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Primark bets on last year’s fashion for April reopening

A Primark store

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Primark owner Associated British Foods says it hopes to offload millions of pounds worth of clothing stock when its shops reopen in England on 12 April.

The High Street giant does not offer online sales and says it expects to have lost £1.1bn in sales due to the latest lockdown closures.

It plans to sell more than £400m of last year’s stock to help plug the gap.

Primark said its 153 stores would reopen in England on 12 April, and in Scotland on 26 April.

Unlike rivals, the retailer had no online operation to shift stock when stores were closed during lockdowns.

But Primark is not set up to sell online, and has said the costs involved in distribution and sales online would mean price rises for customers.

Primark’s £1.1bn sales drop contrasts with online only fashion retailers such as Asos and Boohoo, whose sales rose by around 40% in the last four months of 2020.

Sales gap

Primark said sales for the 24 weeks to 27 February 2021 were £2.2bn, compared to £3.7bn in the same period last year, as lockdowns and closures in the UK and Europe stopped people going to many High Street shops.

However, it is optimistic that customers will return as soon as it reopens: “We expect the period after reopening to be very cash generative,” Associated British Foods (ABF) said in a statement.

It will be selling a mix of new and old lines for the remainder of the year as it plays catch-up.

Primark expects to sell £150m of spring and summer lines that were stored in warehouses from last year, and £260m of autumn and winter stock.

Why won’t Primark sell online?

In the past Primark has said it won’t sell online because the cost of manning the operation and processing high volumes of returns would mean it could no longer offer low prices.

“As a fast fashion retailer they are on a low margins anyway – they have to be very competitive on price,” Patrick O’Brien, UK retail research director at GlobalData told the BBC.

He said pure online players like Asos and Boohoo could make it work because they were “geared up for it in terms of logistics”.

“But Primark would be starting from scratch, and would have to integrate any new online operation with its existing store structure which would be costly.”

Despite this Mr O’Brien said the retailer was still likely succeed, pointing to the surge in sales it saw when its shops reopened after the first lockdown.

But Retail Economics’ Richard Lim said Primark was at risk of “potentially alienating its customers” who increasingly expect to be able to shop online.

“They have very loyal customers who love the brand, but they are crying out to be able to access it online.

“The longer they are not online, the more disruptive it is. The more their customers are discovering new brands and ways to shop.”

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BBC News – Business

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