Asos is far stronger from a brand perspective than the brands it has acquired from the struggling Arcadia Group, but what Topshop, Topman and Miss Selfridge lack in terms of brand health they make up for in quality.
With a rich history spanning nearly 60 years, the Topshop brand has a legacy Asos as a newer digital business can use to its advantage.
But Topshop has seen its presence diminish somewhat in recent years, partly down to the fact it failed to keep up with changing consumer habits, most notably the shift to online, with its digital offer lagging behind that of its new owner Asos.
This gap in ecommerce was made all the more apparent during the pandemic. Arcadia fell into administration in November after failing to gain extra funding to pay mounting debts, which grew as store closures caused sales to slump.
In comparison, Asos posted strong growth in its fourth quarter results, ending 31 December, with total group revenues jumping 24% year on year to £1.4bn.
The main gain from this acquisition for Asos’ already strong brand is in improving quality perception, something that Arcadia’s brands are known for and that Asos hopes to acquire.
Amelia Brophy, YouGov
Arcadia Group accepted £265m from Asos for the Topshop, Topman, Miss Selfridge and HIIT brands, and £30m for the stock. Like Boohoo’s acquisition of Debenhams last week, Asos will not be taking on the brands’ stores.
Asos says the brands collectively raked in over £1bn in total revenues across all channels in 2019, notably before the pandemic, and it expects them to deliver “double-digit return” in post-tax capital in its first full year.
Asos CEO Nick Beighton says the move is part of its plan to “accelerate” Asos’s “multi-brand platform strategy”, and drive growth among 20-something shoppers.
He claims Asos has been “central” to driving recent growth online of these “iconic British brands” as a wholesaler, with the company aiming to develop them further using its design, marketing, technology and logistics expertise. These are “strong brands that resonate well with our core customer base”, he says, adding that they have an established presence in key strategic markets such as the US and Germany.
Poor brand health
Examining the health of the Arcadia brands on YouGov’s BrandIndex, Asos outperforms Topshop, Topman and Miss Selfridge across nearly all metrics.
Looking at value, Asos scores 9.2, towering over Topshop at 1.9, Topman slightly behind at 1.8 and Miss Selfridge with a low -1.4.
When it comes to customer satisfaction, Asos again comes out on top (albeit marginally) with a score of 10.5 versus Topshop’s 9.3, Topman’s 6.6 and Miss Selfridges’ 3.9, while for impression Asos scores 9.9, above Miss Selfridge (6.1), Topshop (5.3) and Topman (4.9). When looking at recommendation Asos scores 9.9, besting Miss Selfridge (6.1), Topshop (5.3) and Topman (4.9).
However, for quality the picture is slightly different, with Asos lagging behind all three with a score of 1.5, after Topshop (2.5), Topman (3.5), and Miss Selfridge (5.1).
YouGov head of account management, Amelia Brophy tells Marketing Week it is evident Asos runs positively in consumers’ hearts and minds, with the purpose of the acquisition being to leverage the former Arcadia brands’ reputation in quality.
“While there are obvious benefits to adding a much-loved brand like Topshop to Asos’ growing multi-brand platform, YouGov data shows Asos already has a strong brand.
“The etailer scores highly among consumers for value, impression, reputation, recommendation and customer satisfaction and scores higher than most other high street fashion brands. The main gain from this acquisition for Asos’ already strong brand is in improving quality perception, something that Arcadia’s brands are known for and that Asos hopes to acquire.”
Meanwhile, data from consultancy Brand Finance shows Asos has acquired brands in declining financial health, valuing Topshop and Topman at £342m in 2020, a 9% year-on-year drop. However, the brands have 93% consumer awareness and are therefore “well-established and worth paying money for”, Brand Finance associate Annie Brown says.
“Recent coverage about company financial difficulties and the allegations of misconduct against Philip Green resulted in Topshop being the least reputable major high street clothing chain in the UK,” adds Brown.
“New ownership under Asos offers a chance for these household brands to undergo a transformation and regain previous esteem, but at the cost of lots of jobs given the store closures.
“It seems like Asos has paid a fair price, which is relatively unusual for struggling British brands (they often get bought at bargain prices). This is likely a sign that Asos has a strong future plan and is expecting major growth once it has full control of the brands.”