Retail Theory and Practice: A Case Study of ASOS Plc

This report provides a case study of ASOS Plc, a British fast fashion retailer, and discusses the key changes within the UK fashion retail industry. It includes a PESTEL analysis of the macro environment and a SWOT analysis of the micro environment. The report also provides recommendations for the company to improve its efficiency and effectiveness.

Retail theory and practice
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Table of Contents:
INTRODUCTION...........................................................................................................................3
Introduction to the Company:......................................................................................................3
Relevant changes within the retail businesses: Macro environment...........................................3
PESTLE analysis: .............................................................................................................4
Relevant changes within the retail businesses: micro environment.............................................5
Strategies and tactics that can be used by ASOS Plc:..................................................................6
Recommendations:.......................................................................................................................7
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9
APPENDIX....................................................................................................................................10
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INTRODUCTION
Retailing refers to the sale of goods or the services from a business to a consumer for
their own use. It is the sale made to the end consumer of the product. A retail business handles
the small quantities of goods which are sold to the ultimate consumer (Souiden, Ladhari and
Chiadmi, 2019.). A fashion retail is that part of retailing which acts as an intermediary between
the manufacturer and the ultimate consumer. ASOS Plc is a British retailer which is specialized
in fashion clothes, accessories, shoes, jewellery and the Cosmetics products most of which are
under its own label. It operates on digital platforms (ASOS plc, ASOS.L, 2021). This report will
discuss the key changes within the UK fashion retail, the relevant changes of retail industry
within its macro and micro environment with the help of PESTEL analysis. The strategies and
tactics that company can use to address the issues by providing some recommendation will also
be explained.
Introduction to the Company:
ASOS Plc is an online fashion and cosmetic retailer who ships its products to around 196
countries across the globe. It operates as an investment company who is engaged in online
retailing. ASOS stands for As Seen On Screen which distinguishes it from the other competitors.
The company sells over 65000 branded products as well as with their own range of clothing and
accessories. It offers women's wear, men's wear, jewellery, accessories, footwear and other
beauty collections. The company uses the tag line of “Buy what you see on TV and films”. It is
one of the leading online fashion platform and it is listed in one of the top five online stores in
the clothing and shoe segments. The company use online business model and caters to a global
audience only (ASOS Plc., 2021).
Company offers thousands of high street, designer and vintage products with addition to
its won brand fashion and beauty products, which the company supplies from the manufacturing
countries all around the world. Its prime target customers are the population between 20-30 years
of age. The company is engaged in charities too. It donated 100% of its lipstick sales profits to
charity.
Relevant changes within the retail businesses: Macro environment
Every market influences changes with the passage of time. The UK retailing sector have
also seen such changes. The companies involved in fashion retailing sector needs to under the
changing dynamics of market and focus more on offering the products and services to the
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customers which the customers want (Tuan and Tram, 2021). As a part of UK retail company
ASOS have also been influenced by such changes. The company have undergone some drastic
changes to survive in the market. To understand more about these changes the PESTEL analysis
of ASOS is as below:
PESTLE analysis:
PESTLE can provide the details about the upcoming and current external environmental
challenges (Perera, 2017). These factors can help the company in operating hose challenges in
macro environment.
Political factors: Political factors are the changes implemented by the government that can affect
the working of a business. ASOS is operating in almost 196 countries and that put it on an
political environment risk. The implementation of Brexit policy and various other digital sales
tax policies in the country as affected the sales of the ASOS plc. The company is continuously
reviewing its prices and prepositions to make sure that they can provide competitive prices on all
the brands and offer the best services.
Economic factors: The economic factors like COVID-19 global pandemic have put the economy
on high alert and instability. The pandemic, poor weather and dented market demands have
slowed the sales of the company. However, the company offers sale on online platform which
helped it in trading through the pandemic lockdown while the physical stores were forced to
stop. The labour market conditions also affect the company. ASOS should analyse the
availability of human capital prior to take advantages when the markets are flexible.
Social factors: Social factors refers to the factors related to population and customer
demographics which can affect the business (Aithal, 2017). The company's presence on social
media have proved to be a great advantage as the shop-able social media posts are gaining huge
popularity. Social media's have helped the company in forecasting the demands of its customers.
ASOS should analyse the demographic features in choosing the right market segment with high
growth potential.
Technological factors: The factors related to technology and innovations are included in
technological environment. The constant changes in technology and the rise of digital platforms
in the market have affected the company on another level. The company needs to consider the
investments made by its competitors like Zara and Boohoo to understand the technological
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influences. Since ASOS is engaged on almost all the digit platforms and is consistent in
upgrading tits technology.
