Has the bubble finally burst of “fast fahsion?”

Once worth £5bn, Asos dropped out of the FTSE 250 this week and other brands face sharp competition in a tough market

The past decade the world of fashion has changed immensely from a consumer perspective. The past ten years has seen many High Street brands collapse as online marketplaces taking the crown.

However has the bubble burst?

Once the feared enemy of the high street and worth more than £5bn, the online fashion retailer Asos has seen its value slump as it faces difficulties that could herald the demise of fast fashion.

The London-based seller dropped out of the FTSE 250 with a whimper this week, valued at about £320m.

Four years ago Asos, and its fellow online fast fashion purveyor Boohoo, were booming as the high street suffered from Covid pandemic lockdowns, and largely housebound shoppers had cash to spare for slouchy leisurewear.

During the pandemic, Asos believed people would keep shopping online forever and bought a lot of inventory. But once the pandemic was over, shoppers returned to physical stores to try on clothes, leaving Asos with about £1 billion in unsold stock.

In late 2021, profits at Asos began to fall, leading to the resignation of CEO Nick Beighton. The company is struggling to find its place in the market. According to a senior analyst at GlobalData, the brand’s styles are no longer appealing to its original millennial customers who have grown older, yet they also fail to attract the younger Gen Z consumer.

Similarly, Boohoo and its sister brand Pretty Little Thing are also moving away from their fast-fashion roots. Pretty Little Thing is currently up for sale, and the larger Boohoo group has rebranded itself as Debenhams. This change in strategy indicates that the company has largely given up on the fast-fashion market to instead focus on a more mature, middle-aged customer base. A retail analyst at Peel Hunt believes this shift shows they’ve “thrown in the towel” on fast fashion, as the market is no longer profitable for them.

The pivot comes as Asos and Boohoo face much sharper competition, whether that’s from Zara’s edgy and rapid fashion shoots, Shein’s cheap prices and mastery of social media, the secondhand specialist Vinted’s one-off bargains or Next’s mix of broad choice and delivery options.

The market is also tough. Online fashion sales bounced back to outstrip the high street last year, with sales up 3%, to £34bn according to Mintel, but in general “people are more cautious about shopping”, according to the market research firm’s associate director of fashion retail research, Tamara Sender Ceron.

Shein and Temu are booming. But the second market is growing in many EU countries. The EU are introducing stricter laws regarding Shein and Temu. Will the UK follow?

The next 12 months will be crucial for the future of fast fahsion.

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