UK fast fashion giant Primark described as the Costco for clothes

UK fast-fashion big Primark, described because the Costco for garments, is plotting speedy US growth and wooing buyers with rock-bottom costs


Primark is understood for its low cost clothes and accessories. Enterprise Insider/Mary Hanbury

  • Low cost clothes chain Primark plans to open almost 50 shops within the US within the subsequent 5 years.

  • The chain is understood for its rock-bottom costs, made potential by retaining enterprise prices down.

  • This contains not having an internet retailer and retaining promoting to a minimal.

Primark has already invaded Europe and now it has set its sights on america.


A Primark retailer in London. Belinda Jiao/SOPA Photographs/LightRocket by way of Getty Photographs

The low-cost European clothes chain stated Tuesday that it plans to extend its retailer community to 60 areas within the US within the subsequent 5 years. It at the moment has 13 shops there, that are largely situated alongside the East Coast.

Primark originates from Dublin, Eire, the place the shop has a totally completely different identify: Penneys. It first opened in 1969.

Penneys, Dublin

Primark has a distinct identify in Eire. Niall Carson/PA Photographs by way of Getty Photographs

When the corporate expanded to the UK in 1973, it was pressured to alter its identify because the US division retailer JCPenney was already registered there.

The identify Primark was born, and from then on, it was used for any of its shops that opened exterior of Eire.

Between 2006 and 2013, the corporate grew at a speedy fee, opening shops throughout Europe – in Spain, the Netherlands, Portugal, Germany, Belgium, Austria, and France. Gross sales rose by 150% between 2009 and 2014.

Primark Germany

Primark has greater than 380 shops throughout Europe and the US. Wikicommons/1971markus

Supply: Primark and The Economist

In 2015, it opened its first US retailer, in Boston, Massachusetts.


Primark arrives within the US. AP Picture/Steven Senne

On the time, analysts anticipated the shop to pose a risk to rival US attire shops similar to Hole and Abercrombie, by undercutting them on value and providing a continuing turnover of latest kinds.

A research by Morgan Stanley in 2016, after Primark launched within the US, discovered that its costs have been, on common, 202% decrease than common US attire costs.

The chain continued to increase slowly within the US over the subsequent few years, opening shops alongside the East Coast.


Primark does not promote on-line. Enterprise Insider/Mary Hanbury

When the pandemic hit Primark discovered itself in a worse place than many opponents as a result of it does not promote on-line.

Its enterprise dried up overnight because it was pressured to shutter shops through the first lockdowns within the US and Europe, costing it £800 million ($1.07 billion) in gross sales between March 1 and June 20, 2020.

Its adjusted working revenue for the 12 months ending September 2020 fell to £362 million ($484 million) from £969 million ($1.3 billion) in the identical interval the 12 months earlier than. In its annual outcomes on Tuesday, adjusted working revenue slumped a further 11% from 2020.

Regardless of this, it has been urgent on with retailer openings within the US. Most lately, it has opened shops in higher-profile areas, together with New Jersey’ American Dream Mall and Chicago’s prime buying spot, Slate Road.

Inside American Dream - Visiting American Dream 2021

Contained in the American Dream mall in East Rutherford, New Jersey. Thomas Pallini/Insider

“With our present portfolio buying and selling very well, it looks like we have established a robust basis from which to speed up our growth within the US market,” Paul Marchant, CEO of Primark, stated in a statement this week.

The shop is understood for its rock-bottom costs, that are decrease than opponents similar to H&M. You’ll be able to decide up a costume for as little as $4 or pair of high-heels for $10.


Sneakers begin at $2. Enterprise Insider/Mary Hanbury

It does so by working a modern logistics system, having restricted promoting, and shopping for merchandise in bulk, which allows it to barter higher costs from suppliers.

Prior to now, the corporate has come beneath fireplace for its cost-cutting supply-chain techniques and the situations through which its garments are made.

In 2013, Primark was highlighted as one of many retailers that made garments within the Rana Plaza manufacturing unit in Bangladesh, which collapsed and killed greater than 1,100 staff. The corporate paid $14 million to victims’ households and signed an settlement to advertise security at textile factories.

The corporate depends on the quantity of gross sales to drive earnings, because the margins are low on its clothes and accessories.


Purchasing at Primark is akin to buying at Costco, analysts say. Enterprise Insider/Mary Hanbury

The standard Primark shopper tends to purchase in giant portions due to the shop’s low cost costs. The hampers on the entrance of every retailer are a nod to this buying behavior, enabling prospects to pile them up with new gadgets.

“Shoppers store at Primark in a different way than they store at a whole lot of retailers,” Bernstein’s Jamie Merriman beforehand instructed The Economist.”It is nearly like buying at a Costco, the place you are fascinated by it when it comes to quantity.”

Its resolution to not function an e-commerce retailer additionally retains costs down. Prospects can view merchandise on-line however are unable to buy them there.

Primark's US website

Primark executives nonetheless say it does not make financial sense to promote on-line, regardless of the occasions of 2020, due to costly delivery and returns prices.

“I believe that COVID has extra demonstrated the power of Primark than the weak spot,” George Weston, CEO of its dad or mum firm Related British Meals, instructed Reuters in November 2020.

“What we have seen with Primark is when individuals are in a position to store they like to buy with us than achieve this on-line,” he stated.

Learn the unique article on Business Insider

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