Primark now the UK budget king
Move over Marks & Spencer, Primark now heads the value for money stakes in UK clothing and homewares.
Although M & S saved itself from the oblivion that threatened it 10 years ago, Irish owned Primark has picked up the formula and run with it, aiming at a younger market than M & S but still keeping to high quality at I-can’t-believe-it prices. Some shoppers in the UK have interpreted the low prices as applying to throw away clothing, but the quality, especially on basics, would put many high priced labels in the shade.
Primark Stores Limited is an Ireland based clothing retailer, operating in the United Kingdom, Ireland and Spain. It has 161 stores, with 125 in the UK, 34 in the Republic of Ireland and four in Spain. In the Republic of Ireland, where the company's headquarters are based, it trades as Penneys. The company, a subsidiary of Associated British Foods (ABF) plc, employs over 26,000 people. In Great Britain, in terms of market share, Primark is now second largest clothing retailer by volume and has been named as the leading retailer in value clothing. Primark was voted ‘best value high street fashion' by a poll of television viewers.
The atmosphere inside a typical British Primark store is more towards grab-and-run than rack browsing. Customers who go in for one item usually come out laden with others and even a casual visitor like me couldn’t resist a bundle of five pairs of top quality cotton socks for three pounds (about A$7).
If you ever doubted the public’s nose for a bargain you should have been at the opening of London's Oxford Street store last April when over one million items sold in its first ten days of trading. A total of 800 staff were employed and the shop took nearly £400,000 on the opening day.
When the 85,000 sq ft Liverpool store was opened last September it was greeted with a similar level of enthusiasm both by customers and media. Primark likes plenty of floor space. It now has 25 stores trading from over 50,000 sq ft of which eight trade from over 70,000 sq ft.
According to the retailing trade journal, Retail Week, Primark is interested in expanding to Germany and later to Scandinavia and the Netherlands. Speculators say that Primark could open as many as 100 stores in Germany.
On my visit to Primark in Hammersmith, jaw droppers included one and two piece Lycra (branded) swimsuits for between four and eight pounds, five women’s cotton mini briefs for two pounds, handbags for between three and six pounds, five pairs of men’s underpants (no flussett) for three pounds and pure cashmere sweaters between 22 and 30 pounds.
Primark targets young, fashion-conscious under 35s. Almost half of the sales are in womenswear, and a quarter each in menswear and childrenswear. Homewares,such as towels, curtains and bed linen make up a small percentage.
And where is all this merchandise made? Every label and swing ticket gives the Spanish office of Primark but no clue as to country of manufacture. Staff members mention Bangladesh and India as major sources – but not China. In Australia we have become obsessed with China as our supplier but there are obviously other countries willing and able to compete on quality for money.
Primark operates differently to most big retailers. It does not advertise its products, preferring to put the money towards lower prices. And while it has a conventional structure of a store manager supported by a team of specific area managers, it has separate weekday and weekend staff and supervisors. Weekday staff works Monday to Friday on either full time (37.5 hour contracts) or part time (20 hour contracts). Weekend staff works Saturday, Sunday, public holidays and usually one late night, normally Thursday, on eight hour contracts.
The company’s growth strategy has so far been to buy existing stores and change them into Primark. In the UK the company has grown by buying stores from C&A, Lewis’s, Allders and Bhs’s One-Up chain.
On the face of it, Primark would be a smash hit in Australia. It would better the value offered by Target and Lowes, and would take business away from many established chains, not only budget operators. But it would face the same fundamental problem as Zara or Mango when they consider setting up in Australia: not enough people.
You need a high density of consumers blasting through the stock to make the machine work. Even a store in the centre of Sydney would not have the customer feed-in to generate the turnover needed. And this doesn’t take into account the necessity to clear leftovers.
Many a visiting retailer from Australia will walk into a Primark store in London and dream of it being transported to Sydney or Melbourne, but then realise that logistics would kill it.
By Fraser McEwing