Feb 13, 2014
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The key to Primark's strong growth in Europe

Feb 13, 2014

Since Primark's beginnings in 1973, the Irish budget fashion retailer had plans to conquer Europe. The opening of its first store in Marseille last December attracted more than 1000 visitors on day one. This success mainly comes from its positioning as a low-priced fashion retailer, according to an analysis by Kantar Worldpanel, released at its Fashion Morning conference.

Everywhere in Europe, Primark has won over its target market of under-35, cutting across all social classes.

With an average item price of 4.5 euros — and a shopping cart total two times lower than its main competitors in Europe — plus cutting-edge fashion collections, Primark has figured out how to become one of the favorite brands of consumers under 35.

But Primark's cheap prices are not the only thing behind the success of the brand owned by the Associated British Foods group. Its ability to refresh its image in each of its European markets is also contributes to its growth.

In England, Primark is seen as a discounter. But the Spanish view it as a major chain store. And in Portugal, the retailer is considered a fashion expert. So far this tactic has enabled the budget fashion giant to multiply its store openings without saturating its market for consumers.

Moreover, the chain's steady growth is also because its customers in Spain and Portugal are buying twice as many items than at Primark's main competitors. In England, they buy "only" one more item than the amount of their normal average shopping cart but the approach is the same: consumers make the most of a trip to Primark because its stores are rarely in the city center. The deep-cut prices encourage them to consume more.

In terms of advertising and communication, Primark shines for its talent to create a buzz with few resources. Targeting young consumers, the Irish retailer essentially relies on social networks to get out the word, such as with contests and store opening announcements. It has managed to create a real community, without very few costs.

If in fact Primark's success story seems flawless, it could have its limitations, says Kantar Worldpanel. In this digital era, Primark still does not have an online store, an amazing strategy, given that all major retailers are opening up to the real growth driver of cross-channel sales.

Another problem might come with a rebound of the Spanish and Portuguese economies and its consumers possibly losing interest in products at discount prices. Also the chain's target market of under-35 is shrinking in France and might not be as dynamic as initially forecast.

Currently Primark's store network now boasts 268 stores with some 891,000 square meters of retail space. Last September the chain announced annual sales up 22% compared to a year earlier.

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