Legal factors: The legal factors are those factors which are related to the laws and legislations
implemented by the government of the country (Camilleri, 2018). The biggest threat to the
company is cyber crime and security of customer data as the company is operating digitally. The
company have taken the initiative to invest more in developing the secure sites for sales and
invested more in its cyber protection. ASOS should focus on protecting its intellectual property
rights and its valuable data and patents.
Environmental factors: The environmental factors include all the elements that affects or can
potentially affect the working of an organization. The questionable practices in fast fashion and
environmental sustainability business put the company in a threat. However, the company has
pledged to reduce the use of plastic, minimize wastages and contribute somewhat in the
environmental sustainability. The sustainable sourcing team of ASOS the suppliers on designing,
sourcing and innovating sustainable products. The company also does environmental awareness
campaigns to educate its customers.
Relevant changes within the retail businesses: micro environment
It is important to focus on determining the internal factors of the business that could
potentially change in the future in order to understand the relevant changes within the micro
environment of that company. This understanding allows the companies in determining the
viability and feasibility of their business and also to face the upcoming challenges of the
industry.
SWOT analysis of ASOS Plc:
SWOT analysis can help the company to determine internal factors like strengths to focus
on its external factors like threats (Quezada and et.al., 2019.).
Strengths: Strengths are those factors which the company excels in. ASOS is one of the leading
companies in retail industry and it has a number of strengths that can help the company to protect
its market share. The expansion of the company has helped it to generate new revenue streams
and diversify its economic risk cycles. Company invests a lot to make its workforce highly
skilled.
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Weaknesses: Weaknesses are those areas who require improvements. ASOS' s positioning and
sales channels are not clearly defined which can put the company in risk of attacks from the
competitors. The company is spending a lot in R&D of the products which needs to be increased
more due to the scale of expansions and globalization. The organizational structure of the
company is only compatible with the current business model. This incompatibility can affect the
company in its expansion in the future.
Opportunities: Opportunities are the favourable factors which can give the company competitive
advantages (Phadermrod, Crowder and Wills, 2019). The company can grab the opportunity to
enter a new market segment, due to government's agreement to the adoption of new technology
standards. Emerging new technological developments can be adopted by the company to
introduce price differentiation to its products. It can also bring customer loyalty and lure new
customers towards ASOS through its value oriented prepositions. The increase in disposable
income of the customers can also be used as an opportunity to capture new customers and
increase its market share.
Threats: These are those factors which have powers/potentials to harm the company. New
technologies developed by the competitor and new environment regulations imposed by the
governments can put the company in a great threat. Shortage of skilled workforce in a certain
market can risk the revenue generation of the company. The constant changing trends and
behaviours of customers can be very difficult to adjust which puts it in a greater threat.
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Strategies and tactics that can be used by ASOS Plc:
To survive and remain in the leading companies of retail industry, ASOS need to use
certain strategies which can be implemented in the company. With the use of such strategies and
tactics ASOS can focus on the various ways its management can conduct its business operations
successfully.
Strategies in regard to macro-environment: They are the strategies that can be implemented
on the economy as a whole are macro environment factors. The company can adopt following
strategies to eliminate challenges:
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Illustration 1: SWOT Analysis
Source:SWOT Analysis, 2021

Innovations and technology: ASOS can improve its technologies to bring constant innovations in
its products and processes. These innovations can be used by the company to create a
competitive advantage over its competitors. Constant innovations will attract the new customers
and will also help in retaining the existing customers of the company for along run (Ahram and
et.al., 2017). The company can also introduce some changes in the distribution channels through
which the company will be able to deliver the products faster.
Brand extension: Although the company is dealing with over 65000 brands, it can also introduce
bigger brands that are popular now like Zara. This way the company can reduce the competition
and capture the customers of those brands too. The company can also extend its own brand line
and introduce new lines of products and services to tap a different market segment. The company
can either increase the product line width or the depth to product line which can cater to the
market segment s which have never been taped before by the company (Vahdat and et.al., 2020).
Here the company can tap the age group of 30-45 years and provide products accordingly.
Forecasting demands of customers: The changing behaviors and tastes of the consumers are a
bigger threat to the fashion brands like ASOS. The company can use its social medias and
analyze the demand of the consumers. Social media can also be used to forecast the emerging
trends of the market. Through this method the company can fulfill the needs o the customers and
tap the market before the competitors. Through this strategy the company will be able to keep up
with the market trends and will produce only those products which are in demand.
Strategies in regard to Micro environment:
They are those strategies that impact the business on individual aspects. The key
strategies that can be used by ASOS are:
Product differentiation strategy: Product differentiation means creating a unique product that
distinguishes a product from the similar products of the competitors (Liang and Xiangmin,
2020). Since the company deals in clothing brand, its products can be easily copied. The
customers also prefer to buy the products that stand distinct from the others. The company can
use constant innovations or methods to create product differentiation. Product differentiation will
also help ASOS in creating a competitive advantage over its competitors.
