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June 20, 2022

Primark in Click & Collect launch but experts want greater multichannel focus

UK value fashion retailer Primark will introduce a Click & Collect service in the UK towards the end of the year, after witnessing a surge in traffic to its new website.

By Hannah Abdulla

The news of the Click & Collect trial comes as Primark owner Associated British Foods (ABF) reports an 81% rise in retail sales for the third quarter ending 28 May to GBP1.7bn, (US$2.09bn) which it attributes in part to higher footfall in stores thanks to a return to office working.

Digital Focus – Click & Collect

Primark launched its new UK website in April with the aim of showcasing more products and details on stock availability by store.

To date, traffic to the new site is up by around 60%, customers on average are viewing twice as many pages per session, and almost 15% of visitors to the site are using the new stock checker facility.

The retailer has now confirmed plans to launch a Click & Collect service after speculation in March.

Primark has chosen “an expanded range” of children’s products for the trial which it says it believes has “the potential to satisfy unfulfilled demand, driving footfall from both existing and new customers to deliver incremental sales in-store.”

The trial will take place across 25 stores in the northwest, which the retailer says will provide a representative sample of store sizes and formats in its UK estate.

The Click & Collect service will build to offer customers some 2,000 options across clothing, accessories and lifestyle products, which will cater for a broad range of family needs from furnishing a nursery to clothing children of all ages.

Around 40% of these options will be exclusive to Click & Collect. The expansion of the offering will be particularly attractive for customers who do not regularly shop in larger stores, Primark believes. Currently, its average size stores are only able to stock a limited range and for these customers the number of options available to them will broadly double, increasing even more for customers of its small stores.

“This trial will enable us to provide more fashion, licence and lifestyle products to more customers and more often,” the retailer says.

Click & Collect orders will be processed and dispatched to stores from a dedicated UK distribution centre. Its product suppliers will prepare the stock in cartons in a way said to enable simple and efficient picking at the distribution centre. This pick and pack operation will be manual during this trial with plans to automate in due course.

Orders will be free to collect for customers, and returns will be accepted free of charge in-store.

Paul Marchant, Primark chief executive says: “The Click & Collect trial is a milestone for our business and builds on the investments we’ve made over the last two years in new technology and people to make this possible.

“This trial will give customers so much more of what they love and a new way to shop with us. It brings together more choice and greater convenience and complements the great in-store experience that is at the heart of our business. We think it will also give us an opportunity to reach new customers by highlighting the fantastic collection that we have for kids of all ages. We’ve chosen to trial the new service in a region where we have a wide range of stores of different sizes and formats and we can’t wait to see the customer response.”

Q3 numbers

ABF says all Primark stores were open during the third quarter period, in contrast to last year when the majority of stores were closed until the middle of April. As a consequence, sales in the quarter were 81% ahead of last year and year to date were 69% ahead of the comparable period last year.

Sales in the third quarter were 4% higher than the comparable pre-Covid period three years ago, while like-for-like sales have been improving since the half-year and for the quarter were 9% below pre-Covid levels three years ago.

In the UK and Republic of Ireland, like-for-like sales have improved markedly while in Continental Europe, ABF says performance only started to improve at the end of the quarter following the removal of remaining Covid restrictions.

Primark remains on track to deliver a full-year adjusted operating profit margin of some 10%.

Analyst reaction to Click & Collect launch

Clive Black, analyst at Shore Capital, notes the current market conditions make the Click & Collect trial “very timely” and that he was “pleased” to see the commencement of the trial.

He adds the online channel in the present down economic cycle has “proved to be especially weak in the face of shoppers’ evolving behaviour in the UK in particular leading to notable warnings, most recently from Asos in the UK.”

“As such stores are proving to be much more resilient than we would have expected only at the turn of the year. Hence, Primark’s pure offline offer is not presently as strategically out of favour as some previously believed and presently may suggest, noting that on a same product basis it has value credentials that remain very high indeed.”

Meanwhile, Louise Delise-Favre, apparel analyst at GlobalData says: “Consumers have long demanded Primark fully embrace digital retail, and its click & collect service is highly likely to be successful as 76.6% of UK consumers surveyed by GlobalData in February 2022 stated that they would purchase from Primark online even if it only offered click & collect as a fulfilment option. The trial, and its subsequent expansion depending on the response, will help future-proof the retailer in an increasingly digital world.”

However, she adds: “While Primark’s introduction of multichannel capabilities will undoubtedly help the retailer strengthen its position in the value market, its tardiness to embrace e-commerce will dampen its impact. Primark’s desirable product ranges and attractive price positioning helped it achieve significant success prior to Covid-19, and the introduction of multichannel retailing should restore its competitiveness in the future—especially as its value price points will be especially attractive to consumers due to the shrinking of their discretionary incomes.”

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