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Primark:overview

Primark is a major clothing retailer that operates stores in Europe and the UK. It started in Ireland in 1969 and has since expanded across Europe. Primark sources its clothing from over 600 suppliers in 16 countries where costs are lower. It has experienced rapid growth and now has 253 stores. Primark offers affordable, on-trend fashion and is popular among young, budget-conscious customers. Its success is attributed to being able to design and source clothing quickly and sell it at very low prices.

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Welcome to our presentation
Introduction • Primark is an Irish clothing retailer, operating in Austria, Belgium, Germany, Ireland (38 stores branded as Penneys), Portugal, Spain, the Netherlands and the United Kingdom. The company's main headquarters are in Dublin; they are a subsidiary of British food processing company ABF. Primark first opened in June 1969 in Mary Street (Dublin). • Established over thirty years ago, Primark started out in Ireland but soon established branches in the UK, creating a historical legacy that explains why it retains two head offices, one in Dublin, Ireland (where the company is known as Penneys), and one in Reading, England. The clothes retailer has been particularly successful in the last decade, enjoying rapid expansion across Europe. • Primark, source clothes from countries like China, Bangladesh, India and Vietnam where materials and labor costs are lower. Primark works with a variety of manufacturers from around the world to provide consumers with what they want.
way to describe Primark
Primark- At a glance • • • • • Type Industry Headquarters Number of locations Key people • Products • Revenue • Employees • Parent : Subsidiary : Retail : Dublin, Ireland : 253 : Arthur Ryan, Chairman; Paul Marchant, Chief Executive John Lyttle, Chief Operating Officer Ben Mansfield, Sales Director Breege O'Donoghue, HR, PR & Advertising Director Aidan Shields, Chief Financial Officer : Women swear, menswear, children swear, footwear, accessories, lingerie and home ware : £3,503m (Financial Year 2011/2012) : 43,000 : Associated British Foods
About Primark As with Penney's, Primark is positioned in the Lower Middle/Value sector of the general merchandising market, with its main focus on Family Safe fashion. Primark targets young, fashion-conscious under 35s, providing fashion basics at value for money prices. A fast-growing brand  Part of Associated British Foods (ABF) Growth stems from meeting customer needs  Offers high fashion at value-for-money prices  Expanding stores  Moving into new markets Products sourced from over 600 suppliers in 16 countries  Europe, Asia, Middle and Far East Primark has responsibility to source ethically Today, Primark has 253 outlets, including 159 in the UK, 38 in Ireland, and over 40 across Spain, Germany, Belgium and Holland. The number is rising all the time as the company continues to grow.
Financial performance Turnover (£m) Adjusted operating profit (£m)
History of Primark The Primark story has been one of continuing success founded on a unique combination of fast fashion and lean operations. •1969 : The first Penney's store opened in Mary Street, Dublin •1971 : The first large store outside Dublin was opened in Cork and 11 more stores open in Ireland and one in Northern Ireland •1973 : The number of stores had reached 18 in Ireland and Primark began trading in Great Britain with four out-of-town stores. •1984 : The first multiple acquisition took place with the purchase in Ireland of five Woolworth stores •1995 : Development of the UK business with the addition of 16 stores •2001-2005 : continued UK and Ireland expansion •2006 : Primark opened its first store in Spain – in Plenilunio (Madrid) •2008 -2010: Expansion into Netherlands, Portugal, Germany and Belgium •2011 : Primark further expanded with store openings in the UK, Spain, Netherlands, Portugal, and Germany.
Facts about Primark • Primark, the clothing retailer, has recently experienced rapid growth and is in the middle of a major strategic change from ‘pile it high and sell it cheap’ discount retailer to mid-market brand with celebrity status. • It has gained market share at the expense of established clothing retailers such as Next and Marks and Spencer (M&S). It has also battled effectively against supermarkets, such as Asda and Tesco, which offer low-cost clothing lines. • Primark’s success has been most apparent in the growing UK womens wear sector which, in 2006, had total sales of £18bn. • Originally, Primark tended to locate in cheap, out-of-town sites in areas of low income. These locations kept costs down and meant that the company was close to its target market
• Primark decided to take its discount approach into the mainstream market. It has begun targeting middle income customers and competing more directly with M&S, Debenhams and Next. • Primark has achieved this in a number of ways including moving into town centre, high street sites in larger, more affluent locations. It no longer targets exclusively the low income customer, and now says that its primary target market is “young, fashion conscious fewer than 35s” who want fashionable clothing at competitive prices. • Primark has been featured in fashion magazine “Vogue”, and celebrities have been seen wearing Primark clothing. • As Primark’s strategic direction changes, and the company moves into the mid-market sector, it has realized that low prices alone will not be enough for success against established companies. Fast product design and innovation, effective brand differentiation, excellent customer service and a positive shopping experience are all essential. The company’s organizational culture will have to change if it is to change from discount to mainstream retailer.
