How Primark is Pairing Experiential Retail and Low Prices to Win

Primark’s Beauty Studio in its Birmingham Store

Primark’s Beauty Studio in its Birmingham Store

By Emily McCullough and Tricia McKinnon

Primark was founded 50 years ago in Ireland by Arthur Ryan. Since then, it has opened 372 stores and has expanded into 12 countries across Europe and the US. Primark is the largest fashion retailer in Britain by volume.  In 2018 it had a 7% share of the British clothing sector vs. Marks & Spencer which had a 7.5% market share.  Just a little over 20 years ago Marks and Spencer had a 13.5% share of the British clothing market which demonstrates how far Primark has come as well as how much traditional department stores like Marks & Spencer have struggled.    

In April, Primark opened its largest store in Birmingham in the UK.  At 161,000 square feet spanning five floors the Guinness Book of World Records has called it the largest clothing store in the world.  Primark’s new store illustrates how a low price offering paired with experiential retailing is a winning value proposition.  Take a look at how Primark is focusing on experiences along with low prices to get customers coming back for more. 

1. With its new store in Birmingham Primark appeals to customers by offering in-store experiences that customers desire. For example, the store has a Disney-themed café which attracts families with young children.  That store location also offers many services such as a beauty salon where customers can get their hair, brows and eye lashes done as well as manicures and pedicures.  The store also has a barbershop where customers can get a quick haircut or facial. Retailers like Nordstrom are focusing more on services to differentiate themselves from the competition.  For example, some of the services offered at Nordstrom Local stores include personal stylists, free of charge, manicures, pickup for eCommerce orders (including curbside pickup), returns, alterations, gift wrapping and complimentary refreshments. Ulta Beauty is another retailer that offers salon services and it has found that salons are a driver of foot traffic with salon customers making twice as many trips to an Ulta Beauty store as those who do not use the service. 

In addition to offering in demand services Primark with its Birmingham location has sought to capitalize on consumers’ growing desire for instagramable experiences.  For example, in the Birmingham location there is a “Snap and Share” room.  This is an area of the store where customers can take pictures of the clothes they are trying on and can set the mood while they are taking picutures by selecting the music they want to play as well as the lighting.  It is like playing dress up for Primark’s young customers without the cost of purchasing the items.  Then customers are able to share those photos with all of their friends on social media. This room allows the average everyday customer to become an influencer for Primark as they showcase and tag the clothing they are wearing on social media.  It is an easy way for Primark to create user generated content without having to foot the bill.  

Retailers that have, similar to Primark, turned their stores into destinations that customers must visit are finding that customers are responding.  Trying to get into a Glossier store on occasion has looked more like the scene that awaits a sold out concert with many people waiting in lines around the block just to get a peek at what awaits them inside. Speaking about Glossier’s flagship store, CEO Emily Weiss has said that her vision for the store is to create a “landmark-to-be”.  “I’m going to the Statue of Liberty, I’m going to Central Park, and I’m going to Glossier”.   With the ease and convenience of online shopping customer expectations have increased and retailers that focus on creating a memorable experience are finding success.

2. The main draw to a Primark store is its cheap and fashionable clothing.  Back in 2016 Morgan Stanley did a study that found that on average the price of Primark’s clothing was on average 202% less than US clothing prices. With its low prices come razor thin margins leaving Primark to focus on selling large volumes of clothing to meet its financial targets.  For example, it is estimated that H&M sells an average of $5,250 of clothes per square meter each year in Britain versus Primark which sells an estimated $8,200 worth of clothing.  Primark falls within one of the categories of retail that is performing better and that is the low end.  Following the great recession of 2008 the middle class has been squeezed characterized by stagnant wages and falling living standards.  This has benefited discount retailers.  The three largest clothing companies are: The TJX Companies, Inditex (Zara) and H&M.  All of these companies are positioned in the lower end.  

To fuel its low prices Primark conducts limited advertising.  It also does not have eCommerce and thus it does not have to incur expensive shipping and return costs.  Not having eCommerce means that customers have to go into a Primark store if they want to experience the brand and get cheap apparel.  That strategy also helps with impulse purchases.  Speaking about its decision not to have eCommerce, Primark has said: “we have a strong digital and a rapidly growing social media presence, with currently 14 million followers. Our customers enjoy looking online at the latest offers, and coming into stores to buy. From time to time we will look at click-and-collect as one possible option to extend our customer service. However, there are no plans in the near future to trial click and collect.” Speaking about their decision not to have eCommerce John Bason, Finance Director of Primark’s parent company Associated British Foods said: "the cost to support home delivery can't be supported with our price points."  Primark is not alone in its decision not to embrace eCommerce.  Marshalls, owned by TJX only decided to launch eCommerce this year. TJ Maxx, owned by TJX only recently decided to launch eCommerce but it is only a small part of the company’s business. Instead both stores focus on providing a “treasure hunt experience” which is difficult to replicate online.

 

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