primark

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A critical analysis of Primark

AREA OF STUDY
Primark is a company which sells clothing, accessory, shoes and home products. Its first store opened in Dublin in 1969 and expanded significantly in the later years. In 1973, Primark moved into Great Britain and now have 152 stores in the UK (Primark company website, 2010). Primark as one of the important clothing retailers in the UK, overtaking Asda and became the NO1 low price retailer in 2009 (Hall, 2009). Children clothing are become more and more important in the recent years because the country's fertility rate booms (Askbaby, 2010). Primark increased its market share in the children clothing which could help in boosting the whole sale (Fletcher, 2007). According to Smithers, (2011), parents in the UK are forking out on average £764 a year on the latest attire for their kids, with 6% spending up to £1,500. In my point of view, this is a very important opportunity for Primark to boost its sales.

PLC STAGE
Product life cycle include five stages. In the case of Primark, it is in the beginning of maturity stage. According to Kotler and Armstrong (2012), there are several features in this stage. I will investigate the features relate to the theory and fact as follow. Firstly, when a company in the maturity stage, it will appear slow down in its profit. Associated British Food is a company which owns Primark. According to its website, there are some data shows Primark’s revenue and operating profit from 2006 to 2011. However, there is no more financial report before 2006 in the AB food website, although some of data could be found before 2006 on the internet but it was from unreliable website. At last, I decide to analyze the statistic from 2006 to 2010. According to figure 1 (page 2), figure 2 (page3) and table 1 in appendix. We can see although the revenue and adjusted operating profit are increase considerably. As the matter of fact, the operating profit in 2008 is declined from 12.1% to 10.9% and the operating profit in 2009 is declined from 12.5% to 12.1% (Associated British Food company website, 2011). The reason for the decline in both years is because they open the new distribution centre at Thrapston, the cost of supporting the Spain in 2008 and increased the cost of goods sourced in US dollars.

Secondly, in the maturity stage, competitors tend to be stable. Santi (2007) maintained that M&S, Primark, Tesco, Asda and Matalan were the top five clothing retailers in the UK. Primark, Tesco and Asda had similar clothing strategic which sold cheap and bulk clothing. In 2009, Primark overtook Asda became the biggest cheap price clothing retailer in the UK (Hall, 2009). Thirdly, in the maturity stage, the company would try to increase its consumption by finding new market segmentation and new customers. Fletcher (2007) pointed out that Primark had increased its share of children wear market from 5.4pc to 6.2pc. Primark had become the fourth in the sector. Furthermore, Primark have invested in Spain since 2006, now Spain already has 20 stores. Primark also invested in Netherland, Germany and Belgium in the later years as well (Primark company website). Using Boston’s growth-share matrix to analyze, Primark is belongs to cash cows. The reasons are listed as followed: firstly, cash cows are low-growth, high-share businesses (Kotler and Armstrong, 2012). From the figure 1, Primark’s growth rate is tend to be slow down which can be see from its unstable operating profit in the recent years. Secondly, according to Verdict (2007), Primark’s market share in 2007 is 18.49% and it droped to 17.7% in 2008. However, it returned to 18.2% in 2009, Shields (2010) claimed that Primark returned to the top spot which mean it became the biggest cheap price clothing retailer in the UK. In the short, I can identify Primark is belongs to cash cows stage.

TARGET MARKET
According to Kotler and Armstrong(2012), target market consist of a group of customers who have the similar...
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