The retail fashion giants that are dominating and shaping the market

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By 2022, it’s said that the UK will spend more than £50 billion a year on clothes, with the market predicted to grow by more than 16% in that time. Fashion is, therefore, big money – with the top players able to attract the attention of everyone from journalists to traders on spread betting platforms.

So, what’s fueling growth? Despite an insatiable appetite for fashion, some retailers are floundering. By focusing on two As – Asos and Amazon – we can see how two giants are dominating and shaping the market in a way that effects consumers and investors alike.

Asos

Asos sales are being predicted to soar in 2018 – and could rise by as much as 30 per cent to top £2.4 billion. This sort of growth would see it outstrip struggling high street brands such as Debenhams and continue an upward trajectory enjoyed in recent months and years.

Its share price has jumped 114 per cent in the past two years – pushing it up to a value of £5.8 billion and placing it behind only Tesco, Kingfisher (owner of B&Q) and Next as one of the country’s most valuable retailers.

Indeed, Asos has become a go-to platform for a large portion of the market, with its name as synonymous with buying clothes online as Hoover is with vacuum cleaners and Google with web searches.

Its success rests, to a large extent, on its impressive ability to be able to act fast to meet the demands of smartphone-wielding customers who are used to a quick pace. Asos takes just four weeks to turn around a product from the design stage to having it available on sale. Zara, a super-streamlined high street retailer, takes about three times as long according to Goldman Sachs, while most others take much longer.

Asos knows what its customers wants and can deliver it quickly and effectively. Indeed, in parts of London it now offers same-day delivery.

Amazon

While Asos has been a soaraway success, it’s time to sit up and pay attention to the power of Amazon. The online retailer covets a place at fashion’s top table and, despite having limited success historically, looks on the verge of achieving its ambitions. Indeed, it is now predicted to sell $28 billion of clothing in 2018 and could top $60 billion in sales by 2021.

Why? Well, Amazon has introduced a series of initiatives that can take advantage of the scale of its platform and have, in the last year or so, started to bear fruit and show how it can shape the market going forward.

This has included:

Growing success for its own private fashion labels. Lark & Ro is the largest of these but The Fix (shoes and accessories) and Find (aiming for a Zara-style audience) are among the 16 brands now launched.
Strong relationships with big names. Nike, for example, became a first-party seller in a bid to drive out third-party sellers. An exclusive partnership with Drew Barrymore’s brand Dear Drew attracted a lot of attention and might pave the way for future deals.

Expansions to the Middle East and Australia. This included the purchase of Souq.com, which has a ready-made bank of 45 million users.

The launch of new shopping methods. Echo Look taps into the power of Alexa, while Prime Wardrobe allows people to buy a box of clothes, get it delivered and send back anything they don’t want without paying. It’s in its early days, but this service is certainly going to be pushed heavily by Amazon.
Asos now and Amazon in the near future are changing the way we shop for clothes – and the ways fashion brands promote their products. In many respects, these are the department stores of the digital age. Consumers, investors and brands can ill afford to ignore them and the potential for growth they possess.