Primark designs its future in Spain: more stores and Paula Echevarria will improve profitability | Companies

In 1969, Irish businessman with a background in fashion, Arthur Ryan, opened a clothing store in the center of Dublin with a revolutionary concept for the time: “Incredible fashion at incredible prices” was the slogan under which Penny’s journey took place. started on Mary Street. 55 years later, the company known around the world as Primark has reached international scale: it is present in 16 countries, soon to reach 17 when it launches in Hungary later this year. However, the basics remain…

In 1969, an Irish businessman with experience in the fashion world, Arthur Ryan, opened a clothing store in the center of Dublin with a revolutionary concept for the time: “Incredible fashion at incredible prices” was the slogan under which Penny’s journey took place. started on Mary Street. 55 years later, the company known around the world as Primark has reached international scale: it is present in 16 countries, soon to reach 17 when it launches in Hungary later this year. However, the basics remain: “We have a unique offering in terms of pricing and variety of offerings.”

The man who says this is Paul Marchand, CEO of the company, who receives this newspaper at his office in Dublin, accompanied by Carlos Inacio, CEO for Spain and Portugal. Marchand is the second CEO in the company’s history, succeeding the founder in 2009.

Its top priority is international expansion. Primark plans to reach 530 stores by 2026, 91 more than it currently has. Most of the openings will be in the United States, where the number will reach 60 this year, more than doubling the current network. But the company is not giving up on continuing its expansion in Spain, the first market outside the British Isles where it made the leap in 2006 and where it will reach 65 locations this year. Only the UK exceeds this figure.

“We have a very robust business in Spain,” explains Marchant. “We are ideal for Spanish clients for two reasons: they are looking for quality at a good price, and we give it to them; and there families go shopping together, we see this in shopping centers. And in our stores there is fashion for men, women, children, home… There is a perfect adaptation.”

Discoveries

The Spanish market, with sales of more than 1.5 billion euros, has been at the forefront of Primark’s international strategy in recent years. Between 2019 and 2023, the company opened 13 stores due to the pandemic, more than in the United States or Italy. Last November it opened number 60 in Spain in Lorca (Murcia), and next week it will open number 61 in the La Vaguada shopping center (Madrid).

The discoveries are part of a $100 million investment plan the company has approved for 2023 and 2024. Over these two years, it will open eight stores and renovate a large number of them. “We definitely see a lot of growth opportunities in Spain. There are places that don’t have Primark and we can be there,” he notes. “There are also places where we are already located but where we can have larger stores. In 2025 we will have more and more stores in Spain.”

We see many opportunities for growth in Spain. We have a very strong business there.

Paul Marchant, CEO of Primark

Carlos Inacio, responsible for the brand on the peninsula, refines the shot a little more. “We have a lower density of stores in the north and center than in the south. Another example is the border with Portugal: we have only one – in Badajoz.” The textile company has a team based in its Madrid offices dedicated to location scouting. Although those at Primark are reluctant to forecast investment plans for 2025, Marchant is frank: “We talk to the owners all the time about possible openings. I insist that in Spain we have many opportunities.”

The relationship with this market goes beyond opening stores. Primark has an important Spanish presence in positions of responsibility: José Luis Martínez de Larramendi is Director of International Expansion; Paula Dumont is responsible for the women’s collections; Alejandro Fernandez de Sea is also the head of purchasing for women’s fashion.

In addition to all this, the actress’s company also has influential person Paula Echeverria as an image in all its markets. And its relevance goes beyond photographs. Primark ended last year with a return on sales of 8.2%, down 1.6 points on 2022 as it absorbed some of the cost increases. According to forecasts for 2024, this figure will exceed 10%. How?

“It will be a combination of factors,” says Paul Marchant. “Most of the inflation that affected us has already disappeared, and that increases margins. In addition, we are constantly developing new products.” These include the premium line The Edit, increasingly available in many stores, or “collections with Paula Echevarria or Rita Ora.” This is a product range that allows us to achieve price increases without increasing prices on a like-for-like basis. Of course, we will not increase this year,” the manager continues, excluding financial consequences due to instability in the Red Sea. “We communicate daily with our delivery partners, especially Maersk. There may be delays of 10 to 14 days, but this will not impact costs.”

Online steps

Primark boasts that it can sell its clothes at more affordable prices, although it denies being a retailer. fast fashion: “50% of our sales are basic clothing: socks, underwear, T-shirts. We don’t recognize ourselves under this label,” says Paul Marchant.

This points to operational efficiency and high sales volumes as the key to being able to offer low prices in addition to forgoing high margins. Another factor that plays in favor of costs is the lack of a standard online retail structure, although Primark continues to make strides in this area.

The company is currently developing an online ordering and in-store collection service, which is being tested in the UK. “This is proven to lead to increased traffic in stores. Our business is completely focused on them, and we make every decision to ensure that more customers come to us,” says Paul Marchant. He insists that home delivery is still not possible and explains that Spain could be a logical step to expand the service, although no decision has yet been made.

In the online space, Primark, like other traditional operators, faces competition from Chinese operators, especially Shein and Temu. “New rivals were always appearing. Competition is good, it forces you to be better. Of course, we see Chinese online operators growing. But this will not affect our business in any way. Price is a key element, but also quality, durability… We pay special attention to this.”

The industry is watching how these operators comply with the strict recycling and reuse rules that the European Commission will introduce in the coming years. “The rules will give us all more work. We are dedicated because we pride ourselves on the rigor of all our processes. Any regulation that improves the playing field and allows you to compare yourself with your opponents is a good thing. If you need to quantify the degree of compliance of some competitors and their suppliers, that is a different problem,” concludes Paul Marchant.

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