‘Get over it’: Primark resists move online despite pandemic shock

As Covid-19 rampaged across Europe in 2020, Primark’s managers could only watch as online rivals muscled in to supply T-shirts, hoodies and pyjamas to its locked-down customers. With no online sales channel, the discount clothing store was faced with total closure and burning through GBP100mn of cash each week. The retail powerhouse that was forecast to make GBP1bn of operating profit in the year to September 2020 ended up making less than a third of that.

But even the toll of the pandemic has not persuaded Primark to finally embrace online shopping. George Weston, chief executive of the chain’s owner, Associated British Foods, told the Financial Times that while it was “a nice hypothesis” that Covid had changed the industry for good, sending shoppers permanently online, the growth in Primark’s market share compared with before the pandemic suggested that was not correct. Weston is adamant Primark “is and always has been a high street retailer” and said an evolution into a home delivery ecommerce business was simply not going to happen.

“At our price points and our basket sizes [online] doesn’t just take some of the margin, it takes all of it,” he said. “Get over it,” has been his blunt message to those who advise otherwise. Still, surviving the sudden closure of 191 UK stores and hundreds more in Europe was a challenge the business would rather not repeat.

“We grabbed the revolving credit facility and put it into our own bank accounts, looked at the terms and conditions of our private placement notes and told our food businesses to generate as much cash as they could,” recalled Weston.

Column chart of Adjusted operating profit (GBPm) showing Primark's profits remain below pre-pandemic levels

As the weeks of lockdown turned to months, other British clothing retailers, such as Marks and Spencer, expanded their online offerings. Primark considered using a marketplace such as Zalando or Asos to sell through, but swiftly ruled it out. “The only reason to do it would have been to clear stock to raise cash,” said Weston. “Once the stores started to reopen, we knew we would not have to do that”.

The company’s sales are still below pre-pandemic levels in some European markets but Primark said this was often because the overall apparel market had contracted and that its share of the market had actually increased in many countries. But some believe Primark’s online position is untenable in the long term. One person who has worked at the fashion chain pointed out that the UK and several of its other key markets were relatively mature and its core customers increasingly expected to be able to shop online.

“They cannot end up as the only retailer in the world [that] doesn’t offer [ecommerce]”, the person said. Even Walmart in the US, a low-price retailer initially reluctant to trade online, eventually decided it “had to get into it and learn to make it work”. Primark’s only concession to online selling so far has been a click-and-collect trial of childrenswear from 25 stores in parts of England — around 6 per cent of its total estate.

The mini-trial was so popular the company’s website crashed when it was launched — and it could be extended. Richard Chamberlain, an analyst at RBC, said click-and-collect services that drove footfall into stores had been tried by retailers such as Sports Direct and H&M, but the sales added had been useful rather than transformational. He said it was “hard to see [ecommerce] as anything other than dilutive to margins”.

Online sales also pose dangers for the store estate. “If 20 per cent of your sales migrate online, your cost base in the stores doesn’t change,” the former Primark insider said. “They just don’t want it to happen”. By contrast, Primark hopes that click-and-collect might drive a degree of “top-up” shopping in stores as customers pick up another GBP1 pack of bangles or a 90p hair brush along with their order.

GM221206_22X Primark's international expansion

The chain is not alone in shunning online shopping. Supermarket groups Aldi and Lidl have stayed away from ecommerce.

So-called “variety discounters” such as B&M and Home Bargains in the UK and Action in Europe have also struggled with the economics. Primark, along with other discounters in all sectors, has regarded opening new stores, often in new countries, as a more reliably profitable way to grow. “We have trialled [online shopping],” said Mat Ankers, chief financial officer at Poland-based discount clothing retailer Pepco. “But our customers want to shop with us in our stores, and stores remain the key driver of our growth”.

The company is opening hundreds of new shops each year in central, eastern and southern Europe. Similarly Primark, which was established in Dublin in 1969, is planning to add Romania and Slovakia to the 14 countries in which it already operates.

One of Primark's stores in Madrid
One of Primark’s stores in Madrid attracts crowds of shoppers (C) Marcos del Mazo/LightRocket/Getty Images

The fashion chain’s approach to international expansion is usually to start small and learn. In the US it planted its first flags in Boston because of the strong Irish-American presence there.

But as it quickly became clear the clothes were popular with Hispanic customers, it opened stores in Florida. In New York, managers noticed that a disproportionate number of customers were from lower income groups, so Primark initially focused on the outer boroughs of New York, rather than flagships on Manhattan’s Fifth Avenue. This gradualist approach — and its refusal to follow peers online — is helped by its ownership structure.

