Last week, Primark followed up a set of impressive financial figures for the 24 weeks to April 2014 with the news that it would launch its first stores in the US. Primark, which began life as the Irish budget clothing retailer Penney’s, has experienced remarkable growth across Europe in the last decade, and not just because of competitive pricing in an age of austerity. The retailer’s womenswear in particular commands an ever increasing amount of column inches from serious fashion journalists, with its ranges a strong signal of which catwalk trends are set to hit the high street.
But as it prepares to move into what is still a challenging market even for well-established businesses, does Primark have what it takes to crack America? We’ve taken a closer look at the detailed information we hold on the likes, dislikes and shopping habits of the million women who have a Dressipi Fashion Fingerprint to identify what trends have been driving the retailer’s success.
Firstly, Primark is doing increasingly well at a brand level with consumers. Every six months we track British shoppers’ favoured retailers with our Fashion Brands Index and last December saw Primark crack its Top Ten for the first time. 12% of consumers said it was one of their favourite fashion retailers, putting it level with Oasis and ahead of both M&S and ASOS. This was also the same edition of the Index that saw Zara lose its place as Britain’s top brand to another budget priced retailer, New Look. The economy may have gone back into growth phase during 2013, but this tells us customers remain very price-conscious. In fact some recent research we conducted into the shopping habits of our users indicated that 41% of women only went shopping to replace old clothes, with impulse buying account for just 16% of purchases. The same research told us that women in their 20’s and 30’s, the customers Primark targets most aggressively, were also the most cash-strapped. 29% of 20-somethings said they spent less than £250 a year, while 27% of 30-somethings capped their annual budgets at £500, making them ideal targets for Primark’s £20 outfit philosophy.
Primark’s popularity among the users of a recommendation service like Dressipi is all the more remarkable given that Primark doesn’t sell its clothes online. Apart from a 12 week long experiment in ecommerce selling via ASOS, Primark has concentrated entirely on bricks and mortar sales, though it has hinted it will develop a “more consumer focused website”. This makes the retailer an interesting counterpoint to Next, which also enjoyed enormous success in 2013 on the back of a strong multichannel strategy.
Primark has also shown a great deal of flair with its product. The best example is of this is Primark’s dresses, where the retailer is consistently praised for its ability to translate key trends at very low prices, such as the gingham that stood out in Derek Lam and Oscar de la Renta’s S14 collections. This wins Primark friends among the media and trendsetters, but it also makes solid business sense. Dresses have grown in importance as a category thanks in part to more casual workplace environments, and are now just as important a ‘basic’ as either a white shirt or jeans. They’re also a category where women are increasingly directing a lot of their clothes spend – £187.50 a year on average goes on dresses, compared to £75 for jackets and just £37.50 for skirts.
Primark’s first big achievement lay in carving out a name for itself on the UK high street on price, which it has since kept by producing the goods design-wise season after season. As a company whose success hinges on bricks and mortar sales and high basket sizes, and in the absence of a multichannel strategy, its success across the Atlantic will depend heavily on how quickly it can achieve scale on Main Street USA.