The U.K fast-fashion chain named Primark has finally announced and executed early steps in its plan to open stores in the United States. Fast-fashion is when fashion trends are consistently manufactured quickly and cheaply for mainstream consumption. Common Fast-fashion retailers include H&M, Zara’s, and Uniqlo.
Primark’s competitive advantage is cost leadership. Cost leadership is when an organization has low cost of operation within their industry. This allows customers to see tangible changes in price. Primark’s clothes were priced 48% below market average in the U.K., and will continue this series of undercutting to gain market share in U.S. Markets. Primark can use cost leadership more effectively because of its “rigid control” over its supply chain and its lack of an online presence. Since Primark’s products are so affordable, the average customer has low average spending per trip and a high return rate. Therefore, it would not make sense for Primark to have an online store which allows them to cut costs and in turn lower prices to consumers.
Primark’s plan to break into U.S. Markets, includes leasing space from Sears Holdings Corp. in the Northeast region. The Boston store is expected to open in late 2015. A main challenge Primark faces is the lack of a brand name. Primark has no pull in U.S. Markets and it will be interesting to see how they compare to the likes of other fast-fashion retailers. This is important because Primark will affect the consumer goods market in the future. If they are successful we could see a bunch more of Primark stores opening not only in the Northeast but across all of America.
By: Jonathan Chan
Sources: Wall Street Journal