ANALYSIS OF PRIMARK Ana Paola

Topics: Supply chain, Primark, Fashion Pages: 11 (2172 words) Published: April 25, 2015
ANALYSIS OF PRIMARK

Ana Paola Gutiérrez Aldana
April 2015
Fashion & Buying Merchandising

INTRODUCTION
In this project I am going to analyse Primark from a fashion and buying merchandise perspective.
This will involve different aspects of the company's strategies and its competitors.
The company is going to be presented with financials and compared to the market and direct competitors.
For this assignment I have combined what I have learned “in class” during the  course as well as own research and personal background about the fashion industry.
The aim of this Analysis is to present a realistic picture that shows the keys of success of Primark and the reasons behind the success.

1. - The Retailer
Primark is a subsidiary company of the ABF (Associated British Foods) Group. The company was founded by Arthur Ryan in 1969 in Ireland trading as Penny's. It is currently the 4th largest clothing company in UK. History of Primark/Penneys

Its first store opened in Marry Street (Dublin) in 1969.
Within a year, four more stores were open, all in Greater Dublin. Expansion was rapid after the company moved to England in 1973. Primark capitalised on the new fast-fashion trend that started in the 1990’s. It is known for trendy fast fashion, unbelievably low prices and a lot of choice. The company sources and buy fashion items that best reflect each season’s key  fashion trends.

Key people
- Artur Ryan: Chairman & founder
- Paul Marchant : Chief Executive
Finalcials
- Annual Sales: USD 4.17 billions
- Annual Net Income: USD 287.81 millions
*Hoovers.com

Geographics
Primark stores LTD locates its headquarters in Reading, England. We can classify the company bussiness as Discount Department Stores. Primark employs 48,000 people operating in 9 countries in Europe and planning to open a new store in Boston U.S. in fall 2015.

Stores are distributed by country as follows:
Uk
Spain
Ireland
Germany
Portugal
Netherlans
France
Austria
Belgium
USA

161
35
38
10
9
5
5
2
1
1

 The company doesn't own factories but buys goods from suppliers.  Primark does not manufacture goods itself.

Its expertise lies in understanding its customers and working with its suppliers to produce goods to Primark’s specification.
Its profitability depends on sheer volume of sales.
Primark's value-for-money prices rely on low costs. This can be achieved with an exceptional supply chain.
Primark’s products are mainly sourced from suppliers in Europe and Asia.  Its key sourcing countries are China, India, Bangladesh and Turkey due to low cost of raw materials and hand labor.

Primark’s competitors
ZARA:
Flagship brand of the Inditex Group
More than 2,000 stores worldwide
Revenue: $ 83.26 M (source: marketwatch.com)
Sales: $14.4 B (source: forbes.com 2014)

H&M:
Second Largest apparel retailer in the world.
Sales Revenue $19,618.561 *Hoovers.com
Net Income $2,617.395 *Hoovers.com
2,600 stores
Forever 21:
Fast fashion chain
Revenue $3.85 B (source: Forbes 2014)
Operates more than 600 stores

Tesco
Uk’s third largest clothing retail.
Revenue: over £1bn in 2014 (source: Tesco website)
Mark and Spencer
International, multi-channel retailer
Clothing revenue £4.1bn (March 2014 Mark and Spencer website) More than 798 stores

2.- Primark's Sourcing Strategy
Primark sources from around 700 suppliers located mainly in China, India and Bangladesh`. Primark website (2015) Primark: Our Ethics [Online]. Available: http://www.primark.com/en/our-ethics/questions-and-answers/where-areprimarks-clothes-made [Accessed 02 April 2015] As fast fashion company, they share the same factories with other retailers, frequently even direct competitors.

This impacts on a cost reduction per item manufactured due to the massive size of the factories and the amount of garments.
Also Lead times are crucial for a Fast Fashion company.
MJ Deschamps (2012) notes:
For most...
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