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How Primark Is Pushing Into a Cutthroat Retail Landscape

Thanks to aggressive expansion in the UK, Spain, Germany and France, Primark has become a household name for Europeans. Now the company is testing its low-price strategy in the US, the world’s most competitive retail market.
Primark | Source: Shutterstock
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LONDON, United Kingdom — Every day around 5 p.m., a human wave builds at the west end of London's Oxford Street. It gathers energy as it approaches a pile of gray stone and scuffed brick that takes up almost a full block, and then crashes through double doors into a cavernous space garlanded with bright T-shirt dresses and tasseled scarves.

This is rush hour at fast-fashion retailer Primark’s flagship store. The tide comes in around lunchtime, again after work, and then periodically throughout the weekend. On a dark October afternoon, Peter Franks is just inside the entrance, wearing a skinny-lapel suit and a correspondingly slim tie and trying to stand his ground against the crowd. For Franks, Primark’s store-design guru, these surges — students in jeans and tank tops, suited banker types, women in face-covering niqabs tapping on rhinestone-studded iPhones — present certain problems, such as moving customers through the 44 fitting rooms, preventing endless lines at the 104 cash registers, and getting seven or more daily deliveries of new styles onto the floor. Another dilemma: price tags — specifically, where to put them.

The crowds get so thick, Franks says, that seeing anything below 5 or 6 feet would be like trying to read a Post-it through a swarm of bees. That means price tags have to be placed high up, as does signage to tell people where to go in the 71,000-square-foot store, which has a maximum occupancy of about 3,200 and can get close to it at busy times.

Each table of stacked jeans or bathrobes or sweaters has another price display lower down, often in a laminated stand. That’s so once shoppers elbow their way to the goods, the neat columns don’t turn into disheveled heaps as they paw through looking for tags. It took a while for Primark to figure this bit out, Franks says. Before, things were a lot messier.

It’s Franks’s job to worry about the physical feel of Primark’s stores. Price tags are a consideration of titanic importance. They’re more important even than the ideal number of window displays (five, with two for women’s wear and one each for men, kids, and home), or whether jeans should be hanging or folded (hanging for more fashion-forward styles so you can see the detailing, folded for basics).

Price is by far the biggest reason Primark is the undisputed victor in Britain’s cheap-fashion war. Secondary are its up-to-the-minute designs, jazzy stores, and tireless promotion on social media. Primark doesn’t sell online and barely advertises. Instead, customers advertise it for free, posting thousands of selfies with their latest outfits, using the #Primania hashtag to be rated and critiqued. The best images get cycled onto giant in-store LED screens to spur impulse buying.

Controlled by the Weston family, a clan of Anglo-Canadian billionaires whose other products include food additives and Twinings tea, Primark has become the unlikely apex predator of disposable fashion. It’s a relentless curator and promoter of clothes so ridiculously cheap that buying them on a whim because you like someone’s outfit on Instagram is an entirely reasonable idea. A rust-colored “bandeau crinkle maxi” dress? £13 ($19.70). “Rip and repair” skinny jeans? £15. A slim-cut floral-print men’s shirt can be had for £8, and denim espadrilles are £4.

What's trending or not gets evaluated companywide every day, so buyers in Dublin or Reading, England, know whether to make a rush order for more "suedette" a-line skirts or gray twill kick-flare trousers. Their decisions are the sharp end of one of retail's most regimented logistics operations, stretching from countries such as Bangladesh to shopping drags all over Europe.

Thanks to aggressive expansion in the UK and Ireland, where Primark has about 200 stores combined, and in Spain, Germany, and France, the company has become a household name for Europeans. Now Primark is testing its low-price strategy in the US, the world’s most competitive retail market. In September it opened its first American store, a 77,000-square-foot, four- floor flagship in downtown Boston — chosen in the hope that the city’s many college students, who come from all over the country, would sing Primark’s praises on Instagram, spreading the message beyond New England. A second elaborate store, at the King of Prussia mall outside Philadelphia, opened in November. Both are part of a test run of eight or so US locations. The idea is to offer prices Americans are used to seeing on less-than-hip clothes from Kohl’s or Walmart on trendy pieces that change from day to day.

“My friends in Lebanon said, ‘You’re going to London? You have to go to Primark.’ ... There’s nothing like this at home.”

Primark is entering a cutthroat retail landscape that’s recently stalled once-hot brands such as American Apparel and Abercrombie & Fitch. The expansion is taking place in the void left by another US retail casualty, Sears, which is leasing Primark space it’s abandoning.

