What Primark is getting right, in 4 minutes

The volume retailer has been a standout performer in a testing market.

by Stephen Jones
Last Updated: 26 Jul 2019

At 161,000 square feet you can fit a lot inside Primark’s £70m Birmingham branch. And the company certainly has.

The five-storey-tall megastore comes fully stocked with three restaurants, a ‘snap-and-share’ room, beauty studio, as well as the chain's entire range of value-for-money clothes, homeware and shoes. 

Owned by Associated British Foods (ABF), the chain has been among a number of brands that have bucked the current retail trend of closures and IVAs, but Primark has arguably been the most impressive. 

The Birmingham store, which opened in 2019, is now the showpiece in a network of 372 shops* spanning 12 countries and employing 75,000 people. With revenues of £7.5bn in 2018, ABF’s sole retail arm contributed nearly half of the FTSE 100 Group’s total £15.6bn, and posted an adjusted operating profit of £843m in the process (up from £735 in 2017). 

So what has it done so well?

Many of the brands that have bucked the high street decline have at their heart a successful ecommerce model. Browse the pages of Primark’s website or social media pages (which have a collective following of 13 million) and you’ll find the usual bright images of trendy, predominantly young models touting the latest ranges, information about the chain’s many campaigns and the price of individual items. 

What you won’t find though is a section that lets you buy them. For that you’ll need to go to the store locator, find you nearest branch and go yourself. Primark’s website is non-transactional, a marketing channel to get customers into stores.

That’s a contrarian approach in an age when success normally means going multi-channel. The reason it works, says former Game Group CEO and author of Reinventing Retail  Ian Shepherd, is that Primark has remembered the other key rule for success in the modern market: "retail brilliantly".

It knows what it stands for and who its customer is. Outlets offer vibrant experiences (e.g. a Disney cafe and walk-in barbers) and are packed with stock. The chain’s volume retail model - selling T-shirts sometimes as low as £2 - offers significant appeal to both low-income shoppers, and the middle-class feeling the squeeze of stagnant wage growth. 

Primark's bricks-and-mortar expansion has also been carefully considered, reflecting an earlier decision to deviate from the crowd - it largely shuns unprofitable and stagnant out of town retail parks, in favour of convenient town centre sites.

And because the brand is so popular and well known, the fact that it hasn’t targeted online sales doesn’t mean that it won’t be able to in the future."I often find myself wondering how it could be an even greater retailer, if its stores were as good as they are now, but you also had the ability to click and collect," muses Shepherd. 

Is it moving with the times?

Primark's pricing strategy doesn't appeal to all, and that’s where the firm’s biggest challenge lies. 

In an increasingly ethically conscious market, the chain has come under scrutiny for helping to fuel environmentally damaging throwaway fashion; and for the alleged exploitation of workers within its wider supply chain.  

Head of ethical trade and environmental sustainability Paul Lister was forced to defend the firm against both accusations in front of a government select committee into the environmental impact of the fashion industry in 2018. He says that the company is able to keep costs low because it saves £150m a year shunning the conventional advertising campaigns pursued by its rivals, which it shaves off into prices. 

What can we expect next?

Fifty years since it was founded by the late Irish entrepreneur Arthur Ryan, Primark is now Britain's third biggest fashion retailer by volume (according to Kantar World Panel) and its onward march doesn't look like stopping any time soon. Year on year sales were up 4 per cent in the 40 weeks up to June 22, and the chain is planning to expand its US and German footprint by the end of the year.

The presence meanwhile of designated recycling zones in the Birmingham shop - which allow customers to trade in old clothes – suggests along with other initiatives that the company is working hard to clean up its sustainability act in response to consumer demand.

Whether or not this will mean Primark’s next 50 years are as successful as its previous half-century, we’ll have to see. But we can be fairly certain that while its Birmingham superstore is its biggest to date, it certainly won’t be its last.

Three lessons from Primark

1. Know your customer inside out

2. Give them the experiences, prices and product they actually want

3. Good business should not come at the expense of employee wellbeing, or the environment

*187 of which are in the UK. 

Image credit: Stuart C. Wilson / Stringer via Getty images


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