Premium Essay

Mshimsji

In: English and Literature

Submitted By mshimshi
Words 551
Pages 3
The “fast fashion” retail model pioneered by companies such as Zara and H&M has been taken a step farther by Primark, the U.K. and Irish retailer offering clothes at rock-bottom prices. IESE’s Julián Villanueva, José Luis Nueno and Julie Ziskind examine the secrets of Primark’s success in a new case study.

Consumer habits have changed significantly since the onset of the financial crisis in 2007. “Value” takes priority over snobby attitudes about labels and brands. This development has been termed “the Primark effect,” in honor of the company that has earned a nationwide reputation for bargain shopping.

The ability of the chain to sell jeans for £3 or flip-flops for £1 is due to the store’s “no bells, no whistles” business model, built around three cores.

1. Efficient Supply Chain, Rapid Turnover
Like many of their competitors, Primark’s strategy is heavily rooted in using private labels.

However, unlike Zara’s focus on style, or H&M’s general affordability, Primark’s niche is its rock-bottom prices. Costs are kept low by making cheap garments from man-made materials, using cheap production processes.

There is also limited reordering of products, as they operate on a “when it’s gone, it’s gone” basis.

This results in frequent visits from customers, as the average store turnover is six weeks.

2. Limited Operating Costs
As Primark’s main selling point is price, the company must forgo expensive advertising almost completely, instead relying on “big bags and big savings” to convey their message. They also place their cheapest items at the front of the store, attracting passing trade and word of mouth.

Primark stores tend to be in shopping malls outside of downtown, further reducing costs through lower rents.

Finally, staff service is focused primarily on managing checkout lines and managing showroom inventory. Quality of service may…...

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