AB Foods is majority owned by the Weston family, conservative long-term shareholders who have nurtured the retailer as part of an old-fashioned conglomerate that also includes sugar production and groceries. Weston said it was “really noticeable that some of the world’s most successful retailers have come from small communities”, namechecking Zara owner Inditex, which has grown from its remote outpost on Spain’s Galician coast to become the world’s biggest fashion retailer. “It gives you a certain humility.

You have to have an interest in what other people want rather than just selling them what you’ve got”. The former Primark insider said the management team was largely “just left to get on with it” by the AB Foods senior team. However Weston noted: “We understand how to internationalise a business, so every now and again we’ll say ‘don’t touch that it’s hot’,” he added.

For now, delivering parcels of clothes to customers at home, and the expensive business of processing the ones they send back, is set to remain in that “too hot” category.

braun listed on couponmatrix.ukeyeko listed on couponmatrix.ukpoppyshop listed on couponmatrix.uksizzling-pub-company listed on couponmatrix.uktabcat listed on couponmatrix.ukubereats listed on couponmatrix.uk
braun listed on couponmatrix.ukGiving you the electric shavers and personal hygiene tools you need to sculpt a better you, Braun has rightfully earned a reputation for creating front-line technology capable of handling hair removal with precision and ease. Next time you’re looking for a silky-smooth finish, pick up a Braun discount code from Groupon so both your body and bank balance can benefit. Be you a professional barber or an average Joe just seeking the perfect trim, Braun offers up the tools you need to leave every bathroom session smiling.
eyeko listed on couponmatrix.ukWhen it comes to makeup products, we’re always searching for our Holy Grail. Eyeko is the eye makeup expert, and it’ll help you nail that swooping eyeliner flick, everyday neutral eyeshadow or eye-popping lash look. Cruelty-free and made with natural ingredients, you’ll love Eyeko’s high-performance mascaras, brow makeup and vegan collection. There’s even an Eyeko discount code available if you refer your friends – £10 off! Thanks to the great offers available, including exclusive offers for students and NHS employees and free delivery on orders over £15, you can switch to Eyeko without busting your beauty budget.
poppyshop listed on couponmatrix.ukPoppy Shop is a popular charity online retailer specializing in trendy fashion and accessories. They offer a wide range of products for women, men and children, from homeware to jewellery, you’re guaranteed to find something for everyone! And on top of that, 100% of their profits is donated to charity! Poppy Shop is known for their great sales and discounts. You can often find a Poppy Shop promo code online to save even more on your purchase. At Groupon, we want to help you save money on all your favourite brands. That's why we search high and low for the best Poppy Shop promo codes and discounts. With our savings, you can do a good deed for less! And with our help, you can treat someone special or yourself with the latest deals. We will keep you updated on all the latest offers, so you can shop with confidence knowing you're getting the best price. The Poppy Shop pins and brooches are top-performing products and rightly so! With a wide range of sizes and beautiful styles, you know you’re getting the highest quality product. So what are you waiting for? Get the best pins and brooches on the market, treat yourself or someone special today and feel great about helping out a charity! Don’t forget to save money with our Poppy Shop discount code too.
sizzling-pub-company listed on couponmatrix.ukWhether you’re celebrating a special occasion, watching the footy with your mates or bonding over a family lunch, you can expect the warmest of welcomes, tasty grub and red-hot offers from Sizzling Pubs. Explore our Sizzling Pubs vouchers to knock money off already affordable prices - with plenty to offer all the family, you could treat the whole gang for less. With friendly service and a home-away-from-home atmosphere, Sizzling Pubs will make your good times go further.
tabcat listed on couponmatrix.ukTabCat is a UK based online retailer that offers products for cats and cat lovers. They specialise in keeping your cat safe with their cat trackers. TabCat discount codes are available to help you save money on your next purchase. Being more accurate than a GPS, TabCat has what you need to keep your animal safe, so you always know where they are. Be sure to browse their selection and take advantage of their deals today! At Groupon we know that discount codes are a great way to save money on TabCat products. We know that keeping your cat safe is your top priority, but we also know it can be costly. We know that finding the best deals is very time-consuming, that’s why we find the best codes and deals so you can focus on finding the perfect cat tracker for your feline friend. Check back often for the latest and greatest offers! TabCat are best known for their trackers. One of their top-performing products is their TabCat bundle v2. Not only does it tell you where your kitten is, it also directs you on where to walk to find them. The TabCat voucher code is a great way to save money on your next purchase. So what are you waiting for? Keep your pet safe and be sure to check our page to take advantage of their discount codes today!
ubereats listed on couponmatrix.ukLooking to save on ordering in? You’ve come to the right place. We’ve tracked down the best Uber Eats promo codes and discounts available right now! We’ve also rounded up our top tips for finding personalised Uber Eats offers on the app, so you can always score a deal on your fave takeaway. From bao buns to Big Macs; milkshakes to margaritas—whatever you’re feeling, you’ll find it for less on Uber Eats.