These are not isolated quarterly results. Of course, like other retailers, last year’s unseasonal weather and exchange rates caused some headwinds for Primark and led to a decline in sales. However, over the last 10 years, Primark is growing on a continuous basis in terms of revenues, number of stores and retail selling space. Such results are remarkable in an industry where many shops suffer and close their physical stores and where customers seem to shift from high street shopping to online.
Why is this? Why does Primark defy the general trends and keep on growing as a physical-only store? Of course, there are always multiple answers to a question like this. Dependent on our perspective, we can point at the leadership, consumer trends, smart purchasing, luck, and so on and so forth. And this will probably give us bits and pieces of the answer. We get a more complete and coherent answer, though, when we look at their strategy over the past years and how well they insist on this strategy and align their company around it.
Let me first share a caveat. As a consumer, I am no Primark fan. On the contrary. I never shop there and have no particular warm feelings about their incredibly low prices or the stacked brown paper bags that appear on the streets around their stores. In the light of sustainability and consumerism, I even pretty much object to what they stand for. However, as a strategist I cannot help admiring what they do and how well they do it.
What Primark is doing so well is that they know their DNA and stick to it in everything they do. This makes that the company is very well aligned internally and externally around the way they create value for their customers. Primark offers low prices. So they clearly compete on price. But it is not just price. It is price combined with an overwhelming large number of fashion items to choose from in their stores. At the bottomline, they sell the kid-in-the-candy-store feeling, the Oh-My-God-I-can-buy-all-of-this-and-still-have-money-left experience. That is their value proposition and that is why they are successful.
Primark is able to create this experience so convincingly because everything they do is aligned around exactly this value proposition. It is well-aligned externally with the market because this value proposition matches the needs and desires of a particular customer segment and because it differentiates them from their competitors. And it is well-aligned internally because all of Primark’s operations – purchasing, stock management, store design, etc. – are aligned to just create this kid-in-the-candy-store experience.
When we look at Primark in this way, it makes sense that they refrain from also operating an online shop. If it were just for selling low-priced fashion, online might have been a possibility – even though distribution and returns would make it a significant challenge to make such business profitable. But on top of that, creating that same kid-in-the-candy-store experience online is much more difficult. We can’t just grab something there, try it and buy or leave it. And how much fun is there in looking at a screen together with your friend and ordering your items there?
What we can learn from Primark is the power of knowing your DNA and sticking to it. Many other companies, in retail and elsewhere, have difficulties doing this. They don’t exactly know what value they create for their customers and as a result they lack focus and alignment. The lesson? Do as Primark does and align everything you do around the type of value you create for your customers.
This post was published earlier here on my forbes.com page.
Image credit: Getty