Primark and M&S plan store expansion drive
Monday 01 November 2010
Primark, the discount fashion chain, is to turn the screws on its clothing rival Marks & Spencer in the crucial festive trading period by opening six new UK stores before Christmas.
This assault on the British market comes as M&S looks abroad, with plans to return to opening stores in mainland Europe a decade after pulling out.
The British store-opening offensive by Primark, which is owned by Associated British Foods (ABF), will include four of the 10 former Bhs stores that Primark bought from its rival earlier this year.
The pre-Christmas move is significant not only because of the huge scale of Primark's stores, which often cover more than 70,000 square feet, but also as new shops typically generate substantially higher sales than existing ones for most retailers. Furthermore, many retailers make the bulk of their profits in the final three months of the year, the so-called "golden quarter".
The new Primark stores will be in Scotland's Perth, Harrogate, Wales's Cwmbran, Bournemouth and Worcester, as well as a relocated shop in Yeovil.
The opening drive by Primark demonstrates the growing threat of the 206-store chain to M&S, as well as Next, Matalan, Bhs, George at Asda and Tesco.
Plans by M&S to return to Europe emerged over the weekend. The strategy, masterminded by new chief executive Marc Bolland, is designed to reinvigorate the group's international sales. It marks a significant U-turn as the high-street chain previously shut its entire network of 38 stores on the Continent in 2001, causing outrage at the time. Mr Bolland is preparing to announce his review of the business next week and could use it to reveal the company's return to Europe .
It is believed that the M&S chief has started preliminary talks with retailers in France and Spain about taking over some of the stores it had sold.
It emerged last week that Primark – which also has shops in Spain, Holland, Germany, Portugal and Ireland, where it trades as Penneys – reclaimed its crown as the UK's biggest clothing retailer over the summer.
Primark grew its share of the clothing market, in terms of sales volumes, to 10.9 per cent, ahead of George at Asda's 10.8 per cent and 10.2 per cent at M&S for the 12 weeks to 15 August, according to Kantar Worldpanel fashion data seen by The Independent.
Primark and Asda typically get a summer sales boost, as consumers snap up their cheap casualwear, such as T-shirts, vest tops and bikinis. Earlier in the summer, Primark had a bigger lead over its rivals with market share of 11.1 per cent, compared to Asda's 10.5 per cent and M&S's 9.9 per cent for the 12 weeks to 18 July. All three retailers and Kantar declined to comment.
While M&S is expected to return to the top spot over the winter, as consumers target its coats, jumpers, thermals and suits, Primark's rapid growth means that the high-street giant's market share is under increasing pressure.
For the 53 weeks to 18 September, ABF said that Primark's sales and profits would be "well ahead of last year". In a pre-close trading statement in September, Primark said it expected its like-for-like sales to have increased by 6 per cent over the year, although its stellar growth slowed in the second half.
Meanwhile, Primark has hired Wolfgang Krogmann as its general manager for northern Europe. The retailer declined to comment on an expected launch in Austria next year.
Primark is rumoured to be considering opening up to 100 stores in Germany, where it unveiled its first shop in 2009, in the long term, as well as launching in Poland and some of the Nordic countries.
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