Katie Smith

June 13, 2013

The online race to retail Primark

ASOS & Selfridges have both started stocking Primark products. Should Primark venture into the highly competitive world of e-commerce? EDITD investigate.

  • Primark at ASOS - EDITD
  • Denim Studio Selfridges - EDITD
  • Market Insight Primark competition - EDITD
  • Market Insight Option Counts Primark competitors - EDITD

Last week, to great fanfare, Primark joined the world of online retail. Their trial with ASOS, who currently hold stock of 68 products and are set to double the offering, is the first time Primark products have been available for purchase online, allowing access to consumers outside of the 8 countries they have brick and mortar presence in. It would seem that this is a dream collaboration of mass market, fast fashion online + offline expertise. Yet in the same week, Selfridges, who aren’t known for low-cost product or ‘disposable’ fashion, added Primark denim to their online offering too. Have Selfridges and ASOS identified a price point which is under-represented online? And with their 7% like-for-like sales up in the last six month, is now the time for Primark to create an online presence of their own?

Primark as wholesaler
The first Primark products arrived on ASOS on the 3rd June, followed the next day by Selfridges’ offering. There have not yet been any sell-outs, but given the hype around the collaborations, stock levels will likely be high. Selfridges currently carry 25 styles of Primark’s women’s denim priced £7-£13. This is a stark contrast with the rest of their denim collection, for which their highest price-point is £11,000 for their bespoke fit, Paige Denim diamond-encrusted jeans. The bulk of Selfridges’ women’s jeans offering is priced £230-£240, with stocks highest of J Brand jeans. Selfridges are perhaps aiming to become a one-stop shop for denim (evidenced in their committing solely to Primark’s denim offering) but aligning themselves with this price point may be detrimental – we shouldn’t forget the story of department store rivals, Marks & Spencers, who in trying to appeal to everyone, lost their loyal consumer base.

The ASOS pair-up makes a more logical fit. In the month prior to the Primark arrivals, ASOS dropped 5,034 new products into store, ranging from £2.50 – £499. The bulk of their offering sits between £18 and £50, with the average price being £43.40. ASOS’s selection of Primark stock spans £4-£22, with an average price of £10.50. That may be a 75% reduction in average price, but it seems a more natural merge than with Selfridges. After their own line, ASOS’s most successful brands (as based on full-priced products which dropped and were also restocked in the 3rd May – 3rd June period) are River Island, Motel, Paper Dolls and Warehouse, whose customer profiles differ little from Primark’s fashion-led consumer. By comparison, Selfridges’ 3rd May – 3rd June ‘most successful’ brands are rather more high-end, including Atkinsons (ties), Tiger of Sweden, Maison Michel, Erdem and Ralph Lauren.

Primark to e-tail?
So it makes sense for ASOS to carry Primark stock, and we’ll continue to analyse how that sells for them, but is it time for Primark to have an e-commerce offering of their own? While the rest of the high-street has poured money into omni-channel offerings, Primark have single-mindedly focused growth on new bricks and mortar stores, now standing at a total of 257 stores in 8 countries. They are without a Twitter presence, although their @PrimarkJobs account has over 15,000 followers who are ready to be engaged, and one would assume, are not all looking for work. Their Facebook page has nearly 650,000 followers who engage with the retailer posting outfit suggestions and new products – yet they can’t purchase those products until they’re next in store. What’s putting Primark off?

The competition
We dug deeper into the £4-£22 price spread that ASOS saw potential from Primark in, to reveal the biggest online retailers of this price point; Matalan, Target, New Look, Forever 21 and JC Penney. These would be Primark’s biggest online competitors, so it would be wise to have a thorough understanding of what is and isn’t working for these retailers before entering the market.

Strategy Decisions
Primark’s high product turnover and adoption of fast lane trends may not be the best route for optimising their online profits – controlling stock levels and uploading products at an ASOS rate is a business model of its own. Primark either needs to continue wholesaling to other online retailers or, until they have made a bigger commitment to e-tail, simply have their core offering online, those products for which they are able to do repeat orders on without risk and would require little discounting. A logical step in this direction would be to blend knowledge of the core items that sell well in-store, with the most restocked styles at the five retailers we identified as Primark’s online competitors. Looking at full-priced products dropped and restocked in the May-June period at those retailers, we can see that at Primark’s price-points, jewellery is the best-selling category, followed by dresses, tops, footwear and skirts. Primark’s ability to manufacture lower-priced garments could mean there is room to grow in categories that their competitors aren’t able to stock so highly, such as trousers, outerwear, denim and shirting.

The recent Rana Plaza tragedy in which 1,000 garment workers lost their lives, should not be overlooked in this story. If Primark had a greater online presence during the tragedy, one would hope their followers may have been more vocal in their disapproval of such practices. A global e-commerce audience would put more eyes on the brand than ever before, and Primark needs to ensure their practices are fair and safe before this happens. Being the first retailer to acknowledge a supplier of theirs was based in the Rana Plaza, the first to commit to a compensation plan and the first to sign the Accord on Building and Fire Safety are all encouraging signs that change is at hand.

Careful plans must be laid before launching any e-commerce presence, and by Primark’s delayed arrival online, it seems they’re making them. Bricks & mortar may, for now, be secure for the fast fashion retailer but their omni-channel high street rivals will expand around them. Consumer shopping habits have changed – fashion’s followers (and especially the newness-hungry mass market customer) demand interaction that only a considered online presence can achieve. Being too late to the game could be fatal. Primark, we hope you’re doing your homework!