The owners of Primark, Associated British Foods, reported this week in their trading update that despite performing well over Christmas there has been a ‘noticeable slowing down of UK consumer demand’. Their year-on-year revenue has grown by a healthy 11%, but this is probably a result of opening ten new stores in the past year, rather than simply continuing to grow their customer base.
Primark is a retailer that has built its reputation on providing clothes at highly competitive pricing that other retailers have found difficult to match. They have never been a business to actively promote themselves through advertising, relying on word of mouth amongst their fiercely loyal fan base to grow revenue. With this demand now beginning to slow down, some of the team at Strand have been having a think about how we would use a small marketing budget to halt Primark’s decline in sales.
Let’s start with a simplified model for their marketing strategy. Primark could direct spend to achieve one of three primary activities: To grow their customer base, to increase visit frequency for their existing customer base or to grow profit, which we could say is basically their spend per visit.
Each of these activities requires a different marketing technique. Until last year, much of our time was spent driving ‘Frequency” through setting up loyalty programmes and various Customer Relationship Marketing (CRM) methods to drive incremental store visits from existing customers. On this occasion, I wouldn’t say this is where Primark should focus.
We’re looking at the other two areas:
Are there any potential customers who haven’t made it through the doors of Primark yet? It’s hard to believe, but I’d say there’s a potential audience who think they are ‘too cool for Primark’, kind of missing the point.
However, perhaps a capsule collection might do the trick? A guest designer, employed in the same way that has been so successful for H&M, Uniqlo and others might be the way forward. An exclusive budget collection by one of the top named designers might introduce a new wave of fans to the Primark stores.
Reading the news today that Gok Wan has been employed by Sainsburys to design a range of clothing, you can’t help but think he would be better off at Primark, can you?
So with Gok Wan out of the equation, we propose turning to a strong name who needs a new challenge. Take Tom Ford, who has a great reputation for luxury, but can he design on a tight budget? Or Giorgio Armani– no longer the name he once was, a tie-up could do wonders for him too. The way to choose the right partnership would be to consider John Galliano. Persona non grata at Dior, man of the moment on the social networks (though for the wrong reasons) with a unique style, we suggest a good career move would be to be signed up by a brand such as Primark to produce something different. Once John Galliano has been considered, pick someone else. But Primark should look for guest designer with similar levels of awareness on the social networks and in the public eye as him.
I remember when H&M launched a capsule collection with Karl Lagerfeld. Some of our team had never been into an H&M store and they bought anything they could lay their hands on. We even had overseas clients who happened to arrange a meeting on the release day! Clothes were immediately changing hands on EBay for many times the retail price.
It’s time for Primark to think about ways to increase spend from each customer on every visit. The average transaction value is probably somewhat lower than the other high street fashion retailers, despite some customers being seen exiting Primark on London’s Oxford Street with huge bags full of clothing.
How do we get them to spend more? Well, there are a number of different approaches. For now, we would suggest introducing customers to Primark Home. How many customers have bought clothing but never been tempted by the low price candles and bedlinen? We propose giving a voucher to any clothing customers who have spent more than £x in a single transaction (where x is more than average) for them to sample Home with either free products or a discount voucher that can be tracked in store.
Not enough? Well I wonder if we could grow spend per head from jewellery and other accessories? Perhaps a few spontaneous purchases like these in the mix might lift spend if it is starting to tail off.
To explore other options, we need to look at the other areas of marketing that support the Customers, Frequency, Profit equation:
If you get the brand right – whether in its inception (Brand Identity) or later on when further refined (Brand Development), then everything else is likely to be more successful, and therefore a smaller investment in marketing on Customers, Frequency and Profit would drive greater returns.
Exploring some options for Primark in this space, we’d consider extending the brand and opening a few smaller concept stores which aren’t structured for the same experience. I once walked past a Primark after it has closed and I was amazed how many items of clothing were on the floor and the chaos that needed to be put right before the following day’s trading.
Is this the right environment for men to buy sports clothing? Or the best layout for someone to browse though home furnishings? Teen Primark? These might be better off promoted within a separate outlet and reinforced by a reduced range in the superstores. Teenage girls love of Primark could be extended to parties, fashion shows etc, if the space was made available and designed to cater for this tailored experience.
We categorise any press coverage, PR, social media activities and suchlike as ‘Buzz’. Like the brand activities, any successful spend on Buzz can significantly reduce the marketing spend on finding new customers or persuading existing ones to interact more.
I think Primark is under-optimised on YouTube. There is so much that could be done with minimal spend. Search for Primark on YouTube and you’ll see what I mean. Then search for H&M and see what they could be doing. Or TopShop’s podcasts…
Our final thought for the day is to consider the student market. We’d have a specific team focused on viral activities and events to promote Primark to this sector. Compared with the competition, this is an audience Primark really has to own. Universities love partnerships with major brands and events supported by Primark might be the way to go. Who knows; we wouldn’t invite Monsieur Galliano but he might just beg us to be involved.