Competitive pricing strategy: The company can use the strategy of competitive pricing. It will
create the prices which are either less or a re more than the prices of products provided by the
competitors. This will create a competitive advantage and more customers can be attracted
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through this strategy (Gupta, Ivanov and Choi, 2021). The consumers always prefer good quality
products at cheaper prices. The company can provide various coupons or discount offers to the
customers on selected days.
Recommendations:
Although the company is performing well in the industry, but it can still use some
recommendations to increase its efficiency and effectiveness:
Company can invest more on forecasting the demands of the customers and the emerging
trends in the market. The company can use various sources like social media to understand those
demands and emerging trends. This way the company can give what the customers want and be
ahead of all the competitors. This can also save the company from making products which will
no longer remain in demand by the customers in the future.
ASOS can also open some physical stores in big cities to enhance its business scale. The
company currently operates only on the digital platforms and have less access to local customers.
The company's physical stores will open a new customer segment for the company which is the
impulsive buyers. The impulsive buyers are those buyers who buy something immediately when
they see it. On online platform, there is a chance that customer can cancel his delivery if he
changes his mind, but it is not possible in physical sales.
ASOS needs to spend more on its product differentiation and create the products which
could be easily differentiated by its customers from the products of the competitors. It can be a
logo or a label attached to the product which can be recognized immediately.
CONCLUSION
It can be concluded that a retailing business is a business which makes small quantity
sales to the end customers. ASOS is a British fast fashion retailer who is one of the leading
companies in retail industry. The company offers 65000 brands to over 196 countries. With the
emerging changes in the market the company also have to change accordingly. The company is
affected by the various government policies like Brexit policy and tax policies. Global pandemic
and various other factors have impacted the business sales. However, the company can analyse
and use various business strategies like product differentiation and competitive pricing to gain a
competitive advantage over the competitors. ASOS can use suggestions like implementing new
distribution channels and focusing on consumer demands to survive the competition.
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REFERENCES
Books and journals
Ahram, T. and et.al., 2017, June. Blockchain technology innovations. In 2017 IEEE technology
& engineering management conference (TEMSCON) (pp. 137-141). IEEE.
Aithal, P.S., 2017. ABCD Analysis as Research Methodology in Company Case
Studies. International Journal of Management, Technology, and Social Sciences
(IJMTS), 2(2), pp.40-54.
Camilleri, M.A., 2018. The marketing environment. In Travel marketing, tourism economics and
the airline product. (pp. 51-68). Springer, Cham.
Gupta, V., Ivanov, D. and Choi, T.M., 2021. Competitive pricing of substitute products under
supply disruption. Omega. 101. p.102279.
Liang, J. and Xiangmin, H., 2020. Optimal Pricing and Product Differentiation Strategy under
Different Price Leadership. Management Review. 32(5). p.205.
Perera, R., 2017. The PESTLE analysis. Nerdynaut.
Phadermrod, B., Crowder, R.M. and Wills, G.B., 2019. Importance-performance analysis based
SWOT analysis. International Journal of Information Management, 44, pp.194-203.
Quezada, L.E. and et.al., 2019. Measuring performance using SWOT analysis and balanced
scorecard. Procedia Manufacturing. 39. pp.786-793.
Souiden, N., Ladhari, R. and Chiadmi, N.E., 2019. New trends in retailing and services.
Tuan, L. and Tram, N., 2021. Factors affecting business performance of manufacturing
enterprises. Accounting. 7(1). pp.179-190.
Vahdat, A. and et.al., 2020. Emotional brand attachment and attitude toward brand
extension. Services Marketing Quarterly. 41(3). pp.236-255.
Online references:
ASOS Plc. 2021. [Online]. Available through:
<https://www.bloomberg.com/profile/company/ASC:LN>. [Accessed on 31 July 2021]
ASOS plc, ASOS.L. 2021. [Online]. Available through:
<https://www.reuters.com/companies/ASOS.L>. [Accessed on 31 July 2021]
SWOT Analysis. 2021. [Online]. Available through: <https://www.planstreetinc.com/what-is-
swot-analysis/>. [Accessed on 31 July 2021]
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APPENDIX
PESTLE Analysis of ASOS:
Political factors Economic factors
 Brexit policy
 Tax policies
 Digital sales policies
 COVID-19 pandemic
 Poor weather
 Dented market demands
Social factors Technological factors
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 Social media demands
 Consumer demands
 Demographic analysis
 Digitalization
 Changing technology
Legal factors Environmental factors
 Protection against Cyber crime
 Intellectual property rights
 Laws of different companies
 Questionable fashion practices
 Environmental sustainability
 Environmental protection campaigns
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