Primark has everyone scratching their heads because it continues to stick with its strategy to not sell online even though it is forecasting £1bn losses through this latest lockdown.
Many people cannot fathom why Primark sticks with this strategy, despite the clear lifeline that e-commerce has provided retailers – essential and non-essential alike – through various UK lockdowns and the pandemic. Nor do they understand the rationale for it when customers are crying out for an online proposition from Primark. Russell Loarridge, Director, ReachFive backs Primark and explains why it will succeed long-term and how many e-commerce retailers are actually no different to Primark in their approach to sales.
Primark has always positioned itself as a low-end, bricks n’ mortar retailer where people visit their stores to scrummage around and buy cheap, but fashionable clothing. There is the low-touch customer experience (CX) people have come to expect and its objective is to reduce costs in the supply chain in order to make a profit. The fact that consumers are crying out for an online proposition doesn’t come as a surprise, as many miss the value from Primark through trying economical times. Aside from e-commerce not forming part of its sales strategy, Primark doesn’t have the DNA or skillset to deliver the same proposition online. It doesn’t have the marketing or operational prowess to make this happen.
Instead, executives at Primark are experts at managing the cost in the supply chain and their point of sale high street costs, to maintain Primark’s survival through the pandemic closures and limited times that they are allowed to open. They are negotiating cost reductions across the board, like any good retailer, in efforts to continue to pile goods high and sell them cheaply.
This approach generally sees Primark providing customers with stores that offer the most basic layout and interior design, opting for a focus on functionality to drive fast and efficient instore sales. Primark is also playing the long game as it has put staff on furlough, re-negotiated supplier contracts, awaits the UK consumer to become vaccinated, weathers the storm and eventually opens to their public again.
In contrast, while e-commerce retailers like ASOS and Boohoo profit through the pandemic, it is worth pointing out that their online CX is actually exactly the same as Primark’s instore CX, except that it’s actually less effective, despite the profits made. At the moment, consumers shopping at the likes of ASOS and Boohoo land in an online store and scrummage ‘virtually’ around for products they like. Generally speaking, this shopping experience is inefficient and impersonal. This is where customer identification and access management (CIAM) technology helps. It enables brands to track, with consent, who accesses their website and what their preferences may be; thus, allowing retailers to form a better picture of who their customer is, with a view to personalising their shopping experience. What if, after logging into a website, retailers could automate product recommendations and marketing deals to customers, to drive sales and loyalty?
Consider luxury goods retailers too. When buying luxury goods, people often visit a store and soak up the experience. There is often a sense of status associated with visiting certain brands’ stores: the red carpet is rolled out, champagne can be offered by some, the shop assistant woos the shopper, the product is purchased and the packaging is spectacular. The customer lives and feels the brand as they enter and leave, and they take that experience with them as an element of the product.
In lockdown, luxury goods retailers have suffered a downturn in sales. As outlined above, it was never just about the product. What if luxury brands could replicate their instore experience online? What if they could get closer through personalised marketing, relevancy and offers to their online consumers based on preferences. CIAM allows brands to provide a more personalised bespoke, white glove service to their demanding clientele.
Is Primark doomed to fail? No. It will survive. It has a strong parent company. Spring is around the corner. The vaccine is on the way. Its strategy is effective for now. The bigger question on the horizon, though, for online retailers is whether they want customers to continue to scrummage around their website; or if they want to form lasting, profitable, long-term relationship with shoppers. ASOS, Boohoo and others are thriving now, but what is their long-term sales and CX strategy? Where does personalisation fit in? How are they planning to foster ongoing relationships with customers that stand the test of time? They have the online DNA in place to thrive, so why not create a dynasty?