this model will also stop the online fashion giant being left with too much inventory as it is backing the trends that are selling.
CEO José Antonio Ramos Calamonte is pinning his hope on this more reactive model to turn around Asos’ fortunes.
For the year ending 1 September, it posted a full-year loss of £379m, up from a £296.7m loss last year, as sales dropped by 18%.
Calamonte highlighted the potential in Asos’ ‘test-and-react’ model, where items are ordered on a 2 to 3 week lead time.
The model, currently 10% of own-brand sales, will be expanded to 20% next year to help it remain relevant to it’s young trend obsessed shoppers.
Primark
Low prices, impressive stores, and internationalisation
As the cost-of-living crisis lingers on, the strength of Primark’s value proposition has helped it thrive.
Full year profits soared 51% to £1.1bn in its year to 14 September, as the boss of Primark’s parent company Associated British Foods, George Weston, declared: “Our low-cost model is as strong as ever.”
The retailer also highlighted it’s “unique store environment and increased digital engagement” as reasons behind its growth.
New stores, particularly in overseas market, are propelling the retailer.
It will push ahead with its store rollout programme in its growth markets in Europe and the US, where Weston said there was “significant white space for new stores”, which would help it drive “sustainable growth over the medium and long term”.
It expects new stores to contribute around 4% to 5% per year to Primark’s total sales growth for the foreseeable future.
The retailer is fast becoming one of the few British retail success stories overseas and its US expansion continues to take off.
This increasing global footprint is making the business more resilient.
AJ Bell investment director Russ Mould says: “What is notable is the company achieved a strong set of results despite Primark in the UK being affected by a wet summer which, for a business reliant on footfall, was less than ideal.
“This was made up for by strong progress in overseas markets, lending credence to the idea the Primark offering can be a success outside of its domestic market.”
Meanwhile digital is helping to drive footfall.
The retailer has famously long shunned trading online but the click-and-collect option it is rolling out to all UK stores “gets more customers through the doors where they can then make additional impulse purchases”, according to Mould.
M&S
Strength in core categories and collaborations done well
M&S has seen success by focusing on its core categories and leveraging collaborations.
The retailer posted a 4.7% rise in clothing and home sales in its half-year results as it retained market share leadership in categories like jeans, knitwear and bras.
It sold 2m pairs of jeans and achieved 26% growth in knitwear sales, showing the retail giant’s ability to lead in everyday essentials.
It’s ever popular lingerie offer also continued to resonate with consumers, reaching its highest-ever market value share at 40% in bras, reinforcing M&S’s position as a trusted choice.
The retailer also drew in new shoppers through high-profile collaborations.
CEO Stuart Machin praised its latest Sienna Miller range, saying it is helping attract a younger customer base for M&S and is “really pushing our style credentials”.
On its partnership with Bella Freud, which released just last month, Machin said 9,000 jumpers were sold in just two hours.
Machin admitted the retailer could have been “a bit bolder and booked bigger”, buying more of the collection.
Zalando
Premiumisation and logistics partnerships
Zalando’s latest results showed that its tactic of using more premium positioning and logistics innovation to compete is paying off.
Logistics revenue grew 11% to €239.7m in the German retailer’s last quarter.
Its logistics network now supports other retailers, including Asos, and creates a new revenue stream while boosting appeal to premium shoppers.
Average order values rose from €58.8 to €61.1, and operating profit margins improved by 2.9 percentage points to 3.9%.
These results point to a fragmented fashion market, split between ultra-fast fashion, low-cost in-store experiences, and brands carving out niches in premium or differentiated segments.
In an era of low consumer confidence and intense competition, fashion retailers are forced to adapt -whether by becoming more agile, creating unique in-store experiences, or targeting new markets.
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