POSITIVE SALES AT PRIMARK, SELFRIDGES BID TO SAVE THE PLANET AND ALL THE COFFEE YOU WANT FOR £20?

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Anna Clymo
Business Consultant

Positive sales at Primark, Selfridges bid to save the planet and all the coffee you want for £20 a month?

The turbulence of COVID-19 has transformed the retail industry into a spiderweb of success stories, struggling brands, quick innovation and new partnerships, as retailers battle through one of the most challenging years to-date. The past few weeks have certainly been no different. We’ve seen promising post-lockdown sales at Primark, Pret A Manger launching a coffee subscription service, sustainability drives from Selfridges and Cos, and Amazon and Co-Op creating thousands of new jobs. However, on the other end of the spectrum, Debenhams continues to look for a buyer, Jigsaw is shutting more stores and reducing head count, whilst retail store vacancies have hit a six-year high. 

Primark down but not out

Let’s start with Primark. Despite being shut for months, and without a transactional website, the retailer’s post-lockdown sales have exceeded expectations, and operating profits for the year are anticipated to be at the upper end of the £300-£350m range previously estimated in July. Understandably this is still significantly lower than last year, with a 12% drop in like-for-like sales, but not as bad as it could have been. So, what are they doing right?

We all remember the images of lengthy queues outside Primark as customers were desperate to return to store upon reopening. This pent-up demand has driven up their average basket size and somewhat counteracted the impact of reduced footfall being felt across the high street. However, not all of Primark’s stores are performing. Those based in retail parks are reaping the benefits of customers staying local whereas those based in city centres are struggling due to a decline in tourism and commuters.

Despite this, Primark’s current model does not solve the potential challenges a second lockdown could bring, nor does it cater for changing behaviours, as consumers increasingly move towards shopping online. In the immediate, Primark should review their store locations as it would appear the city centre as we know it is over. They should also look towards investing in a seamless omnichannel experience to protect themselves from future lockdowns, drive additional revenue and gain invaluable customer data. Without considering this as an opportunity Primark could risk a further drop in their operating profit later this year. The latest government guidelines have shown us this is not over, and further restrictions may be upon us.

Debenhams treading water

At the opposite end of the spectrum, others are not as fortunate. Debenhams is still frantically searching for a solution as the pandemic tipped the retailer into its third insolvency in 12 months. However, last week their Chairman, Mark Gifford, claimed the brand isn’t on the cliff edge as post-lockdown sales have been far better than expected. The stores based in retail parks are currently their saving grace but, this does not solve the issue of an outdated model combined with a confused customer profile.

Department stores have struggled to keep up with changing consumer behaviour and have slowly lost their market share. Although a completely different business model, Primark is well-known and loved for their wide product appeal, value proposition and for giving customers what they want. If Debenhams manages to pull its way out of this crisis, a major review into their customer, product ranges, store portfolio and digital offering will be needed to ensure they reclaim a place in the industry.

Sustainability back on the menu

On a more positive note, we’re now seeing brands take real steps into combating the waste produced by the industry. Back in August, Selfridges launched their sustainability programme ‘Project Earth’ where the department store launched its first own-brand resale model and all brands stocked are required to meet strict sourcing standards.

September sees another initiative being rolled out with their Bay Garnett x Oxfam pop-up shop in the London store where you can purchase vintage clothing selected by an industry-renowned fashion stylist. The products are curated and styled as if they are brand new which should help make second-hand products appear more fashionable and desirable.

Like any new initiative, the challenge will be in converting customers and encouraging them to evolve their behaviours. Many consumers want to be more sustainable but how much action do they really take? The past 6 months have taught us all that we can live with less, however, more often than not it comes down to price. If brands can promote sustainability within affordable ranges they could be onto a real winner. 

Coffee time!

Finally a little tip to end your week… if you’re heading back to the office or live near a Pret (and love a subscription like me!) you’ll be thrilled to know Pret a Manager have launched a subscription service whereby you can have up to five coffees, teas, frappes or hot chocolates a day for just £20 a month. Enjoy!