Primark: Iconic fashion Primark's success is not simply down to supplying a fashion fix. Primark thrives because of its speed at turning out designs inspired by the catwalk and red carpet. It takes on average just six weeks for an item to go from concept stage into the shops, irrespective of whether it's a Kate Moss style waist coat or a Sienna Miller hobo style skirt. “Great sales does not make a brand fashionable” critics say "If Primark produces an iconic piece like the military jacket, they can do it as such low prices that everybody just zooms in on it," says Ms Hinton.
Mission and Vision of Primark "The mission statement of the Primark to supply quality clothing at prices perceived to offer real value." “The vision statement of Primark providing quality products and services to their customer through price strategies” “A low cost strategy is not a cheap strategy for a company to pursue”
Primark's brands • All of the company's merchandise is made specifically for the company and as such Primark has its own brand names. Within both menswear and ladies wear there is one main brand name that supplies most of the fashion labels, which are added to by other suppliers.
 Ladies wear Brands  Ocean Club — beachwear and towels  Atmosphere — Ladies fashion & formal wear  Men's wear Lines  Denim Co. — Ladies denim  Cedar wood State — Mens fashion  Limited Edition — Ladies fashion (available only from  Butler & Webb — Mens formal larger stores) wear  Authentic Apparel — ladies  Backswing — Sportswear leisure wear  Cedar wood State Active (CS Active) — Men's sportswear  Lingerie Lines  Secret Possessions — lingerie  Denim Co. — Men's denim & nightwear  Primark Essentials —  No Secret - Lingerie underwear & nightwear  Primark Essentials —  Authentic Apparel — Men's underwear leisure wear  Love 2 Lounge — slippers, hot water bottles etc.
 Children's wear Lines  Early Days — baby wear (newborn-23 months)  Little rebel — boys baby wear (9–23 months)  Young dimension — girls baby wear (9–23 months)  Young dimension — young girls wear (2–7 years)  Girl 2 Girl — young girls wear (2–7 years)  YD — older girls wear (7–16 years)  Rebel — boys wear (2–7 years 7–16 years)  Denim Co. — Children's denim  Primark Essentials — underwear  Accessories Lines  Opia — Accessories  Opia Girls — Accessories for girls  Other Lines  Primark Beauty — Cosmetics  Primark Home — bedding, cushions, curtains, towels, kitchen and home accessories
Products of Primark Children's wear: •Jumper • Price £ 7-9 Dress • Price £ 10 Blouse • Price £ 7 •Chinos • Price £ 7 Shirt • Price £ 5 Ladies wear & Menswear: Dress • Price £ 17 Ladies wear & Menswear: • Jumper ( Men's) • Price £ 12 • Shirt (Ladies) • Price £ 9 Shirt (Ladies) • Shirt (Men’s) • Price £ 13 • Price £ 8 Leggings • Blouse • Price £ 10 • Jumper (Ladies) • Price £ 12 • Price £ 14
Products of Primark
Primark: A Brief Overview Of The Business Primark is a brilliant and unique organization with a mission statement to enrich the life of everyone with fashionable clothing regardless of social status. It emerged as major force in the British retail industry, contributing through its low price value and great quality fashion products for everyone in society as a whole and leaves remarkable impact on social, environmental and ethical behavior of people. Primark does not rip off its customers and presents excellent example of it motto which states “look good, pay less” Primark, (2010).
