Boohoo founder Mahmud Kamani is having a good year. Personally pocketing £200m following the IPO in March, the first set of results post-launch on the stock exchange saw an impressive 63% rise in revenue. Forgive the pun, but Boohoo has no reason to cry.
Meanwhile, Asos - the business Boohoo is often compared to - issued a profit warning last week amid slowing sales as its international expansion has not been as meteoric as planned.
Boohoo will be haunted by comparisons to Asos for some time yet. But the differences in their business models are becoming clearer as time goes by. For example, Boohoo is not as discount and promotion-heavy as Asos, a factor which Asos chief Nick Robertson admitted had hurt their profits.
Another difference between the two, for the moment at least, is the public’s attitude towards both. Asos’ results mean its reputation has taken a tumble. Whereas media goodwill towards Boohoo – headlines abounded last week trumpeting its success – will only help cement its reputation. The Boohoo feel-good factor is also being spread internally. Kamani gave a £450,000 bonus split between his 452 employees last week. “You have to share the love, don’t you?” Kamani told The Times.
But differentiators that do exist could enable both to be successful. Boohoo is no longer just a pretender to Asos’ crown, it is establishing itself as an innovative force in its own right. Boohoo’s positivity, flexibility and consistently strong affordable fashion will keep its young clientele coming, while Asos remains the place to go for a wide range of products across a spectrum of price points. Asos is also clearly forging new ground in its innovative delivery options.
Meanwhile in the world of retail IPOs, Bonmarché’s profits have risen more than 66% to £8m in its first full-year results since going public. In the women’s value sector it climbed from 2.8% of the total market share to 3.2%. Analyst Kate Ormrod told Drapers that once again, establishing differences from the competition was key to this success. “It’s about having something unique. Bonmarche are now the specialists in the 50+ value market, and that’s how they’re driving shoppers to stores.”
“Comparisons between retailers always happen and they will go on forever,” Ormrod said. To survive, retailers should focus on what makes them different. “Strong, unique selling points are the key.”