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A Successful Retailer Without an Online Presence?
In retail, EVERYBODY must (or thinks they must), be prominent in e-retailing and omnichannel because of ALL the revenue. So Primark must be joking to think they can remain just simply brick & mortar? But when Sears shuts down stores, UK-based Primark buys them to expand into the US. Keep thinking of an old saying: “Jack of All Trades, and Master of None”. Bet Primark has heard of it.
In a lot of ways like low prices but cool fashions they resemble Swedish heritage H&M and Spanish-headquartered Zara's. But both these chains are big online while Primark is not. And they are not (currently) planning one.
Before we say “What's wrong with them?” Primark has a 22% year-over-year increase in revenue.
Their answer lies in strict control of the supply chain and limited marketing expense.
Like H&M and Zara, Primark is extremely agile in dealing with changes in fashion tastes. They have over 270 stores in primarily Western Europe, but they are a tough negotiator with their 700 plus manufacturers based mostly in Asia.
The company’s quick response to fashion changes is a success story. About 10% of its fashion lines are changed out each week and it’s estimated that average stock turnover is about 6 times per season versus an average of 2 times for most US retailers. “Basic” garments come from Asia with a lead time of about 90 days while “fast fashion” / popular items (lead time of 8 weeks) and are manufactured in Turkey or East Europe.
Logistics in Europe (Germany, UK and Spain) is mostly outsourced to DHL Supply Chain Solutions. Would expect they (or subsidiary Exel would manage on in US.
Primark is moving slowly, but surely in the US Northeast: 10 planned US stores by 2016, Sourcing of clothing from traditional supplier markets of China, India, Bangladesh, Cambodia, Vietnam and Turkey will continue. Company stated it will establish suppliers from countries closer to the US such as Guatemala, Costa Rica and Mexico. They are not dumb, are they?
They watch their pennies with limited marketing expense: little advertising and marketing, instead relying on word of mouth plus digital and social media.
How will they do against Amazon and Wal-Mart? By bet is OK; a lot of people still like to physically “shop” and others have a bias about other retailers.