At the beginning of January, the Christmas buying fever has died down and the sales have not yet started. In the shops of the gigantic Créteil-Soleil shopping center, consumers are in no hurry to take out their wallets, undermined for months by rising prices. Except in one of them which valiantly resists desertion. After strolling through the three floors and the 8,000 m2 of the store, families and teenagers on the move come out with huge kraft bags filled with T-shirts, leggings, bodysuits or candles at reduced prices and branded… Primark. “The morning is however calm”, jokes Jean-Edouard Rouquerol, the manager of the store, the largest of the Irish clothing brand in France, where 550 employees are busy unloading the 70 pallets received on average each day, highlighting the must-haves of the moment – sportswear for New Year’s resolutions and coats at the start of the year – and cashing in on customers. Inflation that abuses the purchasing power of consumers and forces them to reduce certain unnecessary expenses such as clothing? Not even afraid ! “Traffic remains very good in store: we are doing well,” rejoices Christine Loizy, General Manager France.
In a devastated French market, at a time when some of its competitors are mired in an interminable crisis, Primark is an exception. Since the opening of the first store in France in 2013, the chain has attracted consumers like a magnet. In less than a decade, it has managed to become the eighth largest clothing distributor in France with just 21 stores – the first is Kiabi, which has more than 300 – and to nibble away 3% of the market share by volume in a highly atomized market. The Celtic giant, which only decided to export its model outside the green Irish and British lands in 2006, has become the world’s third largest ready-to-wear group with its 7.7 billion pounds sterling in turnover, behind Inditex (owner of Zara) and H&M, being present in only 15 markets.
In France, the company even affords the luxury of launching an “ambitious growth plan” at a time when some brands are rather following the opposite trend… 100 million euros of investment are planned for the opening of seven new shops, in Brest, Saint-Etienne or Grenoble. The kick-off was given in Angers last December. And as always, the launch of the store was an event. 2,500 people rushed from the first day of opening to fill their wardrobes. Some of them even reserved hotel rooms for the occasion! “During my first store inauguration in Marseille, I was amazed by this phenomenon: we were overwhelmed for the first few weeks by a human tide and we had to bring in reinforcements from Spain, Ireland and England. ”, recalls Christine Loizy. As a result, shopping center owners, town halls and… Pôle emploi roll out the red carpet for them.
Volume and margins compressed to the maximum
The magic formula for this success has been the same since the birth of the brand and was concocted by Arthur Ryan. This tie salesman decided in 1969 to open a low-cost clothing store called “Penneys”, a revolutionary idea at the time. The bet appeals to the Weston family, owner of the agri-food conglomerate ABF (Associated British Foods), who decides to inject money into it. “Their recipe is to sell huge quantities very cheaply to crush costs, and they’ve managed to take that reasoning to a level of radicalism that was unimaginable: their biggest stores make over 100 million euros in turnover, it’s stunning”, deciphers Cédric Ducrocq, CEO of the consulting firm Dia-Mart. Volume therefore, and margins compressed to the maximum. The budget for traditional advertising is reduced to the strict minimum, a poster a few days before the opening of a store. To promote itself, the company prefers to rely on word-of-mouth and social networks. At a time when all its competitors are rushing into e-commerce, especially since the Covid crisis, Primark refuses to do so: too expensive. The brand has nevertheless launched a “click & collect” experience in England, but remains firmly attached to the in-store experience. The result of this low-price policy: households who have seen their budget nibbled away for years by the increase in their constrained expenses are rushing to the shops to continue to fill their wardrobes.
Clothing at low prices, okay… but there’s no question of skimping on the fashion side: the product must be attractive and not look “low cost”. “They have succeeded in imposing a dream model for the consumer who can find fashionable basics there and with reasonable quality in relation to the price”, underlines Gilles Cohen, head of Klartis Consulting, a consulting firm. strategy consultant specializing in fashion and luxury distribution. When reviewing the products, Paul Marchant, CEO of the brand, combs through all the details and even gives his opinion… on the location of a button or the color of pants! Ditto for the in-store experience. “Unlike other discounters, these are not ugly sheds, but large entry-level stores: the concept is sober, but not sad”, describes Cédric Diamart. Inside these caves of Ali Baba of several thousand square meters, everything is done to provoke a desire for compulsive shopping. “Consumers find themselves in these shops like children in a confectionery store: they want to buy everything!” exclaims Gilles Cohen. “We are merchants first and foremost: we seek operational excellence and we want to offer our customers a fun and entertaining experience,” describes Christine Loizy. Above all, the company chooses the best locations for its stores, even if it means giving up certain areas until they have found the rare pearl… like Paris, which will still have to wait before seeing a Primark store open there.
The Chinese juggernaut Shein, a threat?
Primark’s success does not prevent it from being confronted with a number of challenges, and in the first place inflation. If the customers did not desert the shops, the company had to absorb an increase in its costs with the explosion of the price of cotton and transport. First decided not to increase its prices, Primark had to comply with the exercise… But not entirely. The prices of a large number of references were blocked, in particular on products intended for children, and the sign had to trim its already thin margins a little more. “Their model condemns them to volume in order to continue to grow, and since they cannot really afford to increase prices to pass on the increase in costs, this additional growth is likely to be less profitable”, emphasizes Gilles Cohen. A difficult moment which follows an already complicated Covid period for the brand which could not catch up on online sales like some competitors. “But in the midst of these storms, we have an advantage: we are backed by a family group with solid backs like ABF”, tempers Christine Loisy.
The brand is also one of the symbols of ultra fast fashion, this fashion regularly singled out for its environmental footprint with its “disposable” products and designed on the other side of the world, and had been caught in the eye of the cyclone when the Rana Plaza, a textile factory, collapsed in 2013. “Like all other players in the sector, Primark had no choice and had to grapple with these fashion issues sustainability,” emphasizes Gildas Minvielle, director of the Economic Observatory of the French Fashion Institute (IFM). As a result, a roadmap on environmental and social issues was launched. For example, the chain has committed to ensuring that all of its products are made of materials from sustainable or recycled sources by 2030. Another challenge to be met: the brand is in the process of being competed by the Chinese juggernaut Shein which floods the web with clothing at bargain prices and seduces buyers, despite its catastrophic environmental and social record. To the point of overshadowing him? “I am not sure that the Shein model can last in the long term, because of the cost of deliveries, the logistical headache and the social and environmental issues, which could be called into question from a legislative point of view, but also in the minds of consumers,” says Frank Rosenthal, retail marketing expert. Enough to give hope for more good years for Primark.