Primark recently reported a 22% jump in its quarterly sales, highlighting yet another positive quarter for the clothing retailer. Despite reports that the high street is suffering and with BRC stats showing that footfall in store decreased once again in July by 1.7%, Primark is staying resolute on its decision to stay out of the ecommerce game. This is a bold move, and begs the question; is Primark right, or is it missing a trick by not venturing online?
Some industry experts, Primark included, argue that the retailer does not need to worry about forging an ecommerce presence, due to its continually impressive sales figures. Low costs and high volume sales are resulting in high profit margins for the retailer - it saw a like for like sales increase of 8% in the month of June. Compare these sales figures to other high street fashion retailers where sales have dropped in some cases, and it is clear that offline is working for Primark.
However, while Primark is succeeding in a competitive market where others are struggling, the retailer could still see significant growth by venturing online.
It is important to note that the retailer has not refrained from hosting an online presence all together. It launched a social sharing website ‘Primania’, where customers showcase photos of their Primark outfits. This works as a tool to display brand personality, which has been key to Primark’s expansion both in the UK and overseas. Consumers think of Primark as a place for fast fashion, which allows them to emulate global trends, without breaking the bank so its social site focuses on the newest fashion looks for good value prices.
While this community site creates strong brand ambassadors, it is not a means of driving direct sales and therefore seems like a wasted opportunity. Alone, it does not build and preserve an online presence, as it is used as another way to drive customers in store.
Primark’s strategy has worked to this point, but the popularity of its social site clearly shows an engaged customer base online, who would likely be receptive to an ecommerce platform. The internet often out-performs the high street in terms of growth and would be an area of opportunity for Primark. For example, Mintel findings show that this Christmas 25% of consumers will do more shopping online than last year.
Online is also a key channel for young shoppers, Primark’s target market. According to an international study of 18 to 30 year olds carried out by Telefónica, Millennials are defined by their ubiquitous use of technology; 76 per cent of young people own smart phones globally and the internet, including social media, is seen as the best source of entertainment by 64 per cent of young people. Brands must appeal to an increasingly tech savvy audience across these digital channels.
Serving a digital experience is crucial as changing consumer habits mean shoppers are increasingly looking to purchase whatever they want, whenever they want, on whatever device they are using. Today’s shopper is flitting between web pages, social media and mobile devices, as well as the traditional high street. Often a shopping trip starts with a click of the mouse and if retailers do npt meet these expectations they risk falling behind the competition who can offer an online experience.
Retailers need to work harder than ever to build continuous engagement with the audience, ensuring that the route to purchase is simple. Shoppers expect to be able to buy wherever they are. Without a multichannel presence, Primark is missing out on targeting those consumers who may be looking for a quick, unplanned purchase as they browse the internet for fashion. For example, Ipsos MediaCT Tech Tracker research found that 38 per cent of tablet owners use their tablets while watching TV at least once a day, and a quarter of these people said they are likely to shop online at the same time – it is the perfect opportunity to target a shopper.
Secondly, online could be key to Primark’s international expansion; the retailer announced a flagship store in the USA earlier this year. An ecommerce presence would allow the retailer to provide cross-border services, opening up huge opportunities to grow their customer base globally.
For a company whose profits are based on low margins and low costs, testing brand appetite amongst a new target market using trusted online affiliate partners would be an inexpensive trial. Assigning spend for retail space, delivery logistics and payments solutions in an unknown market is risky but many retailers offset this by partnering with strategic publishers, who promote the brand on their behalf. This means they can reach new audiences quickly, gauge consumer appetite, and pay out only for the true engagement achieved.
By connecting with consumers through trusted publishers who echo the brands’ personality, retailers can deliver a shopping experience which is locally relevant, without risking huge spend. Also the support of a well-known, respected publisher name, means you establish trust for your unknown brand in a new place from the start.
With positive quarterly results, to say Primark is wrong by not selling online would be to ignore the obvious – its business plan to offer low costs and produce high turnover is a strategy which proves extremely successful.
However, Primark could benefit from ecommerce to offer cross border shopping services and reach new digital savvy audiences. Digital marketing tactics such as retargeting and affiliate partners can help to achieve this. As consumers are increasingly moving online, having a multichannel presence, and therefore a complete view of the customer journey, would allow Primark to improve its profit margins even more, whilst boosting its profile on the platform where its customer base is already highly engaged – the internet.