Primark the biggest chain stores

Overview

Primark is one of the biggest chain stores in Europe. It operates in 6 European countries like Ireland, Spain, the United Kingdom, The Netherlands, Portugal and Germany. The first store was established in 1969 in Dublin. Afterwards in 1973 Primark started trading in Great Britain and in 2006, it opened 2 new stores in Spain and from 2008 – 2009, Primark starts trading in the Netherlands, Portugal and Germany. Today Primark’s chain consist from 193 stores, and majority of them located in the UK.

The main offices of company are located in Ireland where it is known as Penneys, Primark is a branch of Associated British Foods pls. ABF has international sales of £6.8bn and 85,000 employees in 43 countries and Primark is the main piece in ABF.

ABF is a highly diversified group of companies who enjoy a high degree of autonomy in the running of their specific businesses. The ABF group is one of the biggest chain stores in Europe with the variety of successful brands and goods in the food sector. (http://www.primark.co.uk/ )

Main Body

The successful story of business is Primark story that has become true in last several years. As it was written in “The Independent: “During a high street slump, it has built a reputation as a seller of extraordinarily cheap garments and shoppers have besieged its new stores, some of them bought from the collapsed Allders chain.” ( The Independent,” Primark is named at least ethical clothes shop”, by M. Hickman, Thursday, 8 December 2005).

Primark success relates to:

• Super-competitive prices (the result of technology, efficient distribution, supply and volume buying)
• Market product quality
• High Street locations
• Clear focus on the target market.
• Good global management and logistics system

(http://www.earthtimes.org/ )

Super-Competitive Prices

Nowadays, global economy opens huge variety of markets, distribution and supply services to the companies that trade in global market. The one of the main oppotunities in companies’ success is opportunity to choose from a wide range of markets where to trade, or what supplier to choose. The combination of this aspects give to global companies a chance to make more profit that was ever made.

As it is known, most of Primark’s suppliers are from China, India and south east Asia. So, it gives to ABF group cheap distribution that relates to prices. Low price system give a huge advantage to Primark as a player in the market, among other players such as Tesco, Mark & Spencer, Next and etc. this is a good strategy for Primark ,as a player in the global market, during the recession. It gives Primark a big market share and increases in profit.

FQDSC strategic model (competitive advantage through)

It is better to understand success of Primark store in FQDSC strategic model, which includes flexibility, quality, dependability, speed and cost aspects.

If we mark Primark in all this aspects with one of his competitors and compare them, we will see why Primark is so successful.

Now, we see that factors such as speed and cost play a huge role in human behavior in today’s world during the recession. The recession time shows us how Primark is flexible with their customers, that speed and cost factors give Primark a huge advantage among other players in the market. In comparison with Debenhams and other competitors, factors such as speed and cost played the main role to the success of Primark. (Gregson, R. (2009) MGT 7100 Managing Processes, Lecture 1)

Market Product Quality

Quality of Primark`s goods strictly relates to the price and suppliers that Primark works with. So it is one of the best quality-price ratio’s in the market. ABF group achieved this correlation by using the basic rules in global economy to reach best profit. As it was mentioned before, global economy gives a huge amount of opportunities to the companies to make their best correlation between quality, price, location, speed and etc.

High Street Locations

Primark like almost a half of his competitors has a good location policy. For example, in London on Oxford street, Primark and his competitors are found in one street of market stores. In the UK High Street there is a huge amount of no-frills fashion stores. That means that Primark have a lot of competitors that have same type of customers. Well-established competitors such as Bhs and NEXT and others have to cope with Primark, while results are booming. Primark has become one of the cheapest fashion retailers in the UK High Streets. Therefore people buying goods from Primark store. The live example of Primark success in UK High Street it is if you go to Oxford street you will see a superior amount of people that are carrying Primark bags than from other stores. (http://www.open2.net/ )

Clear Focus On The Target Market

Primark have clear understanding demands of their customers. Primark’s market segment is the fashion conscious people under- 35s with the slogan “Look good pay less”. Primark has chosen ‘Cost Leadership’ strategy, it means that Primark has a cost privilege over competitors.

In the last several years Primark has done a lot of things right. TK Maxx and Asda are one of the strongest competitors of Primark and they have a similar market segment. TK Maxx and Asda have different strategies to that of Primark. TK Maxx trades hugely-discounted prestige brands and Asda has created its own private and well-known brand. Primark focuses more on buying, logistics and supply chain management rather than developing its own brand.

Primark made its own teams of buyers that travel all over the world to detect fashion trends and to find out the competitive caterers. It means that Primark understand demand of their customer very well by providing them high fashion goods at very low prices. It also has a very clever system of choices of fashion goods to copy into the mass production. To proceed to be most successful in market with ‘Cost Leadership’ strategy the firm should provide the cheapest prices in the market. (http://www.open2.net/ )

Good Global Management And Logistics System

The success of Associated British Foods pls. is not based only on one aspect such as super competitive price, quality, high street location or clear market target. It is the totality of all of aspects. ABF group has a clear understanding of global economy rules. Primark realize that global market opens huge varieties of dealing business. It means that global economy, as it was mentioned before, give to companies a huge varieties of markets, suppliers and etc., and companies can choose among markets and suppliers. ABF group has a good correlation of options that global economy provides to companies. As the result Primark has a very good management and logistic systems. It means that Primark realize a correlation between high volume, low cost, location, market and supply chains.

It is better to understand Primark’s correlation in picture:

Now, we can clearly understand the logistic system that is used by Primark. We can see that global economy and global market give a challenge to Primark and competitors to choose among suppliers. As we can see Primark has chosen the best correlation between suppliers, prices and other aspects which leaded to better profit.

“This is demonstration of Primark’s commitment to having the best available solutions to help manage its supply chain, and to improve working conditions whilst maintaining competitive edge and quality in a fast-moving fashion environment,” said Ray Ellis, business systems analyst at Primark’s owner, Associated British Foods.

( http://www.supplychain.cn )

Conclusion

In conclusion we can see a whole picture of Primark’s success. It is obvious that the company became a successful business story just in several years. Primark success is a very good solution in management and logistic system. Primark became a good example of success and a case study to its competitors.

As it was written before, Primark’s triumph relates to several aspects such as quality, high street locations, super competitive prices, clear focus on the target market, good management and logistics system. The main point of the success of Primark, it is that the owners of Primark were one of the first in practical business who realized the whole picture of global market and combinations of aspects and factors that is given by the globalisation. It is true that during the recession time factors like low costs and fast speed are playing a big role in decision making process of customers. Primark has a clear focus on the target market, and it helps them to know what the best to their customers is. They know that their target market are people under 35 and they focus more on factors such as fashion, low prices and speed.

At the end, we can’t say that the success of Primark is the lucky chance, their success is the well-developed combination between factors and aspects.

References:

1. http://www.primark.co.uk/page.aspx?pointerid=eb44df4565934edca627dac6ec12145a [accessed 14 November 2009]

2. http://www.earthtimes.org/articles/show/primark-to-install-island-pacific-planning-solution,1029702.shtml [accessed 14 November 2009]

3. The Independent,” Primark is named at least ethical clothes shop”, by M. Hickman, Thursday, 8 December 2005

4. http://www.open2.net/money/briefs_20051206_primark.html [accessed 15 November 2009]

5. http://www.supplychain.cn/en/art/2769/ [accessed 15 November 2009]

6. Gregson, R. (2009) MGT 7100 Managing Processes, Lecture 1