Should Primark consider e-commerce following its zero-earning month?

Jessica Paige 21 April 2020 (Last Updated April 21st, 2020 17:27)

UK clothing store Primark made £0 this month during the Covid-19 coronavirus lockdown, as opposed to its average £650m per month. Retail Insight Network took to Twitter to see what experts and consumers think about the future of e-commerce for the company.

Should Primark consider e-commerce following its zero-earning month?
“Primark’s post-lockdown success will be short-lived.” Credit: Hazel Nicholson on Flickr

Primark, which closed stores on 22 March, has also reduced its clothing stock value by £284m and furloughed 68,000 staff across Europe.

With stores being forced to close during the UK lockdown, Primark has been unable to sell any products due to its lack of online store or click-and-collect services. In the past, the store has justified this by saying it would not be able to keep prices low if home delivery were an option.

However, is e-commerce now a realistic possibility for the retailer? Retail Network Insight took to Twitter to see what experts and consumers think.

Exposure Ninja digital strategy manager Dale Davies tweeted: “It’s highly likely that within several boardrooms over the past four weeks, the sentence ‘why aren’t we online already?’ will have been spoken by multiple stakeholders.

“Post lockdown, we’re going to see many stores go online, if they haven’t already put that into motion, especially Primark.”

In his tweet, Davies added a graph displaying google search term popularity for online retailers. Of those listed, Primark has seen the most interest over the past month, which has risen dramatically since the beginning of the lockdown.

E-commerce expert Dan Barker said: “Primark have dabbled a tiny bit with e-commerce, selling via ASOS, etc., but they’ve never really pushed into it. Ultra-low prices, with margins that may be eaten by shipping and returns, but they could definitely make it work.

“John Lyttle – their COO for many years – is now group CEO at Boohoo, which has a similar model in some ways and does incredibly well via e-commerce.

“I think it’s very likely they will relook at e-commerce after this, likely with a cut-down range online. They hired a strategy director with a long background in e-commerce a couple of years ago, so I’d suspect plans were already there at some stage, if not already in motion.”

Considering Primark’s perspective, Twitter user Gary Vincent Mead said that the store would not invest in e-commerce “…without raising prices. The CFO of [Primark owner and diversified business group] Associated British Foods (ABF) said as much last year, quoting that one third of clothes bought online are returned and the shipping on some basic items would cost less than shipping.

“Personally, I think there will be a post lockdown surge of people going to brick and mortar stores to overcome the isolation from lock down. Ill advised? Sure, but probably inevitable.”

Primark’s outlook following the pandemic

According to news source the Financial Times, Primark owner ABF has said that it has plenty of cash to see it through the Covid-19 coronavirus pandemic. The outlook for Primark, however, is uncertain, with the ABF group deciding to note declare an interm dividend.

On the topic of reopening stores, ABF CEO George Weston said: “We must make our Primark stores safe for our staff and our customers, even if that means ensuring there are fewer people shopping at any one time and so accepting lower sales at least until the remaining risk is minimal.

“In time we can rebuild the profits. We can’t replace the people we lose.”