Primark – challenges to UK LFL & margin growth

Primark’s Growth Story – and Challenges Ahead

In the past 10 years, Primark’s market share has grown by three percentage points in the UK, making it the second-largest clothing retailer. These gains were made at the expense of established players, notably New Look and Marks & Spencer, which is the leader at present. 

Primark’s growth is down to various strategies. One major force is that it is “in tune with the fashion market” and can get value-driven offerings into stores quickly. Adopting new in-store offerings, like beauty parlours, and different product ranges, such as home and sportswear, has also attracted customers. 

Another focus, the expert noted, has been on changing the shopping experience: “they’ve moved away from being large, white-box barns to far more interesting and aesthetically pleasing stores”. This helps Primark appeal to younger customers and improves store dwell time. 

There are potential downsides to Primark’s outlook, however. Despite outperforming its peers, Primark has seen a small decline in like-for-like sales. Our specialist believes this is due to consumer uncertainty, which is affecting all Primark’s competitors, less people visiting the high street and poor weather. 

Another issue could be Primark’s plan to move 220 staff from Reading to Dublin. Although moving more teams under the same roof makes “perfect longer-term strategic sense”, losing personnel who don’t want to move country could affect the business. Replacing this expertise would take time – if half the staff choose not to move, the recovery could take over a year, the former head estimated. 

To access all the human insights from the Primark – Challenges to UK LFL & Margin Growth Interview, click below to view the full transcript.