• According to Associated British Foods Plc (2009) it is a diversified international group. It has over 96,000 employees in 44 countries with sales of £8.2 billion approximate every year. • This global business group has sales and manufacturing operations all over the world. It has operation in America, Europe, Asia, China and Africa,. Associated British Foods Plc's business activities can be divided into grocery, agriculture with sugar, ingredients and retail. • The retail segment comprised of a major value fashion retail group. This group is trading on the high street as Penneys in Ireland, Primark in the UK, and Primark Tiendas in Spain. • It is operating 190 stores with 5.7 million square feet of selling space on the high streets of the UK, Ireland and Spain.
• Recent research proved that in UK, Primark is now the second largest clothing retailer by volume. In the important value sector it is also the largest retailer. • Most of their clothes are bought from same factories as other fashion retailers and people producing them are paid exactly the same whatever label and whatever price in shop. • Company's success is based on sourcing supply cheaply, they buy directly from factories without involving any agents, making clothes with simple designs and fabrics, only making them in the most popular sizes, buying stock in huge bulks and varieties and targeting young, fashion-conscious buyers under 35's, offering them high quality, fashion basics at value for money prices. • They are able to offer such good value and good quality because of low mark-ups and big volumes. • Their overhead costs are extremely low as they do not run expensive advertising campaigns; instead they have wonderful strategic marketing approach that stands them out.
Stores of Primark Number of Stores Trading at 22nd November 2012  Ireland – 38 Portugal, Germany Belgium, Austria-2 6 ,8 1  Spain – 33 Netherla nd, 3  UK – 159 Ireland, 38  Netherlands – 3  Portugal – 6 Spain, 33  Germany – 8  Belgium – 1  Austria – 2 UK, 159
Primark business model •Business model based on  High sales volume  Lower retail margins •Value for money stems from  Economies of scale - buying volume  Sourcing products efficiently  Lean production • Using simpler designs or local fabrics • Focusing on most popular sizes • Using off-peak factory time for production  Not spending heavily on advertising
Primark and business principles Primark shares values with parent ABF  Shape relationships with all stakeholders  Affects dealings through supply chain Key principles Respect for human rights Setting appropriate conditions of employment in suppliers’ factories • Over 700,000 workers in three continents • Around 95% of Primark suppliers also supply other high street retailers
Company's success is based on sourcing supply cheaply, they buy directly from factories without involving any agents, making clothes with simple designs and fabrics, only making them in the most popular sizes, buying stock in huge bulks and varieties and targeting young, fashion-conscious buyers under 35's, offering them high quality,  fashion basics at value for money prices.       Their overhead costs are extremely low as they do not run expensive advertising campaigns; instead they have wonderful strategic marketing approach that stands them out.
Efficient Primark Primark is able to offer value and low prices because its business model is based on high sales volumes and lower retail margins with minimal advertising. The company keeps costs down by buying large quantities of items and enjoying the economies of scale resulting from buying in bulk. In addition, retail prices are kept low through lean production and efficient operational practices.
The Market Segment The market segment of Primark is divided into two groups – teenagers and young adult (working group). In the competitive marketplace, the market segment has been an important factor to have a clear definition in the supply chain management and sustain their sales even in the midst of industry crisis. The market segment targeted by Primark is the fashion conscious under-35s with the slogan "Look good pay less”
Primark’s new strategy is built on a number of key elements: • continued rapid growth through careful selection of locations in prime sites in the right towns • improved store layouts that are more attractive and shopper friendly • buying the latest fashion goods at competitive prices from suppliers all over the world • an organizational culture that places a much greater emphasis on good customer service • attracting high quality staff with a range of retailing skills and experience • achieving economies of scale as volumes of supplies increase • Publicity featuring celebrities wearing Primark clothing.
• Primark’s purchase of a number of high street stores from two large retailers, who recently went out of business acquiring the prime sites necessary for the move to the midmarket. The company than works with the local community to promote its shops as a good place to both work and shop. • Primark builds links with local colleges, Job Centers and community groups to recruit the best people. • employees undergo a three-week induction and training program designed to communicate its organizational culture and to build team spirit. • The organizational culture attempts to create dynamic people who can thrive in a fast moving fashion industry and who enjoy putting the customer first. • Attracting the right people to work for the company is crucial.
