Primark faces losing up to 42% of its customers in the aftermath of child labour allegations, an exclusive ICM Research poll commissioned by Drapers shows.
The value fashion retailer has been the darling of the high street during the downturn because of its high volume and ultra-cheap business model.
But it appears to have lost support from a significant chunk of its core shoppers in the 18- to 44-year old bracket following last week’s BBC Panorama exposé about its supply practices.
The Drapers-ICM poll found that 42% of people who shop at Primark were now less likely or a lot less likely to shop at the retailer directly because of what they had heard in the news. 68% of them had heard about child labour allegations and 38% were aware of issues with suppliers in India.
Primark sacked three of its southern Indian suppliers featured on Panorama for sub-contracting work without the retailer’s consent a week before the documentary aired.
The potential loss of such a large number of shoppers would be a massive blow to Primark, which relies on huge volume sales to support its tiny margins.
One value expert said: “Primark is working on such low margins – the industry believes these to be between 30% and 40% – that a drop off of just 5% in volume sales would harm its profits significantly.”
The negative consumer sentiment flies in the face of the generally held industry view that Primark would escape the child labour allegations relatively unscathed because of shrinking disposable income.
Whether as many shoppers will, in fact, abandon the retailer is unclear. Only 3% of Primark shoppers cited ethical production as a key consideration when out shopping and 46% of shoppers still cited value for money as the most important factor.
Maureen Hinton, senior analyst at consultancy firm Verdict Research, said: “Primark needs to invest in good PR in order to regain consumer trust. But unless there is a sustained campaign against it, any negativity will lessen over time.”