Primark’s E-Commerce Apathy Reaches Tipping Point
The temporary closure of all 189 Primark stores in the UK, and 376 sites worldwide, is expected to cost the company around £650m a month in net sales. The timescale and severity of these losses is dependent on when their stores can reopen, and any successful cost cutting measures. As reported by The Guardian, Associated British Foods (ABF) – the owner of Primark – has withheld rent totalling £33m as part of an attempt to negotiate fresh deals with landlords.
Primark does not sell online. Sales will therefore be entirely wiped out by temporary store closures caused by the Covid-19 pandemic. This sudden shock exposes the limitations of a business model solely focused on bricks and mortar stores. Selling purely on the high street is a strategy that has been hugely successful for Primark for more than 50 years.
Primark generated an astonishing £7.79billion of sales in their retail stores in 2019 and has posted impressive profit figures for many years. The high street fashion retailer has certainly bucked a trend. Other retail businesses on the high street have, in recent years, been going into administration at an alarming rate.
Despite previous success – the question has always remained – why can you not buy Primark clothing online? With a global pandemic causing the closure of all their stores, the question is more pertinent than ever.
Primark’s millions of fashion conscious shoppers, many of whom are under the age of 35, sounds like a match made in heaven from an E-Commerce point of view. However, Primark has resisted the urge, and the need, to sell direct to customers online for more than 50 years.
“You have to be agile and on your toes all the time” said Primark CEO Paul Marchant during an interview with Drapers in October 2019. Smart advice, and exactly what you’d expect from the head honcho of one of the most successful retailers on the high street. In fact, Primark’s business has been one of the greatest success stories of all high street fashion retailers since its inception in June 1969.
Pandemic Rocks The World
Most of us wouldn’t have imagined a global pandemic in 2020 and that Covid-19 would grind business and travel to a sudden halt. The damage caused to bricks and mortar based business models can’t be truly measured yet – but we know it’s significant. Pandemic or not – the signs have been clear for Primark for many years that they should be selling online in some capacity. There is proven demand for their goods online and the company hasn’t catered for it.
At one point it appeared there was hope for Primark fans seeking the convenience of online shopping. Primark branded clothing items began to appear on Amazon’s website in 2019. Amazon is an E-Commerce giant and accounts for more than a third of all E-Commerce sales in the United Kingdom and United States. Almost 90% of UK shoppers use Amazon.
Primark on Amazon
The euphoria was short lived. It wasn’t Primark selling on Amazon’s huge global marketplace. It was savvy third-party suppliers reacting to the consumer demand and surges in online searches for Primark clothing.
Primark reacted to the appearance of their clothes for sale on Amazon by releasing a statement. The company made it clear they were in no way connected with Amazon and advised shoppers to come into store to buy products, rather than pay a premium for them online. Despite the fact that consumers were clearly crying out for their products online, the company stuck to their guns and original strategy.
If you think that Primark has never sold online you’d be forgiven but also mistaken. Previously, the company ran a 12-week-long trial run selling online through online fashion retailer ASOS back in 2013. Despite “phenomenal” demand, Primark decided not to continue with the online partnership, or set up their own online shop. Back in 2013 the supply chain boss at the time, Martin White, said the company wanted to launch online but that they would not be able to operate profitably due to associated costs of fulfilment.
Did You Know?
Websites, particularly E-Commerce websites, provide an almost endless supply of data. Helping to fuel predictive analytics.
These analytics anticipate how customers will behave in the future. Ranging from how long users spend browsing different products, to complex demographics of users.
This data is available once customers have filled in their information online, or signed up to relevant rewards programs that enable the sharing of this data.
Why Do Primark Not Sell Online?
We don’t know exactly why Primark have not retailed online in a substantial capacity but the previous comments in 2013 provide some clues. The likelihood is returns, fast pace turnaround of product lines and the low price points have been seen as hurdles that cannot be overcome. What management may have overlooked until Covid-19 arrived, is that the online version of Primark has flexibility to serve an adapted model to what has made the high street stores so popular.
The undoubted power of the brand could be manipulated – there’s not necessarily a need to serve customers in an identical way that their physical stores do. With a fast ranging turnover of product lines and cheap prices there’s clearly logistical problems for an E-Commerce version of Primark that reflects their in-store offering. However, with a loyal fanbase of gargantuan size in tow, and a powerful brand, the odds are currently still in their favour of being able to transition to retailing online.
Returns Cause Headaches
Returns are a big problem for fashion retailers and especially online fashion retailers. With usual return rates between 25%-50% there is room for disruption in this area. Will artificial intelligence (AI) and virtual fitting rooms be able to reduce the problem of inconsistent sizing and consumers returning clothing because it ‘didn’t look as they expected’.
There’s a good chance that Primark stores already experience a high rate of returns. We don’t know the exact figures, but their current returns policy stipulates any item can be returned within 28 days if it is unworn or unused with the original tags in tact. Queues for the changing rooms are often considerable at peak times within the stores. Logically, it means more people will ‘wing it’ and try their items on when they get home.
One thing is for sure, the estimated £650m per month in loss of revenue due to Covid-19 store closures could go a long way to reinventing the way logistics work for Primark online, and internet fashion retail in general.
Primark’s Online Competitors
We used UberSuggest to get an estimate of traffic of the Primark website (which displays products but doesn’t sell) and the Next website (almost £2billion of online sales 2019). As you can see from the attached screenshots, Primark has a very impressive amount of traffic for a site that doesn’t sell and that’s down to impressive brand power and considerable content throughout the website. Also, don’t forget the ability to browse their range of products.
People likely use the site for inspiration for future visits to store. Nevertheless, the Next website boasts around 8x more organic traffic than Primark, and also boasts a considerably more diverse and powerful backlink profile in comparison.
Next Website Sales
Next temporarily closed warehouse and distribution centres due to Covid-19 restrictions in March. They have since re-opened, and are able to accept orders via their website, with special measures in place. Next is predicting a ‘worse case scenario’ of a drop as much as £1billion in sales due to Covid-19 this year. Next achieved sales of almost £2billion online in 2019. Source: Statista.com.
“No one knows what the High Street will look like in ten years, but one thing is certain: The people walking down it will be wearing clothes,” chief executive Lord Wolfson said during an interview in March 2019. Who would have imagined, a year after these comments were made, that people wouldn’t actually be allowed to walk down the high street.
Ability to Pivot Online
Next said it believes the online fashion market represents a “long-term threat” to its retail business but potentially, a much “larger opportunity” for the group as a whole. This open-minded and pragmatic approach to E-Commerce retailing could stand Next in good stead.
Covid-19 is unprecedented, and the subsequent measures that have been put in place have left hugely successful businesses entirely exposed. We have used Primark (and Next) as examples, but similar case studies can be made for any businesses without the ability to pivot quickly to online sales and services.
Will we see Primark selling online at scale in the future? It looks more likely than ever. For now though, Primark fans will be forced to wait for stores to open, or shop elsewhere online.
Author’s Bio: Lewis Murawski is the Managing Director of Kahootz Media. Connect with Lewis on LinkedIn