The rise and rise of Primark

How a small Irish retailer came to dominate the UK high street

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Primark Store opens Flagship Store - London

Not many people have heard of Associated British Foods, but nearly everyone has heard of Primark. The fast-growing discount fashion chain is owned by ABF, and after taking the UK by storm has its sights set on the rest of Europe.

Primark – described by City analysts as ABF's "jewel in the crown" – has gone from strength to strength in the face of the decline of high street stalwarts and could be worth £19 billion, says investment bank UBS. How did the 'cheap and cheerful' retailer make it thus far from its humble Irish origins?

When Primark opened at the Marble Arch end of London's Oxford Street in 2007, thousands of people queued outside the store and as soon as the doors opened there was a stampede and staff were injured.

The retailer took no chances at the opening of a second 'posh Primark' shop at the other end of Oxford Street in 2012 – bosses cleverly decided to open an hour earlier than advertised to avoid a repeat of the near riot. They also tried to move the brand more upmarket – the four-storey flagship store has exposed brick walls and giant LED screens; 111 cash tills and 92 fitting rooms.

The 268-store chain is taking its winning formula to continental Europe. It launched in Germany, Spain, Portugal, Belgium, Austria and the Netherlands in recent years and is now busy trying to sell its cut-price T-shirts and skinny jeans to the fashion-conscious French, after opening in Marseille in December.

Origins
Primark started out as Penneys in Ireland (where it still trades under that name). It first opened its doors in Mary Street in Dublin in June 1969. Within a year, four more stores were open, all in Greater Dublin. Expansion was rapid after the company moved to England in 1973.

Primark capitalised on the new fast-fashion trend that started in the 1990s and the ability to produce clothes cheaply in Asia where garment prices dropped dramatically. It grew quickly by snapping up stores from other chains over the years, for example Woolworth, C&A and Littlewoods in 2005. In 2006, it ventured into Spain (Madrid) – its first foreign foray from its Irish/UK base.

As TimeOut wrote over a decade ago: "You get what you pay for in terms of shopping experience - the queues are long, the staff indifferent, the rails chaotic, and demand for changing rooms so high that people try on clothes on the shop floor. But there aren't many shops where you can fill enormous paper bags full of clothes and leave with change from a £50 note."

Shopper Kate Rushton hit the nail on the head in the comment section: "Cheap and cheerful. Do not bother with the changing rooms though. Just return clothes the next day! This is my shop to go to if I am having a bad day. I know that it won't hit my credit card too much!!!"

Tactics
Primark is to fashion what Aldi and Lidl are to food. Discount chains have emerged as beneficiaries of the recession, as many – even middle-class shoppers – trade down. Even as the economy is recovering, Primark is still taking market share from other retailers and has hailed a general shift to "value" clothes and fast fashion.

The chain is able to offer bargain prices because it keeps costs to a minimum (for example, by doing all its marketing in one place – London – and limiting numbers of sales staff on the shop floor). So even though its clothing is made in the same garment factories that rivals use, Primark can keep prices lower but still make a profit.

Primark prides itself on being "right on the bubble in terms of fashion and what people want to buy" by getting its buying right and investing in large, bright shops.

Going abroad
The discount retailer has plans to add a million square feet of shop space this year, mostly in Britain, Spain, Germany, France and the Netherlands. It now has the same number of stores (38) in Spain as in its country of origin, Ireland. It is up against two retail giants – Spain's Inditex, which owns Zara, and Sweden's H&M.

"We're really at the very early days of expansion in continental Europe," George Weston, chief executive of parent company ABF, said in December. Primark only has 11 stores in Germany - H&M's biggest market - against 162 in the UK. "One day we will have a hundred or more."

UBS analyst Alan Erskine reckons Primark is still in the early stages of its growth story. The retailer recently opened its first store in France – albeit not in chic Paris, but in the south, Marseille, which is more down to earth. It does have deals to open three stores on the outskirts of Paris by this spring. Primark says it always trials various locations when entering a new market.

The retailer has come under fire in recent years after reports found poor working conditions and alleged exploitation of children at its suppliers in India and Bangladesh. It has since sacked several Indian suppliers, and adopted a supplier code of conduct which includes the UN Charter and is audited by third parties. Last year a building collapsed near Dhaka, the capital of Bangladesh which housed garment factories that made clothing for Primark and other European retailers. Primark paid compensation and emergency aid to the victims and vowed to review the safety of the buildings where its clothes are made. None of this had any lasting impact on the company's runaway success.

Why shoppers love it
Primark appeals mainly to young women, who just love rummaging around for £3 T-shirts, £2 bikinis and £10 shoes. It is known for trendy fast fashion, unbelievably low prices and a lot of choice. Retailhysteria.com says the shopping experience at Primark "stimulates a part of our brain which 'wants to have a good deal, is competitive, does not want to miss out'."

Retail guru Mary Portas is not a fan, though, lambasting the retailer for "an unsettling shopping experience" and "bastardising" good taste. At its biggest shop, the 155,000 sq ft behemoth in Manchester, her overriding sense was one of urgency and panic, she wrote in 2011.

"Women were wandering around with piles of clothes draped over their arms, scrambling to find their sizes and discarding on to the floor anything that didn't make the cut. This is disposable fashion at the sharp end, and the whole effect was so unsettling that I barely noted any particular products."

"Prices this low mean people buy far too much, and all the evidence I've read suggests that that is good for no one but the shareholders. And what appears to be value may not be so if the product you're buying soon falls apart."

But consumers don't seem to mind. Portas wondered whether Primark was past its prime. It looks like she might have been mistaken.