Created in 1969 in Ireland, Primark has become one ofthe heavyweights of clothing distribution. Generating 30% of the AssociatedBritish Food’s revenue, Primark is already established in seven Europeancountries particularly in the United-Kingdom, Ireland, Europe and UnitedStates. We will examine the recent internationalization of Primark in France,particularly in the Paris region during December 2016. Primark’s mission statement and corporateobjectives aim to always be consumers’ first choice and maintain this positionso that the consumers do not go for opponent brands. Primark’s goal is also toachieve an improvement on sales and make an expedition on the market share. Forthat, its business strategy primarily focuses on finding cheap sourcingsupplies and in parallel directly purchase from the factories.
By focusing on the development of its internationalretail presence, Primark aims to continue to entice new customers by providingaffordable, trendy and good quality products in an ‘exciting, fashionable andfun’ in-store environment. ‘With a uniquecombination of the latest fashion andThe Irish giantdiscount fashion celebrated Tuesday the doubling of the surface of its store inCréteil, now its largest in France. There are already 8 stores but targets 13by the end of 2017, and has just confirmed that it will also arrive in Le Havreand Strasbourg.
I. REASONS FOR & ROLE OF INTERNATIONALISATION As taking full advantage of the economic crisisstriking deep into Europe, Primark, with its ‘made in Asia’ labels andreputation of imposing ruthless conditions on its suppliers, is already positionedas the number one fashion in volume in England, Spain and in Portugal.After conquering the UK market, its expansion towardEurope has started in 2006 in Spain, following the Netherlands in 2008,Portugal in 2009, Austria in 2013 and finally arriving in France.
Planning thisinternationalization into the French market marks the opportunity to meettypical French consuming needs and experience in a French environment.In 2016, its overall turnover reached 5.9 billionpounds, increasing by 9%. With 320 stores of at least 3,500 m² and more than68,000 employees worldwide, Primark is a European giant still poorly known inFrance by its location, mainly on the outskirts of cities, in shopping centres.This should change however next year, because the brand has taken over thebuilding Galeries Lafayette in the centre of Toulouse. II. CHOICE OF THE TARGET MARKET CONSIDERING THE STATED REASON FOR INTERNATIONALIZATION France is seldom an evident option as a sales base,rather its rooted position as a fashion hub and site of haute couture givesspace to strong valuable branding initiative.
With Stan Smith-inspired sneakers at 11 euros, 6 euros shirts, 3 euros bras or59 euros costumes, Primark is far for being affected by the crisis of clothing.In France, where fashion sales stumbled more than 4% in July, Primark’s have remainedstable and have been doing well ever since. More than confident, the Irish juggernautof low prices fashion maintain its success by planning immense stores at LeHavre and Strasbourg.In the process of internationalization, choosingMarseille as the first anchor point in France was not a coincidence. Whenopening in other countries in Europe, instead of opening in capital cities,Primark opened next to the most important cities as a solution for loweringcosts when expanding to France by having a test area. Thanks to rents lowerthan Paris, the Irish group has been able to evaluate its success andpopularity without risking its volume policy. This first opening in the south of France has benefitted from a segmentof population with few means.
The opening in the Paris region in 2016, as afashion capital, raises the brand image both for tourists and French consumers.The stagnation of the French apparel market since 2012has created a strong demand for low-cost offerings that do not compromise onstyle and the recent implementation of Topshop has begun to develop a taste forBritish fashion. It is evident that France a valuable retail market followingthe success in other European countries such as Spain.France is no stranger to fast fashion with brands suchas Zara and H&M which are present in multiple regions, as a matter of fact,the top five clothing brands in France are low prices brands. As a matter offact, domestic first price brands such as Kiabi and La Halle will be stronglyimpacted by the arrival of Primark on the market. In comparison, the averageprice of a Primark item is two times less than its Swedish competitor H&M.Studies showed that French consumers’ needs weremainly based on retailing, price, proximity and convenience. In parallel withPrimark, the factor of price was already dealt with, with regards to the convenienceand proximity, their strategy of implementing their stores in places likeshopping malls seemed to be the most ideal location especially as Primarktargets a market of youth, some may not be able to drive so shopping mallswould be easier access as opposed to industrial zones.
