Primark’s move into the US should not be compared with previous UK retailers’ entry and subsequent failures in that market.
Primark’s move into the US should not be compared with previous UK retailers’ entry and subsequent failures in that market. This is a different time and a different retailer whose unique young fashion proposition should score top marks with American shoppers.
Primark’s plan to open in the US with a store in Boston in late 2015 should not come as a surprise – this is a brand that’s key strategy is international expansion and the £202bn US clothing market is an obvious choice because of the huge potential it offers.
Primark is following in the footsteps of other young fashion retailers such as H&M, Topshop and Inditex brands that have proved there is demand for international fashion in the States. Tastes have become less conservative among young American consumers, thanks to the impact of the internet, social media, fashion bloggers and the influence of global media and entertainment. Indeed young fashion is arguably now global since the digital world became such an integral part of young people’s lives.
Though the Mid West is probably still harder to crack, cities such as Boston, New York, Chicago and Los Angeles have big populations of young consumers who are already engaging with European clothing retailers. Furthermore Primark’s price positioning gives it a unique edge which will undoubtedly prove a draw when it opens. And choosing Boston with its links to Primark’s Irish roots is bound to create the kind of excitement we have witnessed with its entry into European markets like France and Germany.
Moreover it is far easier to expand internationally in clothing, which is considerably more fragmented universally than sectors such as food & grocery and electricals which tend to be consolidated sectors with large local players who are not going to concede share easily.
The logistics of supplying a market so far from its home base have been addressed with local warehousing, and the generally lower operating costs of the US can offset this cost to a certain extent.
Of course having a transactional site opens up a market even more, but the problem of making this channel work profitably for such a low priced retailer has still not been solved. However the option of offering click-and-collect in store could prove a half way solution.
But for Primark this is not such a problem – its core young shoppers like visiting stores. It is only at the beginning of its international expansion so still has plenty of opportunities for store openings in existing and new markets before this becomes a big problem. Indeed this is a fashion brand that has real potential to become truly global eventually.
- Maureen Hinton is group research director of global retail at Conlumino