Even during the worst of the recession, one thing that remained consistent was that Primark continued to power on as if nothing was wrong.
Even during the worst of the recession, one thing that remained consistent was that Primark continued to power on as if nothing was wrong. Which makes this week’s acknowledgement that since the turn of the year it has seen “a noticeable slowing down of UK consumer demand”, something that will have made everyone in retail sit up and take notice.
Primark simply doesn’t do bad numbers. Which means that either something has gone badly wrong in the business, or the market has fallen off a cliff. No one - not even its rivals - believes it’s the former.
Sales may have bounced back a little last week thanks to the change in the timing of half-term, but no one should be fooled by that. While everyone expected anxiety about unemployment and potential interest rate rises to weigh on spending, what’s really hurting is the immediate impact of everything - especially petrol - costing more.
If the shopper has less left in her purse at the end of the week, her spending on discretionary items will be less, and that’s as much of an issue at the value end of the market for Primark as it has proved in recent weeks for John Lewis at the upper end. Next week’s BRC figures for February are unlikely to be good, and what growth there is in the market is coming from inflation, not volumes. An interest rate rise will make things worse still.
The worry has to be that Primark and John Lewis are best-in-class in their particular markets. If they’re having it tough, their rivals must be hurting even more.
A retail great
This week we take a look at the challenges Phil Clarke faces as he takes over the biggest job in UK retail. But while he’s never been one for fanfare, it would be remiss not to pay tribute to the extraordinary legacy his predecessor is leaving him.
Sir Terry Leahy will go down in history as one of the greatest retailers of all time. The record of innovation by the business during his time in charge is extraordinary: Clubcard, overseas expansion, non-food, its extra-large and extra-small formats, the Finest and Value ranges.
Leahy’s Tesco has delivered giant profits to shareholders, huge revenues to the UK exchequer and tens of thousands of jobs. And Leahy himself has embodied the culture he has created in the business: humble, driven, committed, understated, decent.
Read more on my blog, visit retail-week.com/retailday