Friday, May 27 2022

Among the retailers that have thrived in recent years amid industry-wide disruption is Primark.

Specializing in low-cost “fast fashion”, the company, which opened in Dublin in 1969, expanded its physical retail presence at a time when others were closing their doors. There are currently 402 stores – the largest to date in Birmingham, covering 161,000 square feet over five floors – with plans to expand to 530 over the next five years.

And these stores are extremely popular. When COVID restrictions were lifted in the UK, a common sight across the country was the huge Iines around the block with customers eager to feed their Primark fix after months of forced cold turkey. This was because there was no e-commerce option to meet the pent-up demand when store doors were locked.

While other retailers have been able – in theory, anyway – to switch to an online retail model, Primark has not been able to, which has cost the brand and its parent company Associated British Foods dearly. As ABF’s annual report for 2020 bluntly notes:

Unable to sell anything, Primark went from profit to loss within days, with no visibility on how long these conditions would last.

This has left some commentators wondering if this shock to the system might prompt Primark to further commit to an e-commerce strategy to mitigate any further macro-crises it may need to weather? The answer seems to be yes, but no, not really.

Until a certain point

Last week, the British mainstream media was very excited about Primark’s launch of a new website, which was seen as a major online change by the retailer. But a closer look at what is actually deployed reveals that it is a notion that does a lot of work!

The new site is essentially a showcase for customers. You can now browse thousands of items in the Primark clothing and homeware catalogue. But then you can’t buy those items online or have them delivered or place a click-and-collect order.

What you can do is check if your nearest store has the item you want to buy on the shelves, which you couldn’t do through the previous, very limited online presence. The Stock Checker works on the basis of a color code:

  • Green – Item is in stock
  • Orange – Stock is running out for this product
  • Red – This item is now sold out / out of stock
  • Gray – This item is not available at this store.

You can also get a lot more product information, such as fabric details, care instructions and material sourcing, the latter being an important item to check off, especially in the clothing industry.” fast fashion”, at a time when consumers say they put sustainability at the forefront of their criteria when selecting products.

But – yes, another one – if you find your t-shirt or jacket or whatever and it happens to be in stock at your nearest store, you cannot reserve that item. Click-and-collect is not offered here. This is also a real-time example of the stock’s position at the time you search. There is no guarantee that the actual item will still be available when you walk through the doors an hour later.

This is in stark contrast to other ‘fast fashion’ companies, such as H&M. As noted in the past, H&M went through a turbulent period when its inventory management stance left a lot to be desired. A lot of work has since been done and the H&M site is now quite good. You can check availability in-store, like with Primark, but more importantly, you can then order online if your chosen purchase isn’t in your local store or you just want it delivered anyway , while being able to make an online purchase. , In-store pick-up option.

Why not Primark?

So what is Primark thinking here? It does not hide the limitations of its online upgrade. The official press release for the website launch is titled “Find the look then buy in store” (sic). He goes on to say that the new website was created to “better connect the journey between online search and in-store purchase.”

Paul Marchant, chief executive of Primark, reportedly said:

We know our customers love the shopping experience with Primark and the surprises they get when they walk into our stores – that’s what makes Primark special. However, we know they also want to browse the latest collections online and be able to check availability, which our new website makes possible for the first time.

This new website and new features mark a significant step forward for our business and represent a shift in the role of digital at Primark. The new site also gives us a great opportunity to reach a whole new group of customers, allowing us to showcase the wide range of products we offer as they browse online to entice them to visit our stores.

For now, the updated online presence is limited to the UK, but will roll out to Ireland, Spain, Portugal, Germany, Austria and France by the end of July, along with Belgium, the Netherlands, Italy, Czech Republic, Poland, Slovenia. and the United States will follow by the end of July.

And there will be additional features to come over time, including, says Primark:

  • Personalized content – customers will be able to create their own accounts to save their shopping preferences, receive personalized updates from Primark by email and create and save a wish list of their favorite products.
  • Newsletter sign-up – customers will be able to sign up to receive an email newsletter to keep up to date with all the latest news from Primark.
  • Social integration – tighter integration with Primark social channels to allow customers to connect directly to the website for all product information.

But there’s nothing transactional on the agenda, it seems. In fact, nothing seems to have changed since ABF CEO George Weston said during the first UK COVID lockdown:

Our decisions online will be made in their own context, not because of a pandemic that only happens once in a hundred years!

my catch

The problem is quite simple – Primark simply cannot economically justify running an e-commerce model. This is hardly unknown. As previously reported, even the mighty Walmart has struggled to make its online operation profitable.

Primark manufactures low-cost items and has a very tight business model. Getting into the complexities of running an e-commerce operation, with factors like supply chain integration, warehousing, delivery, returns management, and more. – all the things consumers expect from their online suppliers – would increase costs that the company can’t justify, even if the Walmart/Target model of using stores as distribution hubs were to be adopted.

Will this situation ever change? Well, clearly never say never. Last month, Chief Financial Officer John Bason said:

We are driving digital forward in a very big way both in the UK and the rest of Europe. This will generate sales and profits for us. Does it give us the ability to go further? Well, let’s take a look at that.

But it remained clear that home delivery is not an option:

If there was an e-commerce opportunity for us, it would probably be more in the area of ​​click-and-collect. You can’t get our value by home delivery, it’s that simple.

This is the kind of statement that was released by Marks & Spencer only a few years ago. This retailer has changed its position via its bet with Ocado. Could Primark one day find its own e-commerce partner to make a more transactional approach viable? Time will tell us. But for now, it’s all about going to the store if you want to buy from Primark.

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