Primark, the value-focused fashion retailer owned by Associated British Foods, is considering click-and-collect services in what would be its first tentative foray into online retailing.
Paul Marchant, chief executive, told analysts the company was evaluating the opportunity in click-and-collect — where goods ordered online are collected in person from stores.
Primark has traditionally been reticent about selling clothing online given the low price-points of its merchandise. It has preferred to emphasise its social media presence, with its 7m Instagram followers and a posse of influencers driving shoppers back to its shops.
“It feels like it’s a year or so away and even then it’s likely to be a modest trial by region or product group,” said one analyst present at Mr Marchant’s briefing. But he added that it would allow Primark to supply its full range to customers at smaller outlets in its 189-store UK estate, and that it constituted a shift in the company’s position. “It’s the first public announcement.”
John Bason, finance director of AB Foods, said: “We asked if there was anything in ecommerce that would work for Primark. If there is something to look at, it would be click and collect.”
Although it has endured some wobbles, most recently around last year’s Black Friday event, the lack of an online channel does not appear to have hurt Primark’s longer-term sales or profit growth. Its UK store sales have grown at a compound annual rate of 14 per cent over the past two decades, driven by new store openings and a shift in brand perception. Operating profit, including from international operations, has more than doubled since 2010.
“I don’t think we have lost out by not being an early mover,” Mr Bason said, adding that “many people now accept that ecommerce is complex, costly and competitive”. Analysts said Primark’s supply chain was optimised for large palletised deliveries to stores, rather than individual packages.
The remarks about click-and-collect were made as Primark opened its largest ever store in Birmingham, which cost more than £50m and covers 160,000 square feet. The flagship outlet, which includes a Disney café, barber’s shop and beauty salon, is owned by the company rather than leased, like more than half the company’s UK stores.
Executives said the company could add another 1m sq ft to its existing 7m in the UK, giving it an estate comparable in area to that of Next. It is also refurbishing older stores and relocating into bigger units when it gets the opportunity.
“The Primark of 2000-2010 was about fantastic price and the fashion, but the store environment was staid,” said Mr Bason. “Now, we are the ones investing in the high street experience.”
The company faces competition from online rivals operating at lower price points, most notably Boohoo, which recently recruited top Primark executive John Lyttle as its next chief executive.
However, a fully transactional Primark website offering home delivery remains a remote prospect. The company is particularly deterred by the cost of fulfilment, especially the high level of returns. “You are immediately adding first-world labour costs, per item,” said Mr Bason.
This week Asos chief executive Nick Beighton acknowledged that the company had changed elements of its returns policy to deter serial returners “who regard Asos as a rental service”.
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