If its first month of business here is any indication of things to come, life in America will be very good for Irish cheap-and-chic retailer Primark.
Four weeks ago, the Dublin, Ireland-based division of UK company Associated British Foods, whose 270 stores in Europe have been a huge hit with consumers across the pond, launched its first-ever U.S. store in Boston’s Downtown Crossing. The September 10 opening was a low-key yet festive affair, complete with balloons, a ribbon-cutting by mayor Marty Walsh, and a human tunnel of store associates cheering and welcoming the first shoppers.
Although the crowd of a few hundred who entered first on opening day was presumably smaller than expected (the crowd control barriers set up outside the store were reportedly prepared to handle thousands), once word got out about the retailer’s on-trend apparel, accessories and home goods offered at rock-bottom prices, shoppers began flocking to the store in increasing numbers. Earlier this week, a store associate working in the home goods department said that by the last Sunday in September the crowds had grown so big inside the store that would-be shoppers had to wait outside for traffic to thin out a bit before being let in.
The New Boston Store
The U.S. flagship is a four-story 77,000 sq. foot emporium located on Washington Avenue in the historic Burnham Building, once the home of Boston’s iconic Filene’s Department store. Shoppers are welcomed by a neon-trimmed “Hello Boston” mural before entering the women’s apparel space in which fashion is beautifully displayed on mannequins (the store has 500 of them), piled high by size, color and style on tables, and arrayed on walls and t-stands. The décor is befitting an upscale specialty flagship, with open sightlines, upbeat music, elegant fixtures, attractive artwork, judicious use of large video screens and signage that is attractive and tasteful, giving shoppers almost no preparation for the reverse sticker shock that awaits them.
“These are seven dollars?” cried an incredulous woman in her early twenties, holding up a pair of indigo mid-rise skinny jeans (65% cotton, 33% polyester and 2% spandex imported from China). Pricier versions at $15 and $22 contained a higher percentage of cotton and were made of heavier fabric with more detail.
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In the expansive sweater area, styles ranged from basic 100% acrylic crewneck pullovers in solid colors priced at $8 to trendier popcorn stitch, drapey cardigans and others priced in the mid-teens and above. A sweater coat bearing a very close resemblance to one at Urban Outfitters was one-fifth the price. The vast majority of product was from China and Southeast Asia.
On the second floor is more women’s apparel and accessories, including a huge activewear department. In the shoe department, racks of $11 stiletto pumps and $22 fringed suede booties were going like hotcakes.
Men’s is on the third floor, and children’s and home on the fourth.
As shoppers fill their Primark-supplied shopping bags and carts, store associates continuously replace empty spaces on racks and tables with new merchandise.
In the men’s accessories area, an associate was refilling a rack of $7 plaid woven acrylic scarves. “We’re selling thousands of these,” he said, “and the weather hasn’t even turned cold yet.”
According to an analysis done earlier this year by Alliance Bernstein and reported in the Wall Street Journal, U.S. Primark prices are reportedly at least 20 percent below Forever21 and 40% below H&M. The retailer’s determination to offer the lowest prices in the marketplace is carried out in a systematic way. Store managers scour the competition, changing prices if they find a like product elsewhere that is cheaper. A table of cotton/spandex camisoles in a dozen colors was priced at $1.60 to undercut Forever 21’s lower-priced F21 Red brand, which was offering them at $1.80.
Focus on Service
Customers can pay at one of 73 cash registers located at checkout stations on each floor. The 89 fitting rooms are so spacious and comfortable they look like lounge areas in a luxury department store.
Sitting areas strategically placed in the store give customers a place to rest, regroup and recharge their mobile devices. The one located adjacent to the menswear department has a big-screen TV tuned permanently to ESPN.
The store opens at 8 a.m., an hour earlier than the competition, so that people on the way to work can stop in to check out what’s new or pick up a pair of hosiery or tie to wear that day.
“It’s all part of the service, to enhance the customer experience,” said Jose Martinez, Primark U.S. President, as he showed visitors through the Boston store. Prior to relocating to Boston for his latest challenge, Martinez opened several European regions for Primark including Spain and France.
Today Millennials, Tomorrow Gen X
So far, most of Primark’s U.S. customers are Millennials, or Gen X-ers in their twenties and early thirties, a group that represents around 30% of the U.S. population and an even larger share of total apparel spending. This demographic tends to love shopping, particularly for apparel and the other categories Primark sells, and is extremely style- and value-conscious.
A group of young female medical students looking for dressy separates on the second floor said “We are on a limited budget, but want trendy fashions that we can wear a few times and then get rid of. So this is perfect for us.”
Over time, the company hopes, its growing throng of twenty-something consumers will be joined by slightly older parents of young children who, like their European counterparts, will learn to appreciate its collection of fashionable value-priced childrenswear.
Transforming the Neighborhood
Downtown Crossing, whose population has grown 50% in the past decade, is undergoing a renaissance that will transform it into one of the main shopping and lifestyle districts in the city. The Burnham Building’s $670 million renovation was led by Millennium Partners, and includes the construction of a 625-foot high glass tower next door that will reportedly contain luxury condos, office buildings and retail space (including, reportedly, an 18,000 sq. ft extension of Primark that will open in 2017). The Burnham Building store is adjacent to Macy’s and a stone’s throw from TJ Maxx, DSW, Gap Factory, Marshall’s, and H&M. Forever 21 has reportedly signed a lease to open a store in the area as well.
The new Primark has apparently helped speed up the transformation of Downtown Crossing: Nearby grocery stores have reported a huge surge in business on weekends since the Irish retailer opened there.
U.S. Growth Key to Primark, ABF
Primark is a key growth vehicle in the ABF business portfolio. Its $8 billion in global sales in 2014 is expected to grow to $9 billion in the fiscal year that just ended in September. Last year, Primark represented 38% of total company sales (up from 24% in 2007) and almost 57% of its operating profit.
Over the next twelve months, Primark will open another 7 stores in the northeast U.S., located mostly in upscale suburban malls along an approximately 400-mile north-south stretch reaching from Boston to Philadelphia. In addition to 3 stores in the Boston area, there will be Primark stores in Danbury, CT, Staten Island, NY, Freehold, NJ, and in the Willow Grove and King of Prussia, PA, suburbs of Philadelphia. The company has also opened its first U.S. warehouse in Bethlehem, PA, from which it dispatches daily deliveries of merchandise to the Boston store.
One glaring omission from the Primark U.S. strategy, however, is e-commerce. The company claims that its business model and narrow markup structure prohibit the required investment.
So, without the ability to shop Primark online, and until the additional U.S. stores open, Primark’s U.S. fans will just have to come to Boston.
Said one college student shopping for handbags on the second floor, “I have six friends coming from New Yotk to visit me this weekend. Our first stop on Saturday will be Primark.”