Dublin-based fashion retail chain Primark has reported a rise in market share as profits increased during the Christmas season sales in its retail stores across UK. The fashion chain which only sells its products at the high street retail stores has never launched its products on its website although they are available on other ecommerce platforms including Amazon and eBay.
One third of all products sold online are returned implying that Primark’s modest product prices won’t be able to cover the shipping costs, according to the John Bason, finance chief of Associated British Foods, Primark’s parent company. Accordingly Primark has adopted a strategy of staying away from online sale of products and rather focused on expanding offline retail presence. The chain recently announced new store launches in Eastern Europe such as Slovenia and Poland as the sales in Eurozone increased by over 5% for 16 weeks leading up to 5 January 2019.
In terms of volume of sales the company is already Britain’s biggest fashion retail chain, while in terms of value its ranked third after Marks and Spencer who retains the top spot. Primark’s good performance over the Christmas season is an aberration in the industry as many retail chains announced store closures owing to increasingly shifting consumer preference from retail to online shopping. Marks and Spencer was recently in news for closure of 17 retail stores.
Mr. Bason said that although rivals stepped up expenditure on promotions, the firm could turn up profits owing to the several fashion hits this season such as faux sheepskin jackets and animal printed dresses despite a reduction in discounting. Other contributing factors were tighter stock control and lower prices. Primark exceeded its performance expectations after a December update which threatened challenging trading conditions. Its shares rose by over 6% after the announcement.
ABF, the parent company with huge presence in food business warned of losses in its bakery business which owns Sunblest, Allinson and Kingsmill brands. The company which has launched nine stores in USA and planning two more has reported a strong sale in the country along with Spain, another high performer. As worldwide sales in established stores fell by 2% over the period of four months, the strengthening of pound against dollar, which is primary mode of payment to eastern countries, prompted a rise in profit margins.
Mr. Bason said that although customers love the comfort of online shopping, they can offer the lower price range because they don’t have to bear the cost of home delivery. He added that Primark’s strength lies in the fact that its stores are a place where people come to have fun and don’t leave without buying something.