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European-based apparel retailer, Primark, bets on the “treasure hunt” instead of e-commerce

Primark is part of a group of retailers that are expanding their physical footprints, even as more Americans shop online and other retail giants are investing heavily into their digital operations. They have their eyes set on expansion in the U.S, but this dirt-cheap European apparel chain is still resistant to e-commerce — customers can only use Primark’s website to browse products. 

Ireland-based Primark has over 350 stores across 12 countries and opened its first U.S. location in Boston in 2015. Last year, Primark said it’s encouraged by U.S. sales and plans to open more stores in 2019, bringing the total number of U.S. locations to nine. Even the National Retail Federation named Primark the nation’s fastest growing retailer in 2018, but take that number with a grain of salt since it seems this methodology comes from taking the number of current stores (in the US) and considering planned new stores, so adding a few locations doesn’t mean it’s a disruptive new retailer out to destroy competitors. Currently, the retailer has 8 locations all in the Northeast. 

Most Americans won’t be able to shop at Primark since Primark doesn’t sell its products online. It’s a pretty Spartan experience as well – product detail pages with only one picture of the item, no models, item names and prices. That’s all you get. Company executives believe Primark’s business model doesn’t mix well with e-commerce. Primark offers low prices and would have to absorb shipping and return costs or pass them onto the customer. Finance director of Primark’s parent company Associated British Foods, told the Wall Street Journal last year, “The cost to support home delivery can’t be supported with our price points.” 

Like TJ Maxx and Ross, Primark offers the “treasure-hunt” shopping experience that is tough to replicate online, but not impossible – we do it on Etsy and Pinterest. Although Primark doesn’t buy left over inventory from other retailers, Primark believes bulk quantities, fast lead times, and low prices play into the shopping behaviors of its customers. When a consumer first walks into a Primark store, the baskets right at the entry show that the Primark shopper tends to buy in larger quantities because of their cheap prices, wanting to fill the baskets with the newest fast-fashion. On a recent visit to a store in Europe, I didn’t find the experience to be all that different than an H&M, which you can buy online or Lefties, a low-price point Zara brand, that offers click & collect. I will give credit to a fantastic and efficient fitting-room experience. However, unlike the “treasure-hunt” retailers, assortment doesn’t vary from store to store, it’s easy to track inventory at the store level, and it could be quite simple to offer, at minimum, a click-and-collect option for customers.

While currently the model seems to be working for retailers like Primark and Ross, there could be a new opportunity to disrupt the treasure hunt experience both in store and online. “What Ross and TJ Maxx are able to do to disrupt themselves and to create this experience at that lower price point (whether online or instore — my words) is something to keep an eye on,” says Anne Mezzenga in a previous After The Five

While looking only at today’s US sales numbers for Primark, it’s easy to see why leadership doesn’t feel the need to divert resources into the e-commerce space. However, treasure hunt retailers like Primark and Ross should be adding the word “yet” to the end of each statement about the behavior of their consumer. “Our consumer likes going into the store and no one can create a good treasure hunt experience… yet.”

It’s most likely that these types of retailers won’t be leading the charge of creating a digital treasure hunt experience due to their aversion to the costs associated with shipping and the fact that apparel online returns still hover in the 30%-40% range, but this type of disruption doesn’t need to come from a competitor that they define. 

Online UK-based apparel retailer, ASOS, has successfully solved many of the friction points associated with returns and fit size by adding a fit tool using data from multiple brands and real return information from similar consumers. ASOS is on their way to creating a shopping experience of discovery by blending editorial content, social shopping channels, marketplaces, and inspirational features on their site and mobile app. The oldest online treasure hunt eBay is still able to create the rush of the find, as well as Pinterest shopping and Etsy stores.

As Primark plans to open a 160,000 sq ft mega store in Birmingham UK, next month, and has no interest in expanding its online presence, they have a unique opportunity to create a perfect partnership with retail or non-retail players that specialize in the behavior of finding unexpected things whether it is love (Tinder) or good food (Uber Eats). Would it hurt to test out how much customers are willing to pay for shipping?

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