“We certainly weren’t scared by what we saw at the value end of American retail,” George Weston, chief executive officer of Primark parent Associated British Foods, says in his compact London office, furnished in utilitarian blond wood, a couple of blocks from Oxford Street. “The Walmart offer, the Target offer, Kohl’s as well—it didn’t look like something that would be any more difficult to compete against.” The move to the US is still undoubtedly Primark’s riskiest yet, and a splashy one for a retail brand that until 2006 hadn’t even expanded beyond the British Isles.

If Primark has a father, it’s a man named Arthur Ryan, but he’s not easy to get to know. Having hardly ever given an interview or a speech, he’s the Keyser Söze of retail. “I’ve never spoken to him, and I’m not even sure I know anyone who has,” says Wendy Liebmann, a 20-year industry veteran who’s the CEO of consultant WSL Strategic Retail. ABF won’t confirm Ryan’s age — he’s thought to be in his late 70s, though Wikipedia puts him at 85 — let alone make him available for an interview. Approached by a reporter at the opening of the Boston store, Ryan immediately turned to introduce his wife and in one fluid motion disappeared, heading deeper inside, all within about 10 seconds.

What is known is that in the late 1960s, Ryan was hired by Garfield Weston and his son Galen, who’d made a fortune running bakeries in Canada and Britain, to expand their Irish businesses. Ryan had an idea for a store selling cheap, trendy clothes and opened it in 1969. Dubbed Penneys, it was a hit in Ireland; when it came to Britain, it was renamed Primark to avoid stepping on J.C. Penney’s toes.

He spent much of his time as Primark CEO making unannounced store inspections to scrutinize minutiae such as the dimensions of signage, the height of shelving, and, of course, the placement of price tags. That Primark prices are almost always round numbers without decimals — not .99s or .95s — was a Ryan call, says ABF’s chief financial officer, John Bason, because he thought “the price is the price” and didn’t require gimmickry.

Ryan’s obsession with details meant he sometimes needed to be nudged toward big moves. When ABF bought the 120-store Littlewoods chain a decade ago, intending to use some locations for new Primarks and sell the rest, Ryan initially wanted to keep only three, George Weston recalls. (George, Garfield’s grandson and Galen’s nephew, took over as head of ABF in 2005.) ABF brass had to push Ryan “quite hard” to keep 41 stores. The move made Primark a UK-wide heavyweight for the first time.

Ryan became chairman in 2009. His successor as Primark CEO, Paul Marchant, has focused on international expansion and ever-snazzier stores to woo customers with a sense of occasion they wouldn’t usually associate with bargain bin prices. That’s where Franks comes in. Before joining Primark in 2008, he worked in store design for both Louis Vuitton and TK Maxx, a European cousin of TJ Maxx. “The design challenge for us is how to take a volume operation, in terms of retail, and make it fun” rather than stressful, Franks says.

At this, Primark doesn’t always succeed. Depending on your perspective, it might be the first or last place you’d want to spend a Saturday afternoon. At peak times, crowds jostle for fitting rooms. Shirts get balled up on the floor, bringing to mind the world’s largest teenage bedroom. Jeans are knocked from shelves. It can all begin to feel a bit, well, cheap.

To counter that sentiment, Primark is adding polish to new stores, each of which seems higher-spec than the last. Stylized city maps and localized architectural vibes have become a trademark: a brutalist feel in Berlin’s Alexanderplatz, an art nouveau take on the grand European department store on Madrid’s label-choked Gran Vía, and so on.

Much of the international interest is a result of what CFO Bason calls the “Ryanair effect,” after the ultrabudget European airline that whisks continentals to London for fares as low as a few euros. About half of shoppers at the London flagship are tourists. On a November evening, two of them are Madiha Shatila, a 27-year-old doctor from Lebanon, and her sister Marjan, 24. After an epic journey through the store, the pair sit on a ledge outside, recovering with a cigarette, surrounded by five of Primark’s trademark brown paper bags jammed with dresses, tops, shoes, and gifts for relatives. They’d spent about £250. “My friends in Lebanon said, ‘You’re going to London? You have to go to Primark,’ ” Madiha says. “I couldn’t believe how much we bought,” she adds. “There’s nothing like this at home.”

After Ryan left as CEO, the company continued doing fast fashion faster, cheaper, and trendier than its competitors, and it did it in more places. From 2009 to 2012, sales climbed more than 50 percent, to £3.5 billion a year. Then, on April 24, 2013, Rana Plaza, an eight-story complex of garment workshops in Bangladesh, collapsed. More than 1,000 people died. Survivors described the floor disappearing beneath them, trapping workers in a tangle of metal rods and smashed concrete. In all, about 670 employees of a Primark supplier were killed or injured.

Fast fashion—and plenty of slow fashion—wouldn’t exist without places like Bangladesh, where suppliers have developed a huge export industry sewing clothes as cheaply and quickly as possible. Regulation and safety standards are inadequate. At Rana Plaza, workers who saw cracks developing in the structure sensibly left, but they were ordered back to their posts before the disaster.

