SWOT analysis of Primark

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SWOT analysis of Primark

This is a detailed SWOT analysis of Primark. It aims to analyse the strengths and the weaknesses of Primark. It also aims to explore the opportunities and the threats facing the company. Primark is an Irish fast fashion retailer headquartered in Dublin, Ireland. It was founded in 1967 in Dublin under the name ‘Penneys’ by Arthur Ryan on behalf of the Weston family. Associated British Foods (ABF) is the parent company of Primark.

Strengths of Primark

Primark has grown quite rapidly over the years and success in the home market of Ireland has led the company to expand to the UK and many other countries. As of March 2019, Primark has over 350 stores and operates in eleven countries across Europe and America (Primark Stores Limited, 2019). It is the fastest growing retailer in the United States (Hanbury, 2018).

Primark is expected soon to be the biggest selling clothing retailer in the UK. As of May 2018, the company has a 7% market share and has a short way to overtake the market leader, Marks & Spencer (M&S). Marks & Spencer’s market share is currently 7.6% (GlobalData Plc, 2018).

Primark offers a wide range of products and all of its products come under five broad categories i.e. women, men, kids, home, and beauty. Most of the products fall in fast fashion which entices consumers to purchase an array of items. In fact, many consumers buy the same products when the first ones show wear and tear.

Primark offers trendy clothes at amazingly low prices. In the United States, its prices are between 30 and 40 percent cheaper than those of its competitors. Primark pursues a cost leadership strategy to offer consumers low and affordable prices. It has little to no advertising costs, and most of its products are made in countries such as Bangladesh, Pakistan, India, and China. These countries offer tremendously low labour costs that eventually enable Primark to sell its products at low prices. Likewise, selling a lot of the same items requires the company to place large orders with factories and suppliers which also enables it to benefit from economies of scale to keep the prices low.

Weaknesses of Primark

Primark does not sell its products online. It tested out e-commerce in 2013 via ASOS website; however, the partnership came to a very prompt end after 12 weeks (Hanbury, 2018). Many people argue in defence of Primark that the company offers rock-bottom prices resulting in small profit margins. Therefore, online trading may not be suitable for Primark due to high shipping and return costs of products.

Primark has found itself mired in a number of controversies over the years. For instance, it is one of the 260 employers that have been identified by the UK government for paying staff less than the legal minimum wage. Primark was found to have failed to pay £231,973.12 to 9,735 workers in the UK (Hodgson, 2017).

While Primark offers trendy clothes at amazingly low prices, many customers complain that its products are of poor quality and made for the masses with no unique style. With the focus now on climate change, many also decry the lack of eco friendly practices and products on offer by the fashion giant.

Opportunities for Primark

Primark undoubtedly has the opportunity to grow further in the UK and Ireland. The UK offers fantastic prospects for expansion and it is evident that Primark focuses on further growth in the country. In fact, the biggest Primark store in world is scheduled to open on 11 April 2019 in Birmingham, England. Primark also has plans to open new stores in the USA.

As mentioned above, Primark operates in eleven countries across Europe and the United States. Therefore, operating in other countries particularly in both Eastern and Western Europe is worth exploring. In fact, Primark has plans to open stores in Slovenia, Poland, and Czech Republic very soon.

Threats to Primark

Threat is the last element to address in the SWOT analysis of Primark. Primark faces threats from a number of fierce competitors. The main competitors of Primark in the UK are Marks & Spencer, Next, Arcadia Group, ASDA, TK Maxx, Tesco, JD Sports, Debenhams, and Sports Direct. The main competitors of Primark in the United States are Walmart, Gap’s Old Navy, Forever 21, Kohl’s, J.C. Penny, and Macy’s.

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Last update: 22 March 2019

References:

GlobalData Plc (2018) M&S to lose its decades long status as the number one clothing retailer to Primark, available at: https://www.globaldata.com/ms-lose-decades-long-status-number-one-clothing-retailer-primark/ (accessed 21 March 2019)

Hanbury, M. (2018) The fastest-growing retailer in America doesn’t sell clothes online, and there’s a simple reason why, available at: https://www.businessinsider.com/primark-does-not-sell-online-why-2018-8?r=US&IR=T (accessed 20 March 2019)

Hodgson, C. (2017) Primark and Sports Direct failed to pay more than 10,000 workers minimum wage, available at: https://www.businessinsider.com/primark-sports-direct-failed-to-pay-minimum-wage-2017-12?r=US&IR=T (accessed 20 March 2019)

Primark Stores Limited (2019) About us, available at: https://www.primark.com/en/about-us/about-primark (accessed 10 March 2019)

Photo credit: Primark

Author: M Rahman

M Rahman writes extensively online with an emphasis on business management, marketing, and tourism. He is a lecturer in Management and Marketing. He is a graduate of Leeds Metropolitan University and London South Bank University.