Is Your ‘Secret Sauce’ still up to taste?

Primark made a virtue out of bucking the digital trend which has been rapidly growing without them.

They climbed the retailing ranks with a laser-focused business, modelled on discount pricing in physical stores with simplicity and efficiency in-built. 

Then cataclysmic events hit the world; forcing brick and mortar into lockdown and scattering the retail pack. ASOS and Boohoo are basking in +40% sales growth, but Primark’s myopia has wiped out more than ￡1 billion, which they say could lead to retail price increases.

A lesson learnt you might think – it seems not for Primark. 

Those with a degree of digital maturity reacted faster than those unconvinced of the merits of transforming – unfortunately for Primark, digital naivety means they might never realise their full potential. 

__________________________________________________________________________Julian Grindey is an energising and inspirational MD/COO/Trading Director, skilled in leading profitable change and transformation, inspiring strategic vision and commercial delivery and in driving retail and digital growth. Proven in delivering exceptional growth from turnarounds and scale up, in key omni-channel operators, including private label and international product sourcing strategies.

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Primark actually risked alienating those customers who expect to shop online. Those without a digital platform find their customers discovering new brands and ways to shop, ask Debenhams and the others buried in the retail graveyard. 

Citing cost and complexity, the reasons claimed for their inertia are: 

• ‘Perceived’ economics- the handling costs of items under a certain price are more than the income from selling them – on the face of it a fundamental problem for a low-price propositions like Primark. 
• Complexity- they lack a gripping website with a highly functional “back end” that links inventory, supply chain, CRM and ERP systems. 
• Separate distribution warehouses- most retailers find themselves setting up separate distribution to handle online goods and returns – all add to costs.
• Product returns- High rates of returns rising to between 30% and 70% in the fashion world can wipe out any profits for a retailer, with their wafer-thin margins the handling costs might outweigh commercial benefits. 
• Integrating store and e-commerce channels - is a major task to re-model the IT infrastructure to accommodate an online business. 
•  “Cul-de- sac culture”-they trialled selling through online retailer Asos a few years ago. It didn’t work so they concluded it won’t work for them.

The irony is, Primark has procured most of the technology components they need to open up an e-commerce channel which, utilised correctly, would preserve significant amounts of revenues and their consumer advocacy.

Their fears are logical and justifiable but their disregard to their customer and their lack of efforts to address these challenges are far from it.  

There are 9 creative concepts that Primark could deploy to make digital work profitably for them:

1.     Minimising returns mindset– a good returns policy can attract customers, increase sales, and reduce returns. Consistent sizing and fit standards, combined with clear website imagery and descriptions, can minimise the costs of handling returns. 

2.    Subscriptions– command loyalty through increased activity and delivery saver schemes. Data collection and personalised communication can also help drive sales and customer life-time value. 

3.    Minimum spend–a delivery charge of say ￡4.99 would encourage the value savvy shopper to fill a basket before checking out. A minimum spend threshold for free delivery could drive up customer basket building and life-time value. 

4.    A Complimentary online proposition– with a curated range that shares the same value DNA but at a higher end price positioning in categories that will complement the in-store proposition can re-calibrate the commercial model – shifting it to profit.

5.    Financial services– a credit offering is a sales and profits ‘game-changer’, furthermore it can help retailers collect data and generate insights to build a long-term customer relationship.  

6.    Friends of Primark– marketplace fulfilment, where goods are shipped directly from the vendor, bi-passing the retailer, circumvents the supply chain and removes complexity.

7.    Mergers and acquisitions- there are many fledgling digital businesses that could offer Primark an online kick-start to benefit the millions of loyal Primark customers.

8.     Future-proofing operations and supply chain– will also help protect their relevance and defend against value outlets like Boohoo, ASOS, JD Sports and H&M, providing a financially viable avenue to broaden customer base, shift concessions, and retain market position.

9.     Temper negative sentiment- an online outlet can help avoid a negatively impacting narrative and remain relevant to even newer customer groups.  

Conclusion: 

Primark is right to be cautious andprepared to stick two fingers to conventional wisdom inorder to protect its winning business model. 

We need outliers and mavericks who see things differently and are prepared to beat a different path, but they also need to see things through the customer lens. 

They have to be able to differentiate the sound of feedback from an urgent signal to change. 

On digital, Primark are missing a very loud signal! They could be creating a very sour taste amongst their shareholders and customers. 

Time to tweak the recipe for their ‘secret sauce’?

Julian Grindey can be contacted on 07969 397916 or at [email protected]