Primark reluctance to move online could spell “step towards the end” as it becomes FTSE100’s worst performer

Primark’s scramble to retain customers with sustainability initiatives is likely to fail as its reluctance to adapt to the digital revolution could “be a step towards the end for Primark”.

Primark said this week that it has committed to making all of its clothes using recycled or more sustainably-sourced material by 2030 while promising the move will not result in higher prices.

While pressure increases on fast fashion giants like Primark to tackle sustainability issues in their supply chains, making the move an obvious shift in the right direction for many, analysts have warned that it may not be enough for the retailer to retain its loyal audience.

It comes as Primark became one of the worst performing companies in the FTSE100 after revealing massive losses throughout lockdown, largely due to its failure to launch online.

“Nobody is saying fashion brands should give up on their sustainability effort,” Emarsys’ director of customer engagement solutions Payal Hindocha said.

READ MORE: Primark drops “big hint online sales will be part of its future” as it announces digital investment

“But sustainability is also being sold as a way to drive more sales and repeat purchases. In reality, that’s not necessarily the case. Loyalty is driven by a wide variety of factors, of which — unfortunately — ethical behaviour is still only one small part.”

According to the 2021 Customer Loyalty Index just 21 per cent of customers are loyal to fashion brands for ethical reasons, compared to 62 per cent who are loyal due to product choice.

Primark’s customers are renowned for being intensely loyal to the brand, a factor which has allowed the retailer to claw back millions in sales since lockdown ended.

However, loyalty could soon wane according to money-saving website offeroftheday.co.uk’s director Rick Harris.

“The inability to move online and give their shoppers an alternative to the in-store shopping experience has meant they’ve fallen behind and their sales and profits have consequently taken a hit; but that said, it’s promising to see that sales and profits have rocketed compared to last year,” he explained.

“The resistance to move online is no doubt partly due to there not being a large enough profit margin in their clothes to justify a high level of return. Even with the loyalty Primark customers have shown over the past 18 months, there’s only so far loyalty can go; could this be a step towards the end for Primark?

“We’ve seen many online brands soar in the past 18 months; for example. Boohoo and PrettyLittleThing – their price point is quite similar to that of Primark, but most importantly they offer online shopping. It really is just a case of ‘time will tell’ for Primark.”

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2 Comments. Leave new

  • Primark has a 190 ish stores and generates 3.8..£3.9bn worth of sales just from its U.K. arm. No other retailer can match that for sale revenue per store. Matalan over 200 stores only generate a little over a billion same for new look over 500 stores and sales of only 1.2bn even H&M are in the same boat. These experts need to understand this. Also there average selling price is below £4 unlike the boohoo & PLT at over £10 for ASP. If Primark doesn’t have a future then they wouldn’t be on a international Expansion program. E-commercial is not the b all and end all of fashion retail

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  • Could not agree more. E-commerce is a very expensive channel hence so many DTC operators make little or no profit, even with the massive windfall of Covid lockdowns.
    The ongoing song ignorant analysts and journalists sing about the demise of the store is rapidly being proven to be just that, ignorant.
    Unless your product has high price points and high margins, you are not likely to turn an acceptable profit.
    I believe Primark need to do a much better job with their digital engagement, but admire their stance to not transact digitally and erode profitability.

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