and when a new party gets into power laws regarding retail taxes and laws will change. If the newly elected government decide to raise the minimum wage, raise the VAT or corporation taxes ASOS will be directly affected. Due to these changes within the company ASOS will have to raise the prices of their clothing due to their overheads rising.
Customers can become disloyal due to the raising prices suddenly. For example prices on products such as a basic t-shirts stay the same over a long period of time, however if ASOS’ overheads have now increased their prices of clothing too needs to be raised. Customers will start to look around and shop elsewhere for their products, trying to find the best deal they can to save themselves money.
Legal- Minimum Wage.
By the government raising minimum wage companies like ASOS are no longer able to pay their staff the extra money each month. By ASOS paying their staff extra each month adds to their overheads, the minimum wage is a law, therefore ASOS must comply. By raising minimum wage it encourages people to want to work due to them earning more money, due to peoples changing attitudes lots of people are going to apply for these positions.
As ASOS’ overheads increase due to higher labour costs, the E-Commerce need to decide whether they can uphold higher overheads and still make a healthy profit. This is discussed throughout the senior members of the company and if they cannot afford to pay all of their staff members then their hours may be cut, or made redundant all together.
Due to the rising overheads ASOS would need to raise prices to keep pace with inflation and rising labour costs. Customers may expect an increase in prices with each passing year however a sudden jump in prices is not ideal. The drastic change in costs could result in ASOS losing loyal customers to competing businesses and other online retailers.
More information on us in available on our site:
http://www.asosplc.com/