Although many other retailers also used Rana Plaza workshops, the British media pounced on Primark. Labor groups picketed the Oxford Street store and demanded it change sourcing practices. With a prominent brand and super rich owners, Primark was an easy target, almost offering a morality tale: Too-good- to-be-true prices were possible only by risking lives.

ABF says it did all it could to respond to the disaster and improve conditions afterward, paying $14 million in aid and compensation for workers and families, covering medical costs, providing food, and hiring engineers to conduct structural surveys. Executives are always eager to highlight the company’s Bangladesh efforts in interviews and speeches. The response won praise from some activists, who say Primark was quicker than other retailers to help. Others argue that the very concept of prices low enough to make clothes disposable puts workers at risk.

“As one of the drivers of fast fashion, which we’ve seen has overall had a significant negative impact on workers’ rights, [Primark] has a lot to answer for,” says Ilona Kelly, campaigns director at Labour Behind the Label, a UK group that pushes for stricter standards. And tragedies still occur. In September the rooftop canopy of a Pakistani factory that produced for Primark and other brands caved in, killing four people. Primark says it’s investigating the accident and providing support.

Ultimately, concerns about workers’ lives haven’t deterred customers. Primark’s sales soared 22 percent the year of Rana Plaza and have climbed an additional 25 percent since, reaching £5.35 billion annually. Weston is emphatic that Primark’s prices don’t come from cutting corners on labor. “We buy clothes from the same factories that everyone else buys from,” he says. “Everyone.” Instead, he says, undercutting competitors is basically a matter of volume—selling low-margin items many, many more times.

There are other tricks, too. When clothes get delivered to a Primark store, the cardboard boxes go right back onto the truck — to return a few weeks later as cheap-and-cheerful brown paper bags. Because items sell so fast, deliveries often go straight onto the floor, meaning stores have relatively small stockrooms and more square footage for selling.

An executive at a company that works with Primark, who asked not to be identified discussing a client, says the chain has stronger relationships with suppliers than its rivals do. Primark has built a reputation for early, aggressive orders of styles its buyers think will trend, and for sticking with them, the person says. In an industry where retailers cancel orders that are already on freighters and force suppliers to take financial hits when product doesn’t sell, that edge gives suppliers the confidence to cut better deals for Primark, the person explains. When the company’s daily sales analysis shows a need to change direction, it marks down and moves on.

In the US, Primark is trying to beat the competition on price. A basic women’s outfit can be bought for $14, compared with $23 at H&M, according to analysts at Bernstein. Primark should expect competitors to respond with steep discounting and fresh products, WSL’s Liebmann says. Already smarting from price wars, she says, US retailers “can’t afford to lose that extra trip or that extra spend.”

For Primark’s US flagship, it would have been hard to choose a venue more evocative of the promise and peril of selling clothes in America. The Boston store occupies the Burnham Building, a Beaux-Arts confection known to generations of New Englanders as the home of Filene’s. The department store was a Boston institution throughout the 20th century, until it lost market share to larger competitors. In 2005, Filene’s was swallowed by Macy’s, which shut the Boston store, leaving the building vacant. Primark came along in 2013 as it scouted locations for its US debut. While the “received wisdom was that an unknown brand needed to go to Manhattan,” Weston says, real estate prices drove the search to Boston, with its bargain-hunting students and historic links to Ireland.

The huge store is the purest distillation yet of the Primark philosophy, with a few tweaks for local sensibilities. Facing busy Summer Street is a 1,000-square-foot boutique, known as the trend room, showcasing the latest outfits, which change every week depending on what buyers think is in. Up the escalators, one of the first things shoppers see is a broad display of workout wear, which in European stores is something of an afterthought. That was a concession, Franks says, to Americans’ propensity for wearing yoga pants all day, a habit Europeans find bizarre.

The store is a finely tuned machine designed to encourage Instagramming. There’s Wi-Fi everywhere, and the #Primania hashtag is inscribed on mirrors in fitting rooms big enough for two — friends can pile in together, phones out, snapping away. Deep couches with charging ports are placed at strategic intervals, including one set up as a man cave for bored boyfriends, with ESPN on a TV.

Shortly after the flagship opens, Julianne Delapp, 26, and her sister Caitlyn, 28, finish a major expedition for fall wardrobes. The sisters are among a steady flow of back-to- school-shopping students, parents pushing strollers, and office workers from nearby skyscrapers — a sizable crowd for a Friday afternoon. “I haven’t shopped this much in years,” Caitlyn says, struggling with two enormous bags stuffed with pants, tops, and skirts, all bought for about $150. “It’s so cheap you can almost buy it by the pound.”

By Matthew Campbell; editor: Nick Summers.

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