Boohoo's Strategy: 7 Keys to its Success
If you are a 25-year-old woman and are heading away for the weekend with friends you might check out Boohoo to find the perfect outfit to wear. British online fashion retailer Boohoo has a full supply of the latest trendy clothing just waiting to be documented on social media. In the midst of the ultra competitive apparel sector Boohoo has managed to carve out space for itself. Over the past 15 years it has managed to grow into a company with sales of 1.75 billion pounds in 2020 and with sales up 41% last year it doesn’t look like its stopping anytime soon.
Boohoo is among a crop of ultra fast fashion retailers like Shein, who are winning the hearts and more importantly wallets of young consumers. Boohoo can even beat fast fashion stalwart Zara to market with the latest trending clothing. If you are curious about how Boohoo has grown over time consider these seven keys to its success.
1. A more flexible inventory management model. Boohoo uses a “test and repeat” model where it sources inventory in small batches and then sees which styles are performing well. “A traditional retailer might buy three or four styles, but we’ll buy 25,” says Carol Kane co-founder of Boohoo. Then Boohoo will order small batches of those styles, between 300 and 500 units, to see how each style performs. Once Boohoo is aware of which items are trending it will buy more inventory of just those styles. "Within 48 hours of something going live, we have a good idea as to how many weeks we should run that style for and what kind of depth we should buy into it," says Kane. Approximately a quarter of styles that are initially put on Boohoo’s website as part of their test and repeat model are reordered.
This approach is easier for an online retailer like Boohoo to do since it doesn’t have to worry about having a minimum level of stock within a style just in case a customer walks into a store and wants to try something on.
2. A more efficient supply chain. Boohoo, which is based in the United Kingdom, sources a large amount of its merchandise (approximately 40%) from England. This is in contrast to many clothing retailers who source production overseas resulting in longer lead times. “When it comes to apparel, there’s no secret sauce,” said Felipe Caro, a business professor at UCLA Anderson School of Management “to shorten lead times, there’s no other way than doing local production.”
3. A social media model that works. Although it’s hard to imagine, there was a time when brands, especially mainstream ones shunned using social media influencers. Boohoo on the other hand saw early on the potential of using social media influencers as well as reality TV stars to market its products. Actress Meghan Fox, rapper Cardi B, R&B singer Ashanti and stars from Love Island like Maura Higgins have all promoted Boohoo’s products. Boohoo realized before many others that these personalities were setting the trends more so than what’s in Vogue or other high fashion magazines. This strategy is different than the model Zara pioneered where it would knock off trends from fashion show runways. Although Zara now cites social media as an inspiration for its designs.
Kane has also said that using social media to market Boohoo especially in the beginning allowed the brand to be perceived as a much bigger company than it actually was since it would flood consumers with targeted ads.
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4. Focus on the size 14+ consumer. In 1980 the average clothing size was size eight now 40 years later it is size 16. Although 67% of Americans wear a size 16 and above this segment of the market is largely ignored. Annual expenditures on larger sized clothing only represents 16% of sales in the $112 billion apparel market in the United States. This is not by choice it is because of limited supply.
In 2014 Boohoo launched it’s first plus size line ahead of many other retailers. At the time of the launch Boohoo’s senior PR manager at the time, Katie Curran said: “fashion is all about expressing your personality, no matter what your size." "And, so, developing a plus-size collection was a natural progression and one that the customer is really excited about." Boohoo also features size 14+ models prominently on its website giving its website a felling of inclusivity. “We’ve taken a bodycon dress and put it on a size 10 model next to a size 20 [model],” says Kane. “We want to get across that, whatever your body shape, you can wear the same dress.”
5. Leverage stores when needed. When Boohoo entered the United States apparel market it did so by opening pop up stores in 2014 in New York. Even with its digital marketing savvy it knew it had to do a little more to standout in such a competitive market. “When the market is so cluttered, people want to be able to feel the product and know what the quality is like. It gets people over that first hurdle and reduces the barrier to purchase,” said Natalie McGrath, Boohoo’s former vp of marketing for North America.
To win over American consumers Boohoo focused on popups on college campuses where plenty of its target customers live and study. “We are being more targeted in the U.S. because it’s a big land mass to grab, and it’s become an unfriendly region for retail,” said McGrath speaking about entering the United States. “Our marketing dollars are targeting the college girl first, and the woman leaving college for her first job. Our reach is broader in other markets, but in the U.S., we have to build up to that.” “We see the physical space as a window, an introduction to buying online. Our customers aren’t spending time sorting through racks any more than they’re spending [time] sitting on desktop. It’s go, go, go,” said McGrath.
6. Fast to market. Boohoo and newer fast fashion retailers like ASOS and Shein are often called ultra fast fashion retailers because they can get their products to market even faster than Zara can. Boohoo can go from design to sale in as little as two weeks but it typically takes four to six weeks to bring products to market.
Boohoo also puts hundreds of new items on its website every single daily. Having such fresh stock encourages consumers to check Boohoo’s website frequently to see what’s new. This level of agility is a big part of Boohoo’s success as it allows Boohoo to meet the ever changing fashion needs customers have in a way few others can. “Speed is absolutely critical to the shopper today. People see Kim K. wearing something one day, and they want it the next,” said Boohoo’s buying director.
7. The right product at the right price. Boohoo’s products are cheap, really cheap. You can get dresses for as little as $2.00 and jeans for $14.00 at Boohoo. These prices are perfect for the Gen Z or the young Millennial consumer that is looking for disposable fashion that is often only worn once on Instagram or TikTok. These rock bottom prices have helped Boohoo to steal share from the likes of Zara and H&M who sell at higher price points.