TL;DR

Asos launched “Styled for You”, an AI stylist trained on 100,000 curated outfits, as sales fell 12% to £282 million annual pre-tax loss. The service suggests complementary items based on purchase history and preferences for loyalty programme members. The retailer also introduced return charges and banned serial returners, cutting return rates by 1.5 percentage points whilst facing intensified competition from Shein and Next.

AI-Powered Customer Re-Engagement

The online fashion retailer is testing AI stylists to win back customers following a 12% sales decline in the year to 31 August, with City analysts predicting another year of falling revenue. The “Styled for You” feature uses artificial intelligence trained on Asos’s database of 100,000 curated outfits to suggest items that complement previous purchases or searches.

For loyalty programme members seeking a dress, the AI stylist might suggest pairing it with a jacket and heels for formal occasions or a sweater and trainers for casual wear. Recommendations draw from Asos ranges based on consumer trends, shopping history, and preferences expressed during app sign-up. The retailer also uses AI to accelerate design processes by visualising products on models or in different colours.

Operational Efficiency Measures

Chief Executive José Antonio Ramos Calamonte aims to transform Asos from a shopping destination into “a place for inspiration and style”. However, actions to cut discounting and deter unprofitable shoppers—those who return numerous items whilst purchasing little—contributed to sales decline alongside soft consumer conditions.

The company introduced return charges and banned excessive returners earlier this year, reducing return rates by 1.5 percentage points. Annual pre-tax losses narrowed from £379 million to £282 million, though analysts note sales have declined more than one-third from their 2022 peak. Shares fell 10% following results announcement.

Looking Forward

Asos faces significant challenges from fast-fashion marketplace Shein and omnichannel operators like Next, which combines high street presence with rapid online fulfilment. Whilst management claims the most difficult transformation work is complete, Panmure Liberum analyst Anubhav Malhotra warns that competition in fast fashion, omnichannel retail, and multi-brand retailing has intensified significantly, raising questions about Asos’s ability to reverse its post-pandemic sales slump.

Source: The Guardian