It’s no surprise that Primark failed to find a favourable route to a sustainable and profitable ecommerce model.
However, what did come as a surprise to me is just how hard of a kick in the crown jewels they’ve had to ordeal because they failed to embrace selling online or explore other sales channels amidst the pandemic.
According to Retail Gazette, Primark are sitting on a stockpile worth approximately £1,500,000,000 (£1.5bn) and only a single channel to leverage in order to shift it; the high street.
The thought of roosting on such a gargantuan stock pile (and just how they’d get it sold) genuinely prevented me from getting any sleep last night, so I decided to switch on the beside table light and do the math…
Re-opening their stores
The high street will look incomparably different when Primark chooses to re-open their stores.
To help shift some of their stock, there’s rumour spreading that Primark will bust out a huge sale to lure shoppers and devoted Primarni fans from their sofas and into shopping centres, but it’s unlikely to be enough.
Social distancing measures will be in full effect and high street shopping hasn’t exactly been high on the lockdown priority list has it?
As a result, simply blowing the cobwebs off their stores and opening the doors is doubtful to put any tangible dent in to their stockpile.
But, in any case I decided to do the maths to find out how many customers they’d need and what a socially distancing queue would look like in order to shift £1.5bn of stock.
So, let’s do the maths..
Assuming each customer was to spend £50 in store, that would mean they’d need an average of 30,000,000 (30m) customers to run through their doors. Ouch.
Now, if all of these customers were to join a single, socially distancing, good ol’ British queue (with each person spaced two metres apart), that would mean the queue would span 75,000,000 (75 million) metres in length..
That translates to a queue of customers almost 2x the Earth’s circumference, which is 40,075,000 metres in case you were wondering.
Now I’m no professor of applied physics or mathematician, my workings out are super simple (it was 1.30am, cut me some slack) and of course they have more than one store, but yeah, that’s still one hefty-ass, socially distanced queue.
Back to the real world, that’s one huge problem for Primark to have to wade through over the coming months.
Just how can they physically turnover so much stock with COVID-19 sucking all of the life out of the high street and social distancing measures severely limiting the number of customers in stores at any one time.
Primark’s strategy relies heavily on the FMCG model (fast moving consumer goods) or in other words; stack ’em high, sell ’em fast and sell ’em cheap. They’ve certainly got the stock so that’s not the issue, but if you’re limited on the number of customers able to breeze through tills, that’s going to hurt. Will they sink, or will they swim?
Will Primark weather the storm?
It’s not yet clear whether they’ll be able to cope with the increasing pressures that the pandemic is placing them under.
Their sales have come to a complete halt, yet they’ve still bills to pay and other associated business costs too (aside from the stock). Then their worries are further exacerbated by only having a single sales channel to squeeze this mother load of product through.
With international Summer holidays looking less likely by the week, Primark’s ‘suitcase filler’ rush is also likely to be cut short.
Whether you believe or agree that ecommerce is now the way to go for Primark, there’s no doubt that enabling the ability to trade online would potentially ease some of that immense pressure dubbed COVID-19.
However, what is clear is by not having additional sales channels at their disposal, they’re constantly losing market share to other fashion and apparel brands that are able to sell online.
What’s also increasingly worrying for Primark, there’s very little they can do about this until at least one of the following gets the green light:
- Their stores can safely reopen AND customers have the desire to step through their doors
- They leverage ecommerce
- They find another appropriate sales channel to help close the gap
Whatever happens, in order to survive, Primark are going to need to pivot and do so sharpish.
They need to make their stores safe for staff and customers and if they do decide to explore other sales channels, time is absolutely of the essence here.
Will Primark be forced to up their prices?
£1.5bn worth of stock isn’t something you can just make disappear at the back of a few store warehouses.
You’re going to need to find a seriously generous space (or several generous spaces) to keep it contained.
Then there’s moving that stockpile around and allocating it to the various points within their supply chain.
That costs money, time, energy and cuts even deeper in to their already paper-thin margins.
As a result, Primark may be forced to increase prices. A sobering problem when you consider that a core USP of the brand is ‘cheap fashion’.
I won’t lie, there’s no better feeling than throwing items into a basket without having to even check the price; feeling like a superstar until you remember you’re in a Primark.
Surely, selling at a loss cannot be an option here. They’ll have to choose between potentially compromising why so many of us love Primark in the first place (‘cus it’s cheap), or upping their prices and potentially risk losing their unique selling point.
It’s time for Primark to get creative
It’s time for Primark to get creative; Heinz have launched their direct-to-consumer ecommerce site with Heinz To Home, Greggs have plastered their pasties across Iceland stores and Aldi have joined forces with Deliveroo.
Your move, Primark. We’re all watching!
To throw them a bone, the world cannot get enough facemasks right now, Primark aren’t short of material and margin is likely to be much greater in facemasks too. I’m just sayin’…
Lastly, let me leave you with this…
Shopify CEO, Tobias Lutke consistently warns shareholders that he will sacrifice short term revenue for long term value. Maybe it‘s time for Primark execs to approach business with that same thought process, or is it now too little, too late? 🤔
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