Belfast Telegraph

Primark is a top business model, says retail expert

By Clare Weir

Primark owner Associated British Foods has hailed an "excellent" year for the budget fashion chain after sales jumped by 16% on a year ago.

Primark has been the jewel in the crown at AB Foods for a number of years, leading to a Europe-wide estate of 278 stores and 10.2 million sq ft of space.

In the last financial year, Primark opened 1.4msq ft of selling space in 28 new stores, the most recent being in Berlin and Bath.

Retail expert and lecturer at the University of Ulster's Business School, Donald McFetridge, said that Primark is one of the few retailers still consistently reporting excellent trading statistics.

"Primark appears to have their fingers on the pulse in terms of product range, merchandise mix, visual merchandising, price point and quality to the extent that they have been able to rapidly expand and grow their store portfolio to almost 300 stores within a very short period of time," he said.

"Customers these days are paying less and less attention to the price-quality continuum and instead have come to regard 'perceived value' as a much more important performance indicator when it comes to purchasing catwalk fashion at high street prices.

"They look at a garment, check the quality and then consider the price in an attempt to help them make up their minds about whether or not the product is 'worth the money' or not – and balance that with the usage of their proposed purchase before finally coming to a decision to purchase or not.

"The most valuable lesson other retailers can learn from Primark is to get this aspect of the retail proposition as near the Primark level of success as possible.

"Retailers are looking for the 'secret to success'; it lies in understanding that consumers have changed over the past five/six years and now use a completely different set of criteria when making purchasing decisions.

"Primark is a retailer from whom a number of other high street operators could well learn a number of very valuable and potentially lucrative lessons.

"They're the one to watch and to catch up with."

Meanwhile supermarket price wars kept grocers under intense pressure last month, even though the rest of the retail sector grew in August. The latest survey by the British Retail Consortium and KPMG saw like-for-like retail sales lift 1.3% on the back of stronger clothing and footwear last month, with total sales jumping to 2.7%.

But food sales fell by 1.6% over the quarter, the sharpest decline since November 2009, while like-for-like sales also slipped 3.6% over the last three months.

Major supermarkets such as Tesco and Sainsbury have seen their market shares eaten away by discounters like Aldi and Lidl as well as cheap deals to eat out at pubs or cafes.

Belfast Telegraph