Primark CEO Paul Marchant does not have a permanent office at the company's headquarters in Dublin, a large five-story building located a few meters from the first store that the company's founder, Arthur Ryan, opened in the city. city in 1969 under the Penneys brand, with which it still operates in Ireland. It's Tuesday morning and today we find him located in the men's division, where several workers come to his table to discuss ideas and operations. During the week it will change locations to stay in direct contact with the more than 1,300 employees – 26 nationalities and an average age of early thirties – at the operations center of the low-cost clothing chain. There, decisions are made and the thousands of garments are designed and then sold, only in physical stores, in one of the 16 markets in which it has a presence, including Spain. Primark has become the textile company that sells the most in the country by volume – not by turnover – and will soon reach 65 stores, among which the one in Plaza Catalunya in Barcelona and Gran Vía in Madrid stand out. Belonging to the AB Foods group, it earned 10,387 million euros in its last fiscal year – 1,502 million in Spain – and maintains an expansion plan with which it aims to reach 530 establishments by the end of 2026, 60 of them in the United States.
Last year they raised prices on a range of products and have recently launched a higher-cost clothing edition. Is Primark moving away from the low price segment?
Definitely not. That will not change and has not changed. Last year there were very significant pressures on input costs, and we had no choice but to look at our prices. We raised prices in some areas, but also maintained them in others. And in the case of children's clothing we lowered them because the pressures we faced in terms of inflation were also suffered by our customers and we recognize the importance of family in our general proposal. The position we have today remains very compelling compared to our competitors. Now that those inflationary pressures are easing, we won't see any more price increases this year.
Spain is its second market only behind the United Kingdom. Does the type of consumer or purchasing level best fit your proposal?
We opened our first store in Spain in 2006 and since then we had a good response. Our proposal fits with the Spanish consumer. We offer incredible fashion and incredible prices for the whole family, with a strong business in women's, men's and children's clothing, as well as home, lifestyle and beauty... and this fits the way of life of Spanish consumers. They buy a lot as a family and our offer is wide and for the whole family. I think that the Spanish consumer looks for clothes that make them feel good, but without having to spend a lot of money.
Do you see room to grow more in Spain and gain more market share?
We already have 60 stores and we will invest one hundred million between last year and this year between openings and renovations. In the UK we have over 190 stores and there is still much more room for growth. We are not committing to a specific number, but we still see more locations and possibilities where there is no Primark store in Spain. We will continue to invest significantly in our Spanish business.
They are growing in Europe and the United States, they are an international company, but do they want to be global? Will we see a Primark in Asia or South America?
Our immediate short and medium term priorities focus on further European expansion, particularly in the growth markets: Spain, Italy, France and Portugal. And outside of Europe, in the United States.
Who is your main competitor at the moment? Zara, H
All. Due to the nature of our product offering. We sell socks, underwear, basic t-shirts, basic towels... Basics make up 50% of our sales. But we are also selling a collection with more of a fashion component with the artist Rita Ora, we have launched The Edit collection, with a higher value proposition, we sell beauty... We have a very wide range of products. Therefore, we compete with many different companies.
They must be one of the only clothing chains that doesn't sell online. Isn't it a weakness in such a competitive market, with new ultra-low cost companies that only operate online?
No, I don't think it's a weakness. In fact, the investments we have made in buildings, locations and physical stores make us stand out in many markets compared to our competitors. We have also invested in our website, with a tool for customers to check the availability of garments in stores. And that drives footfall in stores. We are also trialling the Click and Collect service – buy online and collect in store – in 57 stores in the United Kingdom. And that also brings traffic to the store.
The European Commission is preparing a battery of environmental laws for the textile industry, so that it pollutes less, and applying this new model will be expensive. Can it reduce the competitiveness of companies like Primark, where the price factor is essential, compared to Asian low-cost operators that will not have to comply with these laws, such as Shein or Temu?
We are aware of the increased legislation that is coming. It is not easy and it is expensive. However, we are very proud of the work we have already done on our ESG agenda over many years. We are in a very strong position and any increase in regulation that levels the playing field between retailers is a good thing. The EU needs to resolve how it treats Asian operators who sell online.
With the current level of clothing consumption, are the new European laws enough to reduce the environmental impact of the textile industry or do people have to start buying less, reducing their consumption?
We need to give customers the opportunity to make more sustainable choices and do so in an affordable way. We have developed more products with recycled materials, with sustainable fibers. Currently, sustainable fashion is really only available to the elite due to prices. Now we have the opportunity to bring those sustainable options to the mass market. At Primark we have done a great job on the durability and quality of our products. It's about offering customers more sustainable options and then letting them decide where they want to shop and what brands they want to support.
How is the sales pace for this year?
Our financial year starts in September and it's early for predictions. Having said that, I am positive, we are very confident in our performance.
