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From online shopping to online existing: why ASOS and Topshop’s merger is so significant for the future of data strategy

February 16, 2021

Saying that retail brands have struggled is an understatement. But recent mergers and acquisitions show their refusal to be defeated. Ross Hawkes, Head of Data Strategy and Analytics at Oliver, looks at the data opportunities that will see both brands thrive online in 2021.

At the beginning of February 2021, online-only retailer ASOS acquired high-street staple Topshop in a £265 million ($363.3 million) deal. Not long before, fellow online shopping giant Boohoo acquired a faltering Debenhams.

The mergers placed the spotlight again on an ever-digitising retail industry. But, moreover, the deals highlight the data strategy opportunities that exist more generally for retailers considering big buy-outs as a way of thriving online instead of the high street.

Why is ASOS’s acquisition of Topshop so significant in the world of digital and data?

The declining relevance of land-based shopping is especially meaningful now. Even before the COVID-19 pandemic, consumers’ attitudes were rapidly shifting online, with declining high street popularity being reflected in official employment statistics: High street retail jobs dropped in over 75% of UK municipalities from 2015 to 2018.

As part of Arcadia Group, Topshop was certainly spinning from a challenging few years. In 2019, Arcadia announced that 11 US stores would close after company losses exceeded £100 million. ASOS, on the other hand, enjoyed a prosperous 2020. The company boasted significant growth in the UK and shoppers returned fewer items than ever before.

But if ASOS wants to continue its growth with Topshop in tow, then ruthless data measurement and insight is essential - and that depth is only possible if and when both brands exist wholly digitally.

‘Online shopping’ has been replaced with ‘online existing’ through COVID

Online living and existing – where the consumer's experience of a brand exists entirely online – is a goal that’s been on the horizon for retailers since the dawn of the internet. The reality is, however, that the pandemic has shortened the timescale in which for brands to get there.

Last year, research [unsurprisingly] called-out Covid-19 as the catalyst for changes already taking place – such as land-based retailers leaving the high street. Today, having a strong high street reputation therefore accounts for very little if a brand doesn’t have a fully-capable virtual existence. That’s why – despite the whirlwind of the last 12 months and the acceleration we’ve all experienced – now is not the time to slow this pace of change.

Where brands trip-up is, well, what works offline does not work online.

Complexity, fragmentation and lack of agility have fast become the enemies of brands that are caught in Covid’s fast-forwarding.

So how can data be used to help brands like Topshop exist fully-online?

Data is the difference between acting reactively and acting proactively in a fast-forwarded world

Before the pandemic, marketers were comfortably feeling their way into the change that was being presented to them. Now, they’re needing to take leaps.

In this climate, great marketing is impossible without deep data and strong dynamism built into the strategy. (Take digital strategy for example, they need more flex than ever, with buyers as likely to come to your website through TikTok or WhatsApp as they are a search engine today.)

Knowing how each customer found you, what they like as well as their individual spending habits has long been possible for brands like ASOS and Topshop. But now they need to use data to capitalise on the ecommerce flood that’s still in development - from direct-to-consumer to social ecommerce. And they need to convert more often than not, by getting to know the high-quality data that they now share. For example, understanding the rapidly changing requirements of fast-fashion, particularly when it comes to their higher cost items: how can they sell these items before they become old news?

This is the speed of the world that retailers live in today. And data is the only way to keep up.

Existing in culture: two brands, one online customer journey

Data doesn’t just give these brands an opportunity to understand the marketing product mix, but also where these brands exist in culture, and how they can craft the right experiences to bridge the creative-to-media void.

Great experiences come today by using marketing analytics to keep connecting product with consumer. Nail this in the first instance, and ASOS and Topshop have the opportunity to provide a whole new level of value in the customer journey. This merger can therefore become a vehicle for innovation, too.

Besides promoting a multi-brand platform strategy, these companies can test new ideas faster using data. In return for time spent testing, they will scale quicker, save both time and money over the long term and be able to pivot more easily for years to come.

Better data intelligence will also allow them to deliver more effective promotional campaigns. They will have more flexibility with their pricing, offering deals on items that are selling well at a minute’s notice. As a result, they can increase the lifetime value of their customers. Leveraging the strength of their partnership, they can also cross-sell as well as optimise their targeting, offering products close to their most popular existing ones.

A long-term data strategy that supports the mining of deep customer insight is therefore also vital. This isn’t just about recommending different products or getting quick sales in the moment, it’s about authentically communicating with customers over an entire lifecycle. This is how ASOS and Topshop will set the standard as a duo that used data to respond to people’s changing tastes and preferences as they get older, keeping them close despite an ageing population.

Doing more with less: deep data strategy as an agent for change

What’s most at play here is the crucial need for these brands to do more with less. The merger won’t just align the brands into one digital experience, but it will help keep both brands competitive as they think about combining marketing teams, growth strategies and distribution channels - all underpinned by data.

Though many are mourning the slow death of land-based retail, we must accept that things die-out for a reason. As more companies make the shift to all-online, access to high-quality data, as well as the ability to pivot using that data quickly, will help them survive the major marketing shifts that are still taking place.

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