While global fast-fashion giants are pivoting toward omnichannel and DTC models, Primark is doubling down on physical stores. The Irish retailer's latest earnings show revenue growth still driven by new store openings. But GlobalData analysts have poured cold water on this strategy, stating that simply adding stores can no longer effectively stimulate consumer demand.
Diminishing Returns of Brick-and-Mortar Expansion
GlobalData's recent report highlights that Primark's same-store sales growth is slowing, and the contribution of new stores to overall revenue is declining year by year. The core issue is Primark's lack of a mature e-commerce system, leaving consumers with almost no touchpoints outside the store. As store density reaches saturation in core markets, new stores inevitably cannibalize traffic from existing ones.
From the upstream textile perspective, this store-driven model poses risks to supply chain order stability. The fabric volumes locked in to support new store openings, if not translated into actual sales, can quickly become inventory pressure, cascading back to weaving and dyeing mills.
Misalignment with Changing Consumer Habits
European and US consumers are accelerating their shift online. Even in apparel, a tactile category, online penetration has exceeded 30%. Primark's insistence on a no-e-commerce strategy ties its growth entirely to in-store foot traffic. GlobalData data shows that apparel retail footfall in major European markets has not recovered to pre-pandemic levels since 2023.
This means each new Primark store faces higher rents and operating costs while competing for the same pool of in-store customers against omnichannel rivals like Zara and H&M. For fabric suppliers, this translates into tighter inventory turnover requirements and potentially compressed payment terms.
Supply Chain Ripple Effects
Primark's procurement strategy, built on extreme value-for-money, relies on large volumes of basic fabrics like cotton woven and jersey knits. During expansion, it places bulk orders with mills. But if store expansion fails to drive sales growth, the procurement rhythm shifts from scaling up to destocking.
Public data shows Primark's suppliers are concentrated in China, Bangladesh, and Turkey. Any slowdown in store openings will first impact grey fabric and dyestuff volumes. For instance, in 2022, Primark canceled some orders due to declining footfall in European stores, directly causing utilization rates at several Shaoxing dyeing mills to drop by 5% to 8%.