Primark: Time for a Digital Sales Channel?

Primark: Time for a Digital Sales Channel?

Covid-19 has brought profound change to the world as we know it. Alongside the awful human suffering, businesses have incurred significant loss of revenue due to the closure of retail stores. While most fashion retailers have continued to trade during the Covid-19 pandemic via their digital sales channels, Primark is an exception. Primark has no digital sales channel. When Primark closed its last retail stores on the 22nd of March 2020, it went from earning £650M in sales a month to nothing. Wow! My first thought too.

In this post, I will dig deeper into the impact of Covid-19 on Primark’s revenue stream and ask whether it is time for Primark to pivot its business model.

Let’s get started.

Who are Primark?

Primark is one of the most recognisable fashion brands across the world. Primark specialises in fashion, beauty and homeware products for the consumer market. The company was established in Dublin, Ireland in 1969 and trades under the name Penneys within the Irish market. Primark has expanded to over 373 retail stores spread across Europe and the United States.

Primark’s YoY Revenue

As indicated below, Primark has grown revenue steadily since 2007. In 2019, Primark generated revenues of £7.7b


Source: Statisa

But, due to the impact of Covid-19, 2020 will be a different story. According to the BBC, Primark went from making sales of £650m each month to nothing overnight. That’s a bitter pill to swallow. Primark’s 2020 annual report will reveal the true impact of Covid-19 on its financial performance.

Primark and a Digital Sales Channel

The most obvious question to ask is why Primark does not sell via a digital sales channel. In an interview with Ruper Steiner from Marketwatch, John Bason, Finance Director of Primark, stated that delivery costs that reduce profit margins is the key reason why e-commerce isn’t part of the company’s business strategy.

Although this argument makes sense, in light of Covid-19, is it now time for Primark to rethink its strategy? Pivoting its business model would make long-term business sense. In these uncertain times, having a 24/7 digital sales channel is essential for businesses to generate revenue during business closures. With medical officers across the world predicting a second wave of Covid 19, there may be more lockdowns in the coming months and years ahead.

Is Sustainable Fashion An Opportunity for Primark to ‘Go Digital’?

A significant survey of 30, 000 consumers across 60 countries in the world by Nielsen in 2015 revealed that sustainability is a worldwide concern for millennials. Not only that, but millennials will also pay more for sustainably manufactured fashion.

With a higher margin from sustainably manufactured fashion, Primark would be able to take the hit on delivery charges and could open up its digital sales channel. Primark would also be meeting the growing awareness about environmental issues among millennial and generation z consumers, future-proofing their affinity with this audience.

Technology has also significantly advanced since the early days of e-commerce and could enhance Primark’s brand reputation. Virtual shopping has been revolutionised by apps such as Zeekit. Zeekit, used by brands such as Asos, provides consumers with the ultimate ‘virtual try before you buy’ technology.

With such uncertain times ahead, the question to ask is whether Primark can afford not to adopt e-commerce. Only time will tell.

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