Apparel discounter Primark has shunned e-commerce all the way through its trading history. Growth and profitability have been achieved without the need for complex omnichannel operations and a home delivery network. Now with the coronavirus pandemic forcing owner Associated British Foods (ABF) to close all its stores, the reality of not having a viable alternative sales channel must be hitting home at the Dublin head office.
Rigid business model
“Primark has always said that the ecommerce model simply doesn’t work for them,” says Chris Field, chairman of Retail Connections and CEO of Fieldworks Marketing. “The costs of home delivery and the expensive logistical issue of returns have kept the value-led business purely bricks and mortar. But in troubled times customers expect retailers to meet their needs in other ways. While the likes of Next, Topshop, New Look and River Island can advise customers to ‘switch online’ for their fashion and accessories as we head into spring and summer, Primark simply can’t. If ABF wants to save sales, the management has a big decision to make.”
Mass closures for safety
Today (23 March 2020) it was announced that Primark’s 189 UK stores have closed “until further notice”, as demand drops due to social-distancing during the coronavirus pandemic. The budget fashion retailer has already closed stores accounting for 20% of its selling space globally, and is now preparing to close its entire store estate.
Primark said it wanted to protect the health of employees and customers. The fashion chain’s CEO, Paul Marchant, said it faced “unprecedented, and frankly unimaginable times”.
Knock-on effect to suppliers
It has also emerged that Primark has cancelled all new orders in anticipation of plummeting demand, a huge shock to suppliers.
On Twitter, Primark has said: “With the health and welfare of our employees and customers at the front of our minds we have made the decision to close our stores in the UK, until further notice. A huge thanks to all our employees, customers, suppliers and partners for their continued support.”
Ecommerce boom will benefit some
The Covid-19 outbreak in China inadvertently created a boon for ecommerce as shoppers stuck at home bought their goods online. “While China is famously more mature than Europe and the US when it comes to ecommerce infrastructure and consumer behaviour, all the signs suggests that Western retailers with robust omnichannel operations and good contingency planning are in a strong position in these testing times,” says Chris Field.
“All retailers will be using the next 12 weeks to think even more deeply about their on/off line mix, because striking the right balance for consumers that move seamlessly between channels will be the next big challenge.”