Brand Strategy A successful marketing mix contributes to good marketing of a product; hence there must be a brand strategy in place. American Marketing Association (AMA) defines a brand as a "name, term, sign, symbol or design, or a combination of them intended to identify goods and services of one seller or group of sellers and to differentiate them from those of other sellers”. Primark has an extensive brand portfolio, Primark's branding objectives include:  Delivers message clearly  Confirms your credibility  Connects your target prospects emotionally  Motivates buyer  Concretes User Loyalty  Gaining a specific number of new clients in next year  Positioning company as an industry leader in next 12 months
Strategic Marketing Management of Primark Strategic marketing management entails the process of formulation, implementation and estimation of marketing strategy by an organization. Simply strategic marketing management is about realizing marketing form the strategic perspective of creating customers. Based on the strategic points, at the level of marketing and at the level of the instruments (the 4ps: price, place, product and promotion) are created. The basic principles of Primark include respecting human rights and setting a guideline for appropriate conditions of employment in its suppliers, employees and vice versa. The strategic marketing of Primark has enabled them to capture confidence of customers in the brand that helps reducing the risk of business.
STRATEGIC MANAGEMENT  Cost -The management of Primark has made an impression in every costumer's in such a way that it is considered to be low cost stores. The cost factor helped Primark a great deal in maximization of their revenue and profits. Primark provides a whole range of clothing in a very affordable price which doesn't hamper pockets of a common man.  Shopping Easy - Along with the cost factor, Primark has given utmost importance to make the shopping of the customer easy and cosy. The interiors of their stores have been designed in such a way that it gives utmost comfort to the customers. This relates itself with comfortable sitting, friendly and helpful sales person, descriptive displays etc.
 Focus on Customer Satisfaction - the ultimate aim of Primark is customer satisfaction. This is the reason why along with low costs, Primark provides comfort zone to their customers. Primark considers the customer to be the basic reason of their business is customer itself and customer are considered to be the “king”. Each and every decision, policy and procedure has been designed by management keeping in mind the importance of customer and their satisfaction.  Job creation - Primark created a lot of jobs in a short span of time. Jobs were designed in such a way the total work is divided into small segment, such as, one bigger work is divided into smaller segments to make it comparatively simpler. Job simplification increases productivity and reduces wastage to a great extent.
Supply Chain of Primark • The idea of supply chain management, has been an important factor in the industry especially on the firms that are engaged in the international market and is an ideal way to appropriately deliver the customer’s needs in the most desirable way. • Stepwise action makes Primark a productive sector. It is an exciting growing brand that provides consumers with value for money in fashion items. • The company has an effective supply chain that combines manufacturing of different countries like Bangladesh, India, China and Turkey and some parts of Europe. • Like other business Primark’s main objective is to be a profitable and sustainable but in doing that it is always trying to satisfy customers keep themselves responsible to the customers.
 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 manmade 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
 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 suffer, but the low costs are enough to satisfy a certain breed of consumer.  Large Store • Since 2001, when it built a 100,000-square-foot store in Manchester, Primark has focused primarily on large stores to encourage volume shopping. • Floor space has in the past decade, resulting in tripled higher sales densities. • Primark has hired interior designers to outfit them with innovative floor layouts and color plans to facilitate efficient shopping.
Market Overview
• Market Research World, 2011 revealed that value fashion sector sees worst decline for first time in over 16 years much to gain of higher-priced retailers, reveals data by TNS World panel Fashion. • While fashion discounters such as Primark, Tesco, George and Matalan saw a phenomenal sales increase of nearly 30% last summer, growth has now ground to a hold with sales falling by 1% over last six months. • In contrast, sales of most expensive clothing are up by 4%, as shoppers head to generally more expensive retailers such as multiples and mail order retailers. • Clothing industry has been globalised. • Strategies followed by clothing firms, to survive in a context of strong pressure from retailers and from competition from low-wage countries, are a combination of two trends. • First trend is relocation of production to low-wage countries; second one is the development of six added-value activities: niche, Quick Response, full package, innovation, branding and retail.
Ambitious expansion and sourcing strategy The buzz around Primark has, inevitably, made it a favourite among financiers in the City of London. The latest company results, released in November, show annual profits up 30% and sales up 17% to more than £1b. This Spring will also see Primark challenging the fashion chains Zara and Mango on their own turf when it opens two shops in Spain. Can Primark continue to grow its market share?
