International clothing retailer Primark has announced it will enter the online market with a click & collect service on children’s products. The budget fashion chain has stopped short of commiting to a full online delivery offer. However, ther Irish-born brand, founded in 1969, which has since grown to over 400 stores in 14 countries, may arguably be signalling an intent to reshape its business model.
The change has come about following the company’s disclosure of a new digital strategy last year, aiming to strengthen its online presence. The move began with the launch of a new customer facing website, allowing visitors to view inventory while also checking product availability in-store. A positive consumer reaction to its new web features saw traffic increase by 60 percent, with 15 percent of users making use of the inventory checker.
The first phase of the strategy is a click-and-collect trial, catering to childrenswear in a representative sample of 25 stores in the northwest region of England. Collections, as well as returns, will be free of charge.
Primark has advised that the ultimate aim is to grow its click-and-collect offering for 2,000 products in the childrenswear, and accessories & lifestyle departments, with 40 percent of those items exclusively available online.
This announcement has come as a surprise to many, as Primark has often denied suggestions of a largescle move into ecommerce. The company has consistently made it clear that its price point is the main reason for not adopting an online model. Historically, Primark’s formula has proven to be extremely profitable. Even shoppers who intend to spend little often leave with a large haul of clothing. This could be due to low budget pricing, or a well planned in-person experience, with some Primarks coming equipped with nail bars and ice cream shops.
This combination, as well as low staff to customer ratio, an effective store layout, and limited changing facilities, has proven to be an extremely cost effective way of running their business. However, it was the low cost of dealing with returns, a noted thorn in the side for online retailers, that encouraged them to avoid eCommerce. Popular high street retailer, Zara, both online and in store, recently announced charges for returns.
Staff shortages in the delivery sector, increased supply chain complexity, and the cost of expanding its logistics operation, could well have dissuaded Primark from acting. So, the question remains, what has changed for Primark to be willing to enter this comparatively tumultuous market, and move away from its previous stance?
Primark CEO Paul Merchant has already dismissed any suggestion that bricks-and -mortar stores are in decline, saying, “anyone who thinks that shopping in person is over or outdated would be naive.”
The pandemic, though universally unwelcome, was a shot in the arm for online retailers. Yet, with UK online demand flagging by as much as 20 percent a month since the beginning of the year, according to IMRG estimates, the timing of Primark’s move could lead to the conclusion that it is signalling a more comprehensive move.
The fast-fashion industry accounts for 10% of greenhouse gas emissions worldwide according to figures published by the UN. Against the backdrop of rising ethical and sustainability concerns, and a retail slowdown, the fast fashion sector is under pressure. The demise of Arcadia’s Topshop, for example, that recently fell into receivership, is a case in point. Predictions indicate that the sector could face a wave of bankruptcies at the end of this fiscal year.
For fast-fashion retailers, environmental concerns won’t go away, and hiding under the blanket won’t cut it anymore. There is also now a strong economic rationale for acting. According to research by Deloitte, 25% of shoppers say they prefer Click & Collect as it’s better for the environment.
By growing its click-and-collect offering, Primark is certainly responding to the need to reduce its carbon emissions. Deliveries made to a local collection point reduce vehicle emissions and eliminate missed deliveries. Primark’s move towards omnichannel retail, albeit a cautious one, is no doubt part of a broader business model revamp. The change is intended to reflect changing consumer buying habits, a toe in the water of what could potentially be a Walmart-like shake up. Time will tell, but environmental concerns are to the fore in the retailer’s psyche.
While the apocalyptic demise of retail is overstated, the retail landscape is rapidly evolving, and Primark has not let this pass them by.
Fergal O’Carroll is the chief revenue officer at delivery management company, Scurri, with responsibility for sales strategy and execution.
His prior roles include EMEA vice-president for commercial sales with Teradata for eight years; prior to that, he was managing director of business intelligence solutions with Avnet Client Solutions for 13 years.
Fergal holds a BA in Business Studies from the University of West London and is a native of Dublin, Ireland.
