Primark reports that the demand for comfort wear has persisted throughout the Summer as the firm saw strong sales in leisurewear.
The rise in the popularity of comfort wear drastically increased during the COVID-19 pandemic as many consumers began working from home, “as people no longer had to wear smart outfits for the office,” the BBC reports.
Primark stated that it expected profits to “beat expectations,” however, despite this announcement and the rising demand for loungewear, Primark reported lower sales in June. The BBC reports and attributes this to the “pingdemic” as consumers around the UK have made the change to online.
This is evidenced by the growing popularity of online retailers such as Amazon, as well as clothing retailers such as Asos, who, due to their success during the pandemic, managed to buy out Arcadia Group, which includes high-street favourites such as Debenhams and Topshop.
Debenhams in particular struggled during the COVID-19 pandemic as due to the health risks associated with the virus, consumers, especially the elderly, strayed further away from physical locations, thus reducing sales for high street stores such as Debenhams.
This had a negative impact on revenue and profits, thus forcing the retail giant to close all of its 124 stores around the country.
Consequently, similarly to Debenhams, Primark is seeing a decrease in demand for its products and services. However, the pattern is not the same everywhere, other fashion designers, such as the prestigious Saville Row trailers have diversified their products and innovated to produce gym wear and loungewear to take advantage of the growing demand for the said products.
This decision to innovate will likely bring about higher sales and profits as the firm is reacting to the changing consumer tastes and fashions. Because of this, despite many high street stores shutting down, not every physical business is going online. However, it may be inevitable that, due to the loss in footfall levels in the high-street, many firms, including successful ones such as Saville Row Tailers, may be forced to go online as the reduction in spillover demand in the high-street will have a negative impact on profits.
This is because the trend of working from home is also stifling demand for clothing retailers as office workers who used to traverse the high street on their lunch breaks to purchase food and other commodities are no longer there to demand services.
At the same time changing consumer fashions that favour apps and online methods are making the high street even more redundant.
Many fashion designers, such as the prestigious Saville Row tailors, have begun to create “gym wear and loungewear” to take advantage of the surge in demand for such products, helping achieve higher sales and therefore more profit.
Hence, Primark, which saw sales drop by 24% in the first four weeks of the quarter to a decline of 8% in the last four weeks, may be forced to also close its physical stores and open a brand new space online.
“Even with dwindling in-store sales, Primark has managed to maintain its market share compared to the same period two years ago,” said Gemma Boothroyd, an analyst at Freetrade
Boothroyd then stated that despite the fierce competition in the online retail sector, Primark “MUST go digital, and do it right, as its staying power won’t last forever.”
“If they don’t change, the firm will find itself in an omnichannel no man's land."
However, whether Primark has the infrastructure to compete with already established online retailers such as Amazon and ASOS is for time to tell as the lack of willingness to move online is definitely setting the firm back as an overreliance on physical stores may be the nail in the coffin for Primark, hence, this lack of change may doom the clothing retailer into becoming the next Blockbuster.
Written by Hubert Kucharski
Research compiled by Billy Ryan