III. COMPANY’S MARKET ENTRY STRATEGY / comparewith other market entries Primark aims primarily at implementing in shopping centreswith 5,000 square meters average shops with the lowest possible rents. The decisionof locating their stores further way from big cities suggests that the brand isrenounces to the tourist-magnet flagship store trend but rather targets localbuyers as their central sales base for its rock-bottom prices products.We identify the Uppsala model that is used by Primarkin Continental Europe, notably in France, Ireland, UK, Portugal, Netherlandsand Austria. The incremental internationalization of Primark in ContinentalEurope is marked my sequent steps aiming for a developing foreign dedication.
Hence, Primark has exercised a step by step expansion by experimenting onforeign markets that are physically close or neighbours. There is a strongmarket commitment and less important market risks. The process is characterizedby the establishment of a foreign sales subsidiary as well as foreign production(Johanson & Vahlne, 1977; 1990) By looking at the French market in France, bothwomenswear and menswear are equal value.
In 2016, womenswear represented 51¨%of overall value. Targeting the French market is very beneficial to the brandas study has shown that women aged between 15 and 29 years old are the mainconsumers in the clothing industry. Though Paris embodies the capital offashion, the brand might not fit into the basic minimum wardrobe of the Parisianswho focus more on quality and brands. France is a challenging market in termsof legislation as it is characterized as inefficient and long in itsprocedures, presenting high taxes, complex bureaucracy and regulations as wellas slow in its justice system but it is a strong economy opportunity as Franceis part of the European Union which presents distribution advantages. Whenlooking at sociocultural opportunities and challenges, fashion is an importantpart of their culture though there is a necessity for adapting the products tothe local tastes. France is a very competitive environment where internationalbrands such as H&M and Zara exercise fierce competition in addition toFrench low-cost must-have brands.
Primark’s strategy operates within the long-runthrough outsourcing, economy of scale and no advertising. By producing hugevolumes of output, the brand relies on manufacturing outsourcing in industriallow-cost countries, mainly led nu Bangladesh. Especially since the EuropeanUnion has removed the rights to goods imported from such countries. But Primarkalso reduces margins to the maximum, as well as its marketing and communicationcosts.
The group does not communicate, except on social networks, where morethan 8 million followers keep abreast of its news. Primark’s focus for facilitating the French marketentry was to focus on hiring local job seekers, many of whom have never workedbefore. In each store, a dedicated human resources management team trains them,accompanies them, and internal promotions are encouraged to motivate them.It is hard to find a lower price elsewhere in France.The brand constantly adjusts the price according to the market, for instance ifthe average market prices decrease. In stores, labels indicate falling pricesfor sweaters passing from 13 to 10 euros, or little dresses reduced from 12 to8 euros. Depending on the successes identified in each store by the managersand team leaders, restocking and new products are ordered.
This process is donelocally by the teams without going through computers which allows each store tooptimize assortments according to the demand as well as giving moreresponsibility to employees. All the employees received trainings in which theyare taught about the international standards as one of their corporateobjective is to gain international organization for standardization standards.Essentially, employees are taught about customer relationship management. Thispragmatic and permanent adaptation to local expectations is one of the reasons forPrimark’s success. IV. IMPLEMENTING OF THE MARKETING MIX (successor failure of adaptation? / standardisation of various elements of the mix) 4Ps model of transactional marketing (TM or marketingmix)In regard to the implementation of the marketing mix,the product elements offered by the brand are very diverse with a broad productmix ranging from clothing to home wear, accessories to beauty.
However, theyfail in offering high standards of quality which is often one of the mainconcern for French consumers. Primark’s product element market strategyprovides affordable and stylish apparel for kids as well as men as women of allrange of age, they approach the product element by primarily focusing onclothing and do not use ways of advertising and communication such as fashionshows or television publicity to publicize their clothing range but rather bysimply showcasing its look good pay less slogan that people see andcommunicate. By embodying cheap chic to a new level and combining runwayinspired looks with rock-bottom prices, Primark maintains the same brand imagein very country even with different languages. Primark’s communication is made with the last threepieces of the marketing mix which are people,process and physical evidence and not through the usual communication toolssuch as advertising or personal selling as these are more expensive, they relymore on word of mouth motion from loyal customersPrimark’s target market is less than 35 years old,they use cost leadership which means that the brand provides the same range ofproducts as its competitors but at lower prices thanks to their low cost in themanufacturing stage.
