The death of the high street has been much exaggerated according to John Bason, finance director at Primark parent company Associated British Foods (ABF), after the value retailer ended its partnership with Asos this week.
Primark confirmed it was ending its partnership with Asos, in which a select number of items had been sold online since June. At the time, the move was praised by analysts and industry experts as a good deal for both, and was widely seen as Primark’s first step towards an online strategy.
But the retailer confirmed it has no plans to launch its own transactional website, meaning in a matter of weeks it will return to a bricks-and-mortar-only approach.
The decision was revealed as ABF increased its profit forecast ahead of full-year results due in November, largely as a result of Primark.
The retailer is expected to record a 21% increase in sales for the 52 weeks to September 14 at constant currency, with like-for-likes up 5%.
Although the deal with Asos will not be extended, or transferred to another pure-play etailer, Bason said sales had “certainly met expectations”.
Bason explained: “We had always said it was about gaining market intelligence over what would sell well – a toe in the water if you like.”
Instead of launching a transactional website, Primark is upgrading its digital platform to act as a “consumer-friendly showcase for what Primark has to offer”.
However, Bason told Drapers the like-for-likes demonstrated how Primark’s high street offer was “the driving force here”, giving management confidence in its offine approach.
Bason acknowledged that not having a transactional website could potentially limit Primark’s reach but insisted that with “extraordinary sales densities and footfall, real estate really works for us”.
He said: “We drive footfall in shopping centres or parts of the streets we are on. We recognise the direction that online sales are going in, but for Primark, the high street is our way of reaching consumers.
“Some people have suggested we could see the death of the high street but that’s a remote possibility in our minds,” Bason said.
He added: “Primark is part of the regeneration and renovation of the ever-changing high street. We see ourselves as a key part of the high street in attracting and generating footfall – what can be wrong with that?”
Primark has already committed to opening several new stores in UK towns and cities over the coming year, including Warrington, Bath and Canterbury – all new locations for the business – as well as an additional one in Leeds.
During the financial year that comes to a close this week, Primark has opened 16 new stores, as well as expanding existing stores in Manchester, Newcastle, Chester and Dublin, adding 800,000 sq ft of selling space.
The business is also planning to extend its footprint further, with the first of five stores landing in France in December.
In total Primark now covers nine million sq ft of retail space.
The period for which Primark was reporting also covers the Rana Plaza building disaster in Bangladesh in April. The collapse of the factory, which manufactured clothing for a number of brands including Primark, killed more than 1,100.
Primark, which moved quickly to offer compensation for victims and their families, saw no apparent change in consumer attitude towards the retailer in the months following the incident (for more see p4).
Bason said: “The tragedy happened right at the end of the very cold spell in the UK, when the weather warmed up. I would say that the effect of the warmer weather [had] by far the biggest effect.”