Primark’s value proposition puts it in good stead to withstand the cost-of-living crisis, says GlobalData – Retail Times


Following today’s release of Primark’s figures for pre-close FY2021/22; Pippa Stephens, apparel analyst at GlobalData, a leading data and analytics company, offers her view: “The return to relative normality following the pandemic, alongside shoppers’ desire for more affordable fashion amid the cost-of-living crisis, has allowed Primark to experience significant year-on-year constant currency revenue growth of 40% in FY2021/22, after having been forced to close most of its stores for a large proportion of the comparative period. Like-for-like revenue was still down 9% on pre-COVID levels though, dampened by its performance across Continental Europe and significant economic uncertainty. While Primark has increased its prices amid soaring inflation, operating profit margin was still lower than expected at 9.6%. It has now committed to limit further price rises for the next financial year, but this will inevitably impact its profitability further, with operating profit margin now expected to be lower than 8.0% in FY2022/23. Despite this, Primark’s stance on prices will help make it more desirable as consumers increasingly cut back on non-essential fashion spend, and will allow it to better compete with its value and mass market competitors like the grocers, Matalan and Pepco, many of which are likely to pass additional costs onto consumers.

“In the UK, like-for-like sales have nearly recovered back to pre-COVID levels, owing to its strong value credentials and trend-led product ranges, whereas trade in Continental Europe has been much tougher, which it puts down to factors such as reduced tourism and slower market recovery. Although store openings have driven continued sales growth in the region, like-for-like revenue remains a worrying 18% below pre-pandemic levels. Primark should prioritise investment on marketing initiatives in these countries to drive footfall to its existing locations, as awareness of its offer is likely to be much weaker in Continental Europe than it is in the UK.

“Following the launch of its new UK website in April 2022, which enables consumers to browse a greater selection of its range and check the instore availability of specific products to create a smoother multichannel experience, it now expects to launch its UK click & collect trial just in time for Christmas. Though this will initially just be for children’s products and available in only 25 stores across the north of England and Wales, it is expected to be a highly popular addition to the retailer’s proposition, as consumers have long been willing Primark to venture into e-commerce. The trial is being launched at a good time, as it means that parents will not have to trudge around its busy stores during the festive period to find clothes for their children. However, since Primark’s stores often have extremely long queues, it must ensure that a separate area is designated to collect these online orders to ensure a more seamless process.”





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Following today’s release of Primark’s figures for pre-close FY2021/22; Pippa Stephens, apparel analyst at GlobalData, a leading data and analytics company, offers her view: “The return to relative normality following the pandemic, alongside shoppers’ desire for more affordable fashion amid the cost-of-living crisis, has allowed Primark to experience significant year-on-year constant currency revenue growth of…