Primark’s strategy is less driven by branding but ratheron buying and logistics by detecting fashion trends and collaborating with cheapersuppliers. As a matter of fact, a bigger attention brought to in-storepurchases which is why there is a strong emphasis on the store design andmerchandising whilst the rest of the fashion industry increasingly turn to theonline channel. Primark relies entirely on its stores by paying high level ofattention to store design and visual merchandising and now includes newfeatures of video displays the new collection. Keeping the store modern andenjoyable will be vital to Primark’s success. Its online website primark.com isavailable in all the different languages in the countries they are operatingshowing their multilingualism. Moreover, Primark has built a very strongdistribution network and efficient processes thanks to their warehousescomputerizing both sales and stock control.
While recruiting, Primark has incorporated managerialteams of French speaking members preferably those who have lived in France fora more efficient understanding of the culture and possible changes. All membersespecially the ones without a French background need to go through an extensivelinguistic and cultural changes training so that they can become accustomed toFrench people and culture In order for Primark to remain on its game in the verycompetitive and demanding customers environment, they have established newrules and regulations changing languages by investing in updated IT for theircommunications website. They have created a French website which helped inattracting more French consumers. In stores, Primark has significantly builtupon the store’s design, the clothing lines are well staged, backlit photos onthe walls.
Relaxation areas with phone chargers are available to customers. Onthe other hand, the packaging is succinct, the furniture very sober and thereis no music. Primark has created a unique experience on the inauguration daywhere all employees had to greet customers with music and songs, arms loadedwith blue balloons, a giant cake with Primark logo and a special buffet markingone of Primark’s greatest successes.Indeed, the average basket, from 35 to 40 euros, istwice as high as in countries such as Spain. The French consumer market is verydiverse, mixing families, young people and seniors with both very small orbigger budgets.
The store is directly connected to Paris by metro, theattendance is very local. As a matter of fact, Primark managed to attract aquarter of the customers coming from the capital.France might encounter possible difficulties whileinternationalizing in France, fashion is an important part of their culture,French people are religiously attached to their luxury brands and don’t usuallygo for lesser brands or unbranded clothes.
Primark is unable to provide Frenchconsumers with high-end branded clothes.The threat of a new entry is quite low since the costof setting up a company in France is high, but the competition is very strongamongst the different brands along with the possible threat of productsubstitution, thus the buyer power is fragmented into several brands. Bigcompetitors such as Kiabi or Zara could pose a big threat as these brands areusually seen as trendsetters among the French population.
According to Porter’sFive Forces, we can conclude that there is a moderate competitive rivalry asthere are only a few retailers with such low-priced and vast ranges ofproducts. Following the SWOT Analysis, Primark has succeeded in internationalizing in tencountries with a very organized business structure and made known to consumersfor its low-priced fast fashion. However, Primark still lack of marketingstrategies which could give it a unique image as compared to its strongcompetitors.
Porter’s value chain model shows the set of activitiesthat brands carry out to create value for their customers by looking at theiractivities and how they are interlinked. As a matter of fact, how value chainactivities are performed constitutes costs and impacts profit. Primark couldpotentially improve its marketing and sales by introducing a loyalty program,as well as its procurement by introducing consumer online purchasing. Finally,Primark could improve its technology development by upgrading customerrelationship management platform to be more flexible and able to reportcustomer buying patterns.In addition, there are existing differences between Frenchand English fashion tastes.
French women rather stay away from bright and boldcolours with loud prints and lots of embellishments whereas Primark consists oflots colourful prints and designs. Primark needs to make an adjustment of theseproducts which would bring higher costs but also potentially higher prices. Despite a drop in attendance since the attacks and agloomy summer, Primark continues to attract a lot, to the detriment of almostall its competitors. And to recruit too, to the delight of the cities that hostthe brand.
The mayor of Créteil, but also the ambassador of Ireland in Francewere thus present this Tuesday in Créteil, to thank the leaders of the brandfor having created 200 new positions at the store in Créteil, where 730employees work. This brings to 4000 the number of employees of Primark inFrance, where he already aligns eight stores, opened in just three years, sincehis arrival in Marseille. “The figures are quite remarkable,” saidIreland’s ambassador to France Byrne Nason, reflecting the influence of a brandwith striking strength. Only one store alone can make 40 million euros in salesin its second year.
