Primark: held back by lack of ecommerce website?

High street discount clothing brand Primark famously has eschewed ecommerce, although it has nodded to digital with its strong social media presence. Primark owner Associated British Foods (ABF) this week said

the clothing retailer had seen a sales boost in the first half of its financial year. Total revenue reached £3.5bn in the 24 weeks to March 3. That’s 8% ahead of the same time last year. Adjusted operating profits came in 6% ahead at £341m. Like-for-like sales were 1.5% down across the business, although UK sales were 3% ahead as the business expanded. It is expanding into European markets and into the US, with stores now open in Germany, France and Portugal and set to open in Spain, the US and the Netherlands.

At the same time, its following on digital and social media grew strongly, said the company. It added: “Our website and these social channels are increasingly relevant to our customers, building awareness of our brand and product, and are drawing them into our stores.” That said, customers still cannot buy via websites, when they would normally expect to. That means shoppers must visit stores – but wider trends are seeing footfall fall. Parent company ABF is unperturbed.

“Primark performed well with profit growth of 4% achieved against a backdrop of unseasonable weather in Europe and a margin decline following the adverse effect of currency on purchases,” said ABF in its results statement. “Our UK performance was remarkable in the circumstances and delivered a strong increase in our share of the total clothing market. Looking ahead we expect this profit growth to accelerate with the continuation of our retail selling space expansion and an improvement in margin following the recent strengthening of sterling against the US dollar.”

So would ecommerce make a difference? Primark’s current growth is coming predominantly from new store openings, with like-for-like sales – which strip out the effect of those openings – down by 1.5% group-wide in the half-year (although 3% ahead in the UK market). A global ecommerce website would take its brand much further than individual store openings, and Primark would almost certainly enjoy the online growth that multichannel traders are seeing. What’s holding it back? It’s likely online would prosper at the expense of its stores as business moves from the high street to digital channels. It’s also likely that executives may see a disincentive in the likelihood that its legacy systems would present a barrier to the omnichannel approach that customers now demand.

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