Asos: Being open and transparent is key to building brand trust

Asos believes the Covid-19 pandemic and supply chain allegations at rival Boohoo make clear and transparent communication more important than ever.

Asos had to take a number of difficult decisions at the height of the Covid-19 pandemic to mitigate the impact on its business. This included turning off its next day delivery service for seven weeks in the UK and increasing its standard delivery proposition by up to 11 days.

While these are what CFO Matthew Dunn describes as “cornerstones” of the Asos proposition, it had to make the changes in order to ensure it didn’t disappoint customers or force its supply chain to take undue risks. Key to ensuring there was little negative kickback from customers was being “open and transparent”.

“We took a number of customer-facing decisions to avoid stimulating demand we couldn’t effectively service to ensure we didn’t disappoint customers on our delivery promise and also to ensure no one took undue risk across our supply chain,” he said, speaking on a call with analysts after the brand’s latest results.

“[This is] something we were up front with customers about before the point of order. Our capabilities here are the cornerstone of our customer proposition and we are clear that open and transparent communication is key to building trust with our customer base.”

The allegations about rival Boohoo’s supply chain – that factories in Leicester which supply the fashion company are guilty of worker exploitation having failed to pay minimum wage or provide adequate protection during the pandemic – have also led Asos to realise the importance of the messages it communicates.

The brand had already started talking about areas such as supply chain, sustainability and recycling with customers, but says this is “ever more important”.

Our capabilities in delivery are the cornerstone of our customer proposition and we are clear that open and transparent communication is key to building trust with our customer base.

Matthew Dunn, Asos

“One of the things we are weaving into our communications, and we were doing more of anyway, is telling stories about how we protect people in our supply chain, how we build products with end use in mind, how we sustainably source cotton, how our garments are capable of being recycled, how our packaging is recyclable,” explained CEO Nick Beighton.

“In light of the Boohoo allegations, it is ever more important we tell those stories to customers about what we are doing on their behalf.”

Asos sales rose by 10% to £1bn in the four months to 30, as the retailer noted “steady improvement” despite the Covid-19 crisis. UK sales fell by 1% on the same period in 2019 to £329.2m, while international sales rose by 17% to £654.1m.

The online retailer grew its active customer base by 16% to 23 million during the period, noting strong growth in new international customers. The company credited its agility in refocusing the product mix in response to customer demand, upping its focus on casualwear and loungewear as demand for evening dresses, formal wear and footwear slumped.

The company also “softened” its promotional calendar and reduced performance marketing spend, in part to ensure it could satisfy demand. However, customer engagement remained strong, with Asos calling out its performance on social media. May was a record month with 9 million likes, comments and shares – up 90% compared to previous highs.

Asos has now returned to a “more normal” promotional calendar, but Dunn admits the promotional environment in fashion is “busy”, although such levels are not “out of the ordinary”. The company is preparing as usual for Black Friday and Christmas while building in flexibility, in particular around the product mix. “Flexibility is key,” adds Dunn.

Nevertheless, Beighton believes Asos is positioned to come out of the pandemic well. “We are on track to emerge as a stronger, more resilient business. We believe we [saw] 10 years of digital disruption in the last four months, we’re well positioned in this context.”