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Penneys' online trial could bring 'incremental' growth, but its future still lies in bricks and mortar

The retailer has just opened its biggest store in the world in Birmingham.

Image: PA Wire/PA Images

A MOVE BY PRIMARK into click-and-collect services could drive “incremental” benefits  but bricks and mortar retail is still the company’s “cornerstone”, according to Davy. 

Paul Marchant, the chief executive of Primark, recently told analysts that the retailer was looking into click-and-collect – where goods ordered online are collected in-store.

The fashion retailer, which is owned by Associated British Foods, has been fending off speculation about an online offering for years and has been slow to move into online retail. 

In a research briefing, stockbroker Davy said while click-and-collect was “on the horizon”, driving footfall and boosting sales “will remain the cornerstone of strategic decision-making”.

It added that “even when rolled out, a click-and-collect offering will only drive an incremental benefit for Primark” due to lower margins, relatively small volumes and only selected stores and ranges making it available.

“Of the top-20 retailers, which hold 70% of the UK market, Primark is the only one with no online presence, yet it has achieved the largest market share gains over the last decade,” Davy said.  

While this is encouraging for the brand, management has said that some form of e-commerce would be on the agenda in the coming years, Davy added. 

World's biggest Primark store opening Source: PA Wire/PA Images

Birmingham megastore

Primark recently opened its biggest ever store in Birmingham. The new branch is four times bigger than its predecessor around the corner. It includes three café outlets, including one Disney-themed café, a barber shop and a beauty salon. 

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These in-store concepts will “enhance the customer experience, driving footfall, extending dwelling time and increasing sales densities,” said the Davy report.

Refurbishments, refittings and extensions are the way of the future for the Primark brand, according to Davy. In 2019, the retailer is planning to open 14 new stores. 

“We can expect to see further in-store services in selected refurbishments and new stores in the coming years,” Davy said. 

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Written by Zuzia Whelan and posted on Fora.ie

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