Primark expansion • Primark is expanding more rapidly than any other British retailer. The company is planning to expand to Portugal, Germany and the Netherlands in 2009 • British shoppers can expect more new stores in the UK, where Primark already operates 4.8 million sq ft of retail space across 140 stores, employing 25,000 people. Its flagship Oxford Street store sold more than one million garments in its first 10 days of trading. • Primark's parent company, Associated British Foods, which also controls Selfridges and owns Twinings, Ovaltine, Ryvita, Jordans and Patak, as well as multi-billion-pound sugar and agriculture interests, regards Primark as the jewel in its crown. Boosted by Primark's profits, the company last year posted revenues of £8.2bn.
Primark's marketing strategy during recession • In recession normally people are trying to cut down extra cost from their daily life • This is because of recent closing down of businesses, unemployment problem and devaluation of pound sterling against dollar and euro. So, normally consumers are going to be more dependable on the value products which will cost less from that of luxurious brand products. • Primark's success is surprising because it came at a time of retail gloom. In a downtrodden economic climate marketing strategy is different than that of normal economic situation. • Primark is doing remarkably well in this downtrodden economic environment. In a word, Primark's strategy is working better than its rivals and seems to be very fit now.
Company's success is based on sourcing supply cheaply, they buy directly from factories without involving any agents, making clothes with simple designs and fabrics, only making them in the most popular sizes, buying stock in huge bulks and varieties and targeting young, fashion-conscious buyers under 35's, offering them high quality, fashion basics at value for money prices. • Their overhead costs are extremely low as they do not run expensive advertising campaigns; instead they have wonderful strategic marketing approach that stands them out. • The company has recently faced criticism from pressure groups who claim that it exploits cheap labour in low-wage economies, with no regard for workers’ conditions, so that it can drive down costs. •
Impact of Marketing Strategies on Financial Statistics • They have been operating for several years and they are currently buying out Littlewoods stores, several of the best of which will be turned into Primark's and rest sold for a tidy sum to other retailers. • Primark has aggressive expansion plans in UK and on the Continent. It plans to open in Holland and Germany next year, as well as launching in Portugal. Primark flagship takes an average of more than £2.5 million in sales a week. Rival Marks & Spencer has two stores on Oxford Street, while Next has three. • Financial statistics of Primark present an excellent report of figures revealing a constant increase in revenue and operating profit over last three years from 2008-2011
• Year 2010 was exceptional for Primark as its revenue increased by 18% with like-for-like sales growth of 6% and benefit of continued investment in new stores. • In comparison with other high street retailers profit was 35% ahead and operating margin improved substantially from 10.9% to 12.5%. • This improvement was mainly due to sterling's relative strength against US dollar in first half which benefited cost of goods sourced in dollars and sold in second half. • In financial year of 2011, due to higher cotton prices and freight costs and increases in VAT, already implemented in Spain and in UK from January 2011, it is expected that growth will be eroded. • Primark can still continue to lead market by maintaining price leadership strategy and by target marketing strategy in long run.
Strategic Marketing Environment Analysis There are three different analytical tools used to assess marketing environment of an organization; 1. Porter's Five Forces Analysis, 2. SWOT Analysis and 3. PESTLE Analysis.
Porter's Five Forces Analysis • Strategic position of a company depends upon the extent to which what it offers is unique and cannot be replaced by something else. Primark has strong brand portfolio which is its uniqueness. • As for some of products, like Primark cheap clothing there are alternatives. But there is no substitute for low price of Primark's products. • Buyers/customers have greatest impact on Primark's strategies as its vision and strategies are customer focused. • Primark is facing big challenge from supplier as it has good and long term relationships with its suppliers build on trust but recently three of its main suppliers are found involved in child labour and Primark has to cut-off ties with them immediately which is definitely a big blow for Primark. • Primark pays its supplier competitive price for their products to retain them. Primark maintains substitute inputs, and high volume of supplier to avoid extra costs.
