In some of the biggest retail news announced in some time, British online fashion retailer ASOS announced a profit warning, sending their shares spiraling downwards by 40%, and wiping $1 billion off their balance sheet.
This news comes at a time when it was supposed to be traditional brick & mortar chains that were struggling, with online retailers breaking records, much like Amazon has been doing up until now.
It seems to be a broader trend in the industry. Shares in some of the biggest retailers were down significantly, and online retailers weren’t spared.
Mike Ashley, Sports Direct’s chief executive, put it bluntly when he said that Christmas shopping had been so bad for retailers it would “literally smash them to pieces”.
Analyst Stephen Lienert summed it up best: “It was supposed to be bricks and mortar that’s dying and online is the future, but that headline gets ripped up today.”
Upon closer inspection, it appears that there is more to the story than poorer-than-expected November trading. While analysts blamed everything from the weather to Brexit, it’s clear that ASOS’ aggressive (and some would say out-of-control) discounting decisions cost them dearly.
In the words of ASOS, there had been a “high level of discounting and promotional activity” by competing retailers, which had forced their hand “leading to a higher discount and continued high clearance mix”.
Put simply, the retailer slashed margins across the board and is now paying the price. This is especially interesting in light of the fact that one of their biggest rivals, Inditex-owned Zara, specifically warned that sales growth would be below its stated target because it is resisting lowering prices and discounting items.
What this story shows, perhaps more than anything else, is the power that the right data can have for a business. Insights into such things as shopping patterns, or rivals’ pricing and discounting strategies, can literally be the $1 billion difference.
At Market Beyond, this is something we’re passionate about. Providing the right actionable insights, in real-time, across a wide range of critical metrics.
Take our holiday shopping report, for example. This report highlighted topline insights such as sales by day, but also more granular insights like how much shoppers spent, which categories were up and by how much, and even which products sold the most compared to others.
Armed with the right data, packaged in the form of actionable insights, you’ll never again be in the dark when it comes to your competitors’ pricing strategies, how the market is moving, which categories to leverage and what items should be bulked up in inventories.
Avoid being blindsided like ASOS was, and commit to taking smart, data-driven decisions. It’s the “unfair” advantage that you can hold over your rivals and will ensure your success where others are struggling.
Sign up to our newsletter to get the latest news about Market Beyond