Primark set to pay price for bricks and mortar only strategy

Primark is running the risk of losing the top spot in the UK clothing market due to its lack of a transactional website, argues GlobalData.

The retailer is set to lose £650 million of net sales per month while its stores are closed. Chloe Collins, Senior Retail Analyst at GlobalData, says that having no transactional website has placed it under additional pressure in the midst of the coronavirus pandemic.

“In the UK, its two closest rivals M&S and Next have the benefit of online operations, with the latter most likely to secure sales over the next few months thanks to its strong branded offer and efficient fulfilment,” says Collins.

“Though Primark has previously denied that launching a transactional website is in its short-term plans, this unprecedented event will provide it with clear impetus to rethink its bricks and mortar only strategy.“

After months of social distancing and self-isolation, consumers are expected to prioritise spend on leisure and experiences more than ever, meaning overall non-food retail spend will struggle to rebound in H2. “While mid-market players are likely to lose out, we expect Primark’s value proposition to retain its top-of-mind appeal,” Collins comments.

“When stores reopen, heavy discounts will be needed to clear existing seasonal summer stock that will have a limited selling period. However the company’s decision to cancel all future production orders will at least mitigate these risks and prevent it from becoming overstocked,” she concludes.