PESTLE Analysis challenging Primark's position in competitive market • Strategic marketing analysis of Primark, using different analysis tools reveal that Primark is expanding globally • Primark has adopted an approach of “Think globally, Act locally” as stated by Armstrong, (2006). • They are expanding globally but cater needs of local market and fashion trends in local culture. • Primark supports UK's global role by showcasing the best of British fashion to a global customers as well as it reflects how it builds social cohesion and business ethics between customers and its suppliers.
SWOT Analysis Strengths Weaknesses 1.It has an organized business structure. 2. It offers quality clothes 3. Provides clothing for all ages and sexes. 1. poor working conditions and disvaluing workers rights Opportunities Threats 2. The company could have problems concerning advertising. 1. Expanding ventures. 1.The customer in terms of 2. High quality products and fashion and uniqueness. services overseas. 2.They do not have any 3. Provide high quality clothes advertising whilst their to fashion conscious competitors do. people.
Primark- Guilty or Not?
• Primark was at the centre of a storm over allegations that illegal immigrants paid just over half the minimum wage had been employed to make fashionable knitwear for one of the firm's bestselling ranges. • An investigation by the Observer and the BBC revealed that Manchester-based garment firm TNS Knitwear which supplies 20,000 garments to the firm every week. may have breached key employment and immigration laws. • The workers were allegedly being paid £3 an hour - just over half the minimum wage of £5.73 - for 12-hour days, seven days a week. • Employees at both TNS and Fashion Waves were caught on film admitting their illegal status in the UK • Working conditions inside both TNS and Fashion Waves were also exposed as cramped and cold, in breach of health and safety regulations.
Primark , The dark knight or the white knight
• Primark faced a major blow to its reputation on 24 June, 2008 after being exposed by and undercover report by BBC exposing it using child labour. • Afterwards, Primark's marketing strategy mainly focused to promote itself as ethical organization with a clear and strict code of conduct to which all suppliers must adhere and which forms part of the terms of their contract. • Primark supports nearly two million people through its supply contracts worth £700 million and is dedicated to improve their standard of living and quality of life. For this, Primark has established ‘Primark Better Lives Foundation' (Primark Ethical Trading, 2011 a). • In response to the allegations of use of child labour by its suppliers, identified by Panorama (BBC program) Primark stopped buying from three factories in southern India for breaking its Code of Conduct. • It also took other major initiatives and is now active member of ETI that announce it ‘Achiever' in year 2009-2010 independent audit
Primark on the rack included footage said to show three boys in a Bangalore workshop testing stitching in the shop's clothes
Vs.
Shamed BBC could lose prestigious TV award over ‘faked footage of child labor’ in Primark Panorama expose • The BBC could be forced to hand back a prestigious award it won for the controversial Primark Panorama expose, after footage in the show of child labor in India was revealed to be fake. • The corporation won the Current Affairs Home Prize at the Royal Television Society awards for its show Primark: On The Rack, which was broadcast in June 2008. • However the report said: ‘Having carefully scrutinized all of the relevant evidence, the committee concluded that, on the balance of probabilities, it was more likely than not that the Bangalore footage was not authentic.’ • The footage might not be genuine in the 45-second clip. This included the size of needles used, which it was claimed would have been ‘inappropriate’ for ‘delicate’ work they were doing. • The BBC will make an on-screen apology to Primark for the footage that was likely faked
• The footage might not be genuine in the 45-second clip. This included the size of needles used, which it was claimed would have been ‘inappropriate’ for ‘delicate’ work they were doing • The BBC Trust also found it odd that in the Bangalore scene there appeared to be no other garments visible in shot – which would be unusual if it was a ‘quality control process’. • It added that the way it had been filmed – with a tight focus on the boys and less on their surrounding environment – added to concerns. There were also said to be ‘inconsistencies’ in the evidence such as the email trail. • In 2007 Blue Peter, Comic Relief and Children in Need were found guilty of faking competition winners. And in 2009 a Sun, Sea and Bargain Spotting cameraman posed as a customer. Source: http://www.dailymail.co.uk/news/article-2004298/BBC-lose-prestigious-TV-award-fakedfootage-child-labour-Primark-Panorama-expose.html#ixzz2DpsdwMHG
Ethical behavior Primark is a subsidiary company of Associated British Foods (ABF). As part of ABF, the company shares important values. These values provide an ethical dimension to Primark’s activities. Being ethical means doing the right thing. For example, ethical companies provide fair working conditions for their employees, and build fair relationships with suppliers. For Primark, acting ethically means,  taking care of its people  being a good neighbour  respecting human rights  engaging with its stakeholders.
