“With 76% of Primark’s global retail fleet currently shuttered in response to COVID-19 lockdowns, and no transactional website to capture consumer demand, sales during the 16 weeks to 2 January 2021 plummeted — with stark losses estimated at £540m. The retailer’s stubborn refusal to go digital alongside its heavy reliance on city-centre locations has resulted in a momentous blow, as weakened footfall from declining tourism and commuting made for significantly less shoppers on the high street. Retail park performance managed to slightly cushion the blow, with higher sales versus the same period last year when no store closures were in effect, reflecting that Primark still exudes a broad appeal, as long as stores are open and in the right locations.
“By extending opening hours for several UK stores during the lead up to Christmas, Primark leveraged ballooning consumer demand built during regional lockdowns in October and November for its value loungewear and nightwear. The retailer sold out of all Christmas and gifting lines, with its casual, comfortable staples performing exceptionally well. Primark’s finger on the pulse to offer an appealing product mix, coupled with its decision to carry over £200m of transitional stock to the following year also allowed the retailer to discount less, which mitigated the impact of its lower sales volumes. But with a dark period of no UK sales ahead, Primark is wise to focus on geographical expansion, as it plans to open 15 stores spanning eight countries in FY2020/21, including its first store in the Czech Republic.
“With a third lockdown currently in effect across England, Primark fans have taken to Twitter, asking the retailer to consider an online offering. Yet Primark is determined to resist, lamenting that it wouldn’t be able to maintain its low value prices. Although it would undoubtedly be a momentous undertaking to manage the logistics and warehouse space needed for its expansive inventory, other value brands such as Matalan and George have been successful in maintaining their low prices while running digital operations, proving it can be done. The growing preference for online shopping is not merely a pandemic-induced phenomenon, and with losses caused by temporary store closures threatening to reach £1.05bn for H1, there’s no time to waste for Primark. While it has maintained a loyal customer base during rampant store closures, if the retailer doesn’t digitise its offer soon, it will continue to lose out to online competitors.”