Primark - Executive Summary The UK retail market has seen...

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Executive Summary The UK retail market has seen as sustained growth of 5%, although it is fragile as the speculation. In June 2005, 2.9 million people, which equate to 11% of the UK workforces, were employed in the retail industry and contribute to the UK total retail sales of GBP 260b. While almost retail sectors rose by 0.4% between April and May 2007, only textile and footwear declined. Large retailers seem to maintain the dominant attitude and keep increasing their market share such as Mark&Spener, Waitrose, and John Lewis. These premium operators will continue their strong trading performance through diversifing their product range and customer service with their focus on high-value, high quality. Internet shopping may hold a stronger role; however, it will have not replaced the shops in high street. Shopping in stores will still be the most important channel. In recent years, while some low cost fashion retailers such as Debenhams, M&S and Next have reported losses, Primark has impressed with good profits and is likely to lead the target market of under 35 years old people with the trendy fashion clothing store. According to Gelb (2005), Primark has appeared in the fashion bible Vogue and has won major prizes at the High street. 1
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1. Area of Study Primark owned by Associated British Food is one of the biggest low-price clothing retailers (Telegraph, 2009). It headed in Ireland and then expanded to other European countries with over 200 stores. According to Primark, the company currently has 36,000 employees and its sales revenue in 2010 was 2,730m GBP. Primark provide various products such as home, menswear, womenswear and childrenswear. 150 is the number of Primark's stores in the UK; therefore it is not difficult to notice that UK is the main market of Primark. This essay will focus on this region. However, there are now some considerable threat towards the company's benefits and revenue such as the high inflation rate of 5.2% and CPI of 4.5% (Statistics, 2011). Moreover, Business Economic (2011) published that the price of cotton, which is the raw material for almost products of the company, has gone up by 50% in this year. Finally, Primark has faced with stronger competitiveness from other clothing retailers for 2
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example Mark&Spencer, Zara, and Asda. Therefore it is worth to concentrate on the clothing section of the company. 2. Product Life Cycle Stage Product life cycle (PLC) is an economic theory that was firstly developed by Raymond Vernon. According to Kotler et al (2010), PLC combines five distinct stages as shown in the graph 1. Graph 1. Product life cycle It is known that products of fashion are introduced and then grow very quickly. They have a brief maturity and then decline rapidly. Primark, generally, is a fashion company therefore the majority of revenue of Primark comes from selling clothing. If looking at the figure 2 it is easy to see that the sales and profit have increased dramatically during ten recent years. However, in the first half 2011 Primark has seen its operating profit decline by 5% in comparison with that at this time last year (Hodgson, 2011). Therefore,
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