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Shopping centres key for Primark’s US rollout

Smaller, regional shopping centres will play a key role in building Primark’s brand in the US, finance boss John Bason has told Drapers a year after the value retailer launched across the Atlantic.

Chasing the American Dream

 

Primark made its debut in the US last September to great fanfare, opening large-format stores in prominent high street locations in cities such as Boston. However, Bason, who is finance director at Primark’s parent company Associated British Foods, said the focus is now on smaller stores in shopping centres.

Primark’s three most recent store openings in the US were in regional malls in Danbury, New England; Willow Grove Park, Philadelphia; and Freehold Raceway, New Jersey. These are on average 54,366 sq ftcompared with the Downtown Crossing store in Boston, which is 77,300 sq ft.

“The [smaller stores] are doing very well for us,” said Bason. “People [in those areas] are now aware of Primark, and that’s something we are really working on. It’s all about getting people through the door. Once they are in, they love our prices and our product.

“It’s important for us to be in these centres as the high street is much less dominant in the US compared with the UK, Germany or France.”

Primark will open three more US stores in the next financial year, bringing its total in the country to eight. It will also extend the Boston store’s selling space by 20%.

Bason would not be drawn on how many stores it will eventually have in the US.

He added: “Our strategy of keeping to one area in the US to begin with is the right one. We have to find out what works for us, once we find that formula we will use that to expand.

“It reminds me of the UK 15 years ago when we first opened in Manchester. It took time to build the brand – it will take time in the US as well.”

Closer to home, Primark said it will not increase prices next year to counteract currency fluctuations caused by the Brexit vote in June.

The business expects like-for-like sales to drop 2% for the year to 17 September, and said the weak pound would hit margins in the next financial year. However, Bason said Primark remains “committed to value”.

“We remain committed to value,” said Bason. “In the market generally I would not be surprised if pressure on the cost base caused prices to go up, but we remain committed to our customers. We have been here before when cotton prices increased in 2011 and we stood by the UK, we will continue to do so.”

Bason said consumer confidence in the UK had not been impacted since the Brexit vote: “In the two months following 23 June I can honestly say we saw no impact. The week after the vote sales were soft, as there was a shock effect, but if you look over the summer there was no real difference. In fact in July we saw good like-for-like sales growth.”

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