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Ve Rt Er .c Om

Ve Rt Er .c Om

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Published by Jennifer Rivera

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Published by: Jennifer Rivera on Dec 01, 2009
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Introduction. Why Primark ?
 
A company which has achieved superior performance in recent years is a AssociatedBritish Foods Plc subsidiary called Primark . Primark opened its first store in June 1969 inIreland, where it operates at Penneys .Today it has
a total of 193 stores operating in
Ireland, Spain, United Kingdom, The Netherlands, Portugal and Germany and is stillaggressively expanding. In the UK, where Primark has its maximum number of stores,138, Primark is second to Asda
s George in terms of thelargest number of clothes sold byvolume, overtaking established reputed companies such as Marks&Spencer 
[1]. The
company has had excellent financial performance . It is reported that their profits haveincreased by 10%[2] and sales increased by 20%[3] in the year 2009
even though each of its three main markets were subject to recessionary pressure and a decline in consumer confidence
[4]. Primark has won several awards each year since 2005 and its most recent
awards are
Best Budget Store on the High Street at the GMTV High Street Fashion
Awards 2009 (awarded 7th May 2009), Retailer of the Year for the secon
d year in
succession at the BCSC Gold Awards and Value Retailer of the Year at the DrapersRecord Awards.[5]
. Apart from this,
Primark has also been successful in establishing its brand name. Celebrities such as Katie Holmes have been spotted wearing its
clothes[6]
and they have also been featured in one of the worlds most premium fashion magazine
Vogue[7].
What is Primark doing right ?
 
Currently Primark only operates in Europe where the retail apparel industry grew by 2.1%in 2008, valued at $420.9 billion and is further expected to be valued at $467.6 billion in2010, an increase of 11.1% since 2008[8].
Source -
 Apparel Retail in Europe
-
fcbe
-4437-
a97d
-
f3206b008999%40sessionmgr4). Reference Cod
e: 0201-2005. 2009, September.
(Accessed 15 November 2009)
 
 
   h  t  t  p  :  /  /  w  w  w .  S  m  a  r  t   P   D   F  C  o  n  v  e  r  t  e  r .  c  o  m   h  t  t  p  :  /  /  w  w  w .  S  m  a  r  t   P   D   F  C  o  n  v  e  r  t  e  r .  c  o  m   h  t  t  p  :  /  /  w  w  w .  S  m  a  r  t   P   D   F  C  o  n  v  e  r  t  e  r .  c  o  m   h  t  t  p  :  /  /  w  w  w .  S  m  a  r  t   P   D   F  C  o  n  v  e  r  t  e  r .  c  o  m   h  t  t  p  :  /  /  w  w  w .  S  m  a  r  t   P   D   F  C  o  n  v  e  r  t  e  r .  c  o  m
 
 
Primark has numerous competitors such as New Look, H&M and TK Maxx although its biggest competitor in the UK is Asda
s clothing brand George. Primark has managed toincrease sales and make profits during a turbulent economic climate even when wellestablished brands like Next have not been able do so[9]. Primark 
adopts the
no-
frills
 
strategy which many
 
successful business in other industries like Ryan air 
have adopted.
They describe themselves as having
a lean business which responds quickly in themarketplace, has short lines of management, good buying and excellent distribution
[10].Furthermore, unlike its competitors, Primark specifically targets people under the age of 35. These are the people who are the most fashion conscious. Primark has excellent
time
to market
and it
is said that it takes them a maximum of 6 weeks to get the latest trendsfrom the catwalks to the shop floors[11]. Primark has very clearly positioned themselvesas being at the absolute bottom end of the market in terms of prices unlike some of its
compet
itors such as Marks and Spencer which have mid range prices. Primark has a clear marketing strategy where it provides the young
generation with the trendiest clothes at the
lowest prices possible. This is further emphasized by its company slogan
look good pay
less
 
According to Porter[12] there are two ways a company can excel and make profits.
Firstly, by the cost leadership strategy where a firm concentrates on having the lowest prices in the industry or by differentiating themselves so that they can charge a premium.Primark very evidently adopts the strategy where it tries to keep its costs as low as possible. Primark tries and effectively cuts costs at all stages of its supply chain. It outsources most of its supplies from oversees countries thus taking advantage of the lowlabor and land costs. Primark, due to its size, orders in bulk and thus benefits fromeconomies of scale. It can respond quickly and effectively to the market due to its flatmanagement structure. Unlike other competitors Primark s pends no money on advertising.Primark then passes these costs savings to their customers. So far, this strategy has proved
effe
ctive.
 
   h  t  t  p  :  /  /  w  w  w .  S  m  a  r  t   P   D   F  C  o  n  v  e  r  t  e  r .  c  o  m   h  t  t  p  :  /  /  w  w  w .  S  m  a  r  t   P   D   F  C  o  n  v  e  r  t  e  r .  c  o  m   h  t  t  p  :  /  /  w  w  w .  S  m  a  r  t   P   D   F  C  o  n  v  e  r  t  e  r .  c  o  m   h  t  t  p  :  /  /  w  w  w .  S  m  a  r  t   P   D   F  C  o  n  v  e  r  t  e  r .  c  o  m   h  t  t  p  :  /  /  w  w  w .  S  m  a  r  t   P   D   F  C  o  n  v  e  r  t  e  r .  c  o  m
 
 
Porters five forces
 
the state of competition in the industry depends on five basic forces
[13]. These forcesare represented in the diagram below.
 Source-
Porter, M. How competitive forces shape strategy. [Online].
-
a2fc
-4828-
92be
-
9cf6b828cedc%40sessionmgr114)
 Harvard Business Review
, Vol.86,(1), 2008. (Accessed
15 November 2009)
 
Michael porter has identified these five forces, which he says affect the competitiveness inthe industry. The way these forces interact with each other and their collective strengthdetermines the potential profit a firm can earn in an industry. It is essential that a firmevaluates these forces and builds its corporate strategy keeping these forces in mind sothat it can defend itself from them or take advantage of them[14]. These forces have beencritically examined in the context of the retail apparel industry in Europe.
 
   h  t  t  p  :  /  /  w  w  w .  S  m  a  r  t   P   D   F  C  o  n  v  e  r  t  e  r .  c  o  m   h  t  t  p  :  /  /  w  w  w .  S  m  a  r  t   P   D   F  C  o  n  v  e  r  t  e  r .  c  o  m   h  t  t  p  :  /  /  w  w  w .  S  m  a  r  t   P   D   F  C  o  n  v  e  r  t  e  r .  c  o  m   h  t  t  p  :  /  /  w  w  w .  S  m  a  r  t   P   D   F  C  o  n  v  e  r  t  e  r .  c  o  m   h  t  t  p  :  /  /  w  w  w .  S  m  a  r  t   P   D   F  C  o  n  v  e  r  t  e  r .  c  o  m

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