Primark U-turns on price promise as energy and labour costs soar

The fashion retailer, which reported soaring sales and profits this week, said it would be implementing “selective price increases” across some of its autumn/winter stock.

The decision marks a change from the retailer’s stance in January this year when it cut 400 jobs but vowed to keep prices the same.

Primark owner Associated British Foods (ABF) finance director John Bason maintained that Primark would retain its value promise for customers, however, keeping its position as the lowest price player in the fashion sector.

Bason told Retail Week: “The first thing to say is Primark remains and is obsessed by price, so you know that we’re going to stand by the fact that we offer the best value for money in everything that we sell.

“The spring/summer stock is not affected by this, it’s actually the autumn/winter stock, so we’ll start to be seeing this in August and September time.

“The word selective is important – some items will not change in price, and others will. These will be some of our continuity lines and also some of the trend lines that come into the store. But let me be very clear, item by item, we will be the best value around.”

He would not be drawn on the particulars of which products would be affected but said that he believed customers would stay loyal to the retail even if they become more price-conscious throughout the year.

Bason attributed the price rises to soaring inflation across the ABF business, mainly affecting energy costs for suppliers, container prices, and stores. 

He added that the war in Ukraine had also created more concern in the market about the supply of energy, which in turn boosted prices higher, while wage costs are also higher as retailers fight to stay competitive in a difficult market.

“Honestly, it’s hard,” Bason told Retail Week when asked how the business was navigating these issues.

“We’re seeing inflation at levels that haven’t been seen for decades. It’s the scale of this that makes it harder for businesses across the board. So what do you do? You look again at the costs that you’ve got, and you take costs out where you can.”

He added that Primark would look into decreasing prices again if it sees deflation of commodities such as materials and energy costs in the future but that he did not anticipate this until at least next year.