Ethical code • On Primark's website, www.ethicalprimark.com, the code of conduct reiterates the conglomerate's stance that wages and benefits paid to suppliers to their company for a standard working week must meet national legal standards or industry benchmark standards, whichever is higher. • The same website states that working hours must comply with national laws and benchmark industry standards, whichever affords greater protection. • The firm also claims to adhere to the ETI code of conduct.
Primark’s Code of Conduct The code states that within its supply chain: 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. Employment is freely chosen Freedom of association and the right to collective bargaining is respected Working conditions are safe and hygienic Environmental requirements - Primark shares its commitment with suppliers Child labor shall not be used Living wages are paid Working hours are not excessive No discrimination is practiced Regular employment is provided No harsh or inhumane treatment is allowed Legal requirements - Primark is committed to compliance of all countries’ laws.
Primark & CSR(Corporate Social Responsibility) What is CSR? Corporate social responsibility represents the responsibility that a business has towards all its stakeholders, not just to owners or shareholders, to deal with their needs fairly. Primark has initiated a programmed of activities which supports its corporate social responsibility (CSR) stance and ensures that its trading meets the company’s values and ethical standards. Underpinning its programmed of activities is Primark’s Code of Conduct which ensures that all workers making its products are treated decently, paid a fair wage and work in good working conditions.
Why Primark embraces CSR As an international business with a global supply chain and a growing retail base, Primark believes that business has a responsibility to act and trade ethically and that, by doing so, it can be a force for good. Its business directly contributes to the employment of more than 700,000 workers across three continents. Ensuring that their rights are respected is key to its continued growth. Primark does not own the companies or factories that produce its goods, but it does have a responsibility to the workers in those factories, to its customers and shareholders, to ensure that its products are made in good working conditions. The HER-project in Bangladesh is an example of how Primark is actively seeking to make positive changes in the lives of its supplier workforces.
HER-Project The programmers aims not only to improve the health of female workers through training and education, but also to give them the tools to help them take charge of their personal and working lives. The HER-project is simple but surprisingly powerful: • A small number of female staff in a factory (around 10%) is selected to become health education trainers called ‘peer group educators’. • The local health service provider trains the peer group educators, who are then responsible for training the other women based in the workplace, passing on the message and helping to disseminate what they have learned.
Primark's success continues as bargain High Street giant launches 'posh' flagship store in Oxford Street
• The four-storey unit, which is near Tottenham Court Road, has a capacity for almost 2,500 shoppers. • At 82,000 sq ft, it is significantly bigger than Primark’s other Oxford Street store, which opened in 2007 and covers 70,000 sq ft. • The flagship store has 1,443 employees, 111 cash desks and 92 fitting rooms and is the fifth largest Primark in the UK and the seventh largest in the company. • Primark, which has 242 stores across Europe, saw revenues rise by 17% over its current financial year.
More to come •Primark will also have 28 outlets in Spain after opening five new stores in the debt-laden country this summer. •Its margins benefited over the summer from lower costs linked to the material falling back in cotton prices at the turn of the year. •Shore Capital analyst Darren Shirley, who continues to forecast group profits of £970 million for this financial year 2011, described Primark as ‘possibly the most potent retail format in the UK and increasingly Europe.’
Primark bucks downward trend on the high street2011 • The retailer, which has 187 stores in the UK, Ireland, Spain and the Netherlands, said yesterday that its like-for-like sales rose by 5% in the six months to the end of February, compared with the previous six months. • Sales increased during the Christmas holidays and underwear sold well over the Valentine's period. • Maureen Hinton, senior retail analyst at Verdict Research, said: "Primark is doing well because its target market is young and they are not so challenged by what's going on in the economy as their parents. Its target market is still buying clothes because they're not being affected as much by unemployment." • Primark has opened a new distribution centre at Thrapston, Northamptonshire, to support further growth, and plans to open seven new stores in the next six months in places including Bristol, Cambridge, Portugal and Germany.
