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Asos guns for slice of discount spend

Etail giant Asos is to launch a virtual TK Maxx-style discount website to capitalise on the booming discount sector and double its sales within three years.

The site, which has been given the working title “Asos Red”, will be linked to the main Asos home page and will offer discounts of up to 75% on end-of-line and past-season stock from young fashion and premium brands. It is due to go live in September.

Asos product and trading director Rob Bready said he planned to stock up to 300 brands on the site and that he would also target premium brands such as Ralph Lauren and Donna Karan, which are not sold on the core Asos site.

He said: “We don’t have physical restrictions, so we’ll offer as much choice as possible.”

The discount sector, which is worth about £2.7 billion in the UK according to retail research firm TNS Worldpanel Fashion, has thrived since the credit crunch.

Like-for-like sales at TK Maxx rose 5% for the first quarter ended April 26, while discount etailer M&M Direct’s sales rocketed 20% to £74 million for the year ended February 28.
Shoppers have become increasingly bargain-hungry in the recent tough times, and the slowdown has meant there is a significant amount of surplus branded stock swilling around at knockdown prices, further boosting the discount sector.

This has also prompted the arrival of several new branded discount etail ventures, including BrandAlley, Koodos and French etail site Vente-Privee, which launches in the UK this week.
“Asos Red” will have a dedicated seven-strong buying team, spearheaded by Asos’s head of buying Debbie Ball, who previously worked for TK Maxx as senior buyer.

Bready said: “We’re looking for ‘Asos Red’ to be as big as our Asos store, in both the size of offer and in cash terms, in the next three years. We’ve got the internal structure to present the brands in a beautiful way, and we have the contacts. In terms of online competition, no one will offer as much choice under one roof.”

Suppliers said they were interested in the venture but that it was important that clearance stock was not “too visible” in the market and that it did not detract from the full-price site.
One brand boss said: “TK Maxx has done really well in carving their niche because they don’t market by brand. Online is much more visible, but as long as the product is six months old and not on the high street, it will be practically the same as people selling on eBay.”

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