A year ago Primark invaded America. The entry point for its invasion was Boston where its Downtown Crossing store opened to great fanfare.

Primark has been trading in the US for one year

Primark

Primark has been trading in the US for one year

Twelve months on and Primark’s campaign is progressing as planned: four additional stores have opened, with two more to follow by the end of this year.

This expansion represents good progress for a new entrant. Yet in a country as vast and populous as the United States, a seven-store chain is a mere drop in a very large ocean, especially for a retailer than does not play in the online space. To put this into context, by the end of this year Primark is likely to have a market share of 0.06% of the US retail market for apparel.

Scale matters, especially for a retailer that operates on the principle of low margins and high volumes. However, such scale can only be attained if the proposition is right. In the early stages of development, success is best measured by customer reaction and opinion rather than by vague notions of market share.

Is the price right?

So, is Primark a welcome invader or is it being repelled by American consumers?

Price is the obvious starting point for the assessment and, looking at our consumer data, Primark does not do too badly here. Its US customers give it an average score of 7.8 out of 10 in terms of offering low prices. This is slightly, although not significantly, above the competitor average score of 7.2.

More worryingly for Primark, when it comes to the score for ‘getting a good deal’, its customers give it 7.2 out of 10 versus a competitor average of 7.6. On this measure, Primark, a retailer that prides itself on offering fantastic value for money, does not seem to be cutting through in the same way as it does in Europe.

”The American consumer psyche is such that many shoppers tend to respond better to apparel sold at a discount than to that with an everyday low price attached. There is a sense of savvy and excitement in buying something for less than the original ticket price”

This matters because for US clothes shoppers, ‘getting a good deal’ is a more powerful driver of store selection than low prices. The American consumer psyche is such that many shoppers tend to respond better to apparel sold at a discount than to that with an everyday low price attached. There is a sense of savvy and excitement in buying something for less than the original ticket price.

But this is not Primark’s model. This is more the model of TJMaxx, a chain which has for the past 20 years posted consistently strong growth. And herein lies a potential problem: Primark’s low-price message, while still welcome and relevant, is less potent here in the US than it is elsewhere.

This has been particularly true over the past year as American fashion chains from Abercrombie to J Crew have been on a discount frenzy, offering more and deeper promotions than ever before. They have done so in response to a crowded and particularly competitive market in which consumers have moderated their apparel purchases. Against such background noise, it has arguably been even more difficult for Primark to bang the drum on price.

On trend

Fortunately for Primark, price is not the only weapon in its armoury. Fashionability is also a key component of its model and here it scores well: 8.2 versus 6.7 for competitors. A constantly changing assortment is another area where Primark outperforms, scoring 6.8 versus 5.2 for competitors, but that’s still a long way short of Zara, which is given an impressive 8.1.

“The danger is that these factors may not be best suited to driving volume”

So, the evidence is that Primark has, generally, been accepted by the American shopper. However, compared with its operations elsewhere in the world, that favour is being won with a slightly different mix of factors.

The danger is that these factors may not be best suited to driving volume. And volume is the critical ingredient that will ultimately determine whether Primark’s American invasion succeeds or fails.

  • Neil Saunders is managing director of Conlumino