How can Penneys have the lowest prices on the high street? • Offering customers low prices by utilizing a number of cost saving strategies. • no advertising costs. instead relying on our customers “doing the talking” about products. • buy and sell in bulk - Penneys and Primark have over 230 stores in Ireland, the United Kingdom, The Netherlands, Spain, Germany, Portugal and Belgium. • Its buying power allows us to buy in bulk and we pass the cost savings back to the customer. • Keeping overheads low wherever possible. • With state-of-the-art logistics systems stores have up-to-the minute fashion, as soon as it reaches Primark.
Competitor Analysis Primark is facing tough competition from 1. George at ASDA, 2. Tesco, 3. Marks & Spencer, 4. TK Max, 5. Costco, 6. Next, 7. Zara, 8. New Look, 9. Peacock and 10. Matalan. Analysis for each major competitor determines that Primark has better business strength and high market share. It has good financial strengths and high profitability but relatively poor quality of management and low standards of technology position.
• Primark is paying least attention to its marketing strategies. • Primark is facing high competition with quality competitors like Peacock, Matalan etc. They are offering cheap products as well and growing at tremendous speed, threatening position of Primark. • Most of Primark customers are switching to rivals because of their quality products and good marketing strategies which Primark lacks. • Marks and Spencer, the biggest rival of Primark has very extensive marketing strategies with strong brand portfolio. They do advertisement on almost every media available; while Primark do not use even single media for advertisement. • Marks and Spencer offers frequent promotions for its customers, they offer loyalty card, and have online sales portfolio, as well directory sales is among one of their marketing strategies. • Competitive rivalry can be effectively overcome through deployment of cross-selling, pricing and co-branding and marketing strategies. This approach to sales will not only increase stability of business but also leverage competitive advantage in target market identified.
Sales trends of Primark and its closest rival is Marks and Spencer clearly show difference in sales growth of both companies over past three years.
Challenges • Business environment is changing way Primark stands in today's world and it is facing many challenges. • As technology is emerging, retail business is taking new shape changing at great speed with increase in number of quality competitor launching better services. • Another major reason for this transformation is that buyers are developing their taste very rapidly and are becoming more demanding with passage of time. • Changes in internal & external environment factors like competitive market, globalization factors, demographical and social forces, ethical forces, technological changes, economical factors and political issues are some other major reasons for various kinds of strategic changes, structural changes, cultural changes, system changes, process changes within organizations.
Our Recommendations for future • Redesigning and re launch website with high tech online shopping portal (Market and Product Development Strategy) • Expanding market, explore new markets overseas.(Market Development strategy) • Brand stretch (Product Development Strategy) • Finding new talent of designer (Product Development Strategy) • Offer clothing for a mature market 35+ (Market Penetration Strategy) • Diversify (Introduce new product line) • Introduce range of accessories (Market Penetration Strategy) • Expand current product lines(Market Penetration Strategy) • Introduce new product lines (Diversification, Market Development)
• Introduce food Hall or Cafe'(Diversification) • Introduce loyalty card or store card(Diversification, Market Development) • Add fragrance section and pharmacies (Diversification) • Introduce section for electronics (Diversification) • Enter in emerging markets like telecom (Diversification) • Open new outlets (Market Development) • More marketing can be done • New market share expanding their range of clothes (Market Penetration) • New products expanding beyond clothing to include more shoes, handbags etc(Market Penetration) • Start own production factories in countries like china and India to drop cost of production and more less prices (Diversification ) • Introduce customized tailoring and on demand preparation of dresses (Product Development Strategy)
Conclusion • For Primark to continue delivering value across range of its products, it must develop strong marketing as well as has to enter online shopping portfolio. • They have to compete with rise of online retailers. • Although only 4% of clothing sales are currently made online, this looks set to grow. The value sector has had a huge impact on fashion market over past few years and rest of high street has been forced to slash prices in order to compete. If this influence diminishes, fashion market could become a very different place to trade in. • The key challenge faced by Primark is critics who unveiled that Primark is involved in unethical trading using child labour. • Other threats are rival companies, customer's changing requirement which has become potential implications in implementation and success of new marketing strategies and hinder its sustainable growth its survival in today's competitive world. Primark should focus on brand stretch and family branding strategies to gain competitive edge over competitors.