Primark’s continuing insistence not launch an ecommerce offering despite taking a £1.1 billion hit could “be the start of the end” for the beloved brand.
Last week the fast fashion giant, owned by Associated British Foods (ABF), reported a 30 per cent drop in sales in the 16 weeks to January 2, as 305 of its 389 shops around the world remained shut.
This means roughly 28 per cent of Primark’s stores remain open, while the retailer reported that sales performance at stores that remain open is varied as less tourism and more people working remotely hammered footfall.
Despite this plunge in sales, Primark has remained staunchly opposed to experimenting with selling its goods online, even as its fast fashion rivals like Boohoo report runaway sales.
“Are we losing sales here during these store closures? Yes, that is not in dispute here,” AFB’s finance director John Bason said.
“But that does not mean that it pushes you to make uneconomic decisions about changing a winning business model.
“Our price point is the reason that we can’t and other people cannot make money online. That makes us different.”
Analysts across the industry have questioned its hard-headedness, arguing Primark could suffer irreparable damage without exploring ecommerce options.
Fluent Commerce’ managing director Rob Shaw said: “The irony is, Primark has procured most of the technology components they need to open up an eCommerce channel which, if utilised correctly, would have preserved significant amounts of lost revenues and potentially consumer advocacy, during the COVID-19 lockdown period – even if this was offered via limited regions in the first instance as a pilot.”
Andy Barr, retail expert and co-founder of online price tracking website Alertr, argued that while Primark has until now faired fairly well during the pandemic, now “might be the time to reconsider” their offline-only approach.
“We have seen even the biggest retailers take huge blows over the last year, with store closures and job losses being reported almost daily,” Barr said.
“If Primark continue to ignore online shopping, they could well go the same way, despite their popularity.”
Rick Harris, director of discount online retailer offeroftheday.com, warned that Primark’s loyal fanbase would not remain so forever, and months without being able to shop with Primark could force customers to turn elsewhere.
“If truth be told, the resistance to move online is no doubt in part due to there not being a large enough margin in their clothes to justify a high level of return,” he said.
“Customers will only remain loyal for so long though; could this be the start of the end for Primark?”