Primark to launch home delivery in Great Britain

Primark’s owner, Associated British Foods (ABF), will soon offer a home delivery service for the fast fashion retailer, in a bid to improve its online offering.

It comes as the retail group, which runs large food, sugar and agriculture operations, has announced it has purchased a new highly automated warehouse from Debenhams to support Primark’s delivery service.

Susannah Streeter, chief investment strategist at Wealth Club, says that while Primark has been slow to adapt to the online shopping trend, competition and a drop in sales are the likely cause for the U-turn.

She said: “Lacklustre trading has helped propel fast fashion giant Primark into making a U-turn it’s resisted for years. Primark is finally joining the home-delivery party, despite a record of repeatedly insisting that its cheap prices made online shopping too expensive to make sense. The retailer now says the success of Click & Collect, improving digital capabilities and a highly automated fulfilment centre in Sheffield have changed the maths, which is why it’s lurched into this U-turn. So, customers will be able to get their fashion fix delivered when Primark spins off from parent company ABF, with the demerger targeted for the end of 2027.

“The economics of home delivery have shifted, with customers also more used to having to pay fees for returns, and the dominance of Shein set to be eroded with the tax treatment of small parcel imports set to change. Primark has benefited from a loyal customer base, and its social media presence keeps them across new styles landing in stores, but its agility has been stifled given that it’s been so slow to adapt to the biggest shopping trend this century – e-commerce. Gone are the days post-pandemic when huge queues snaked round the block to snap up bargains once shops re-opened. It’s facing much tougher competition from high street rivals who can keep the digital tills running and parcels landing when conditions turn more inclement. The rolling heatwaves are likely to be partly why Primark’s sales have come under sharp pressure as customers have stayed away from scorching high streets amid stifling temperatures.

“Like-for-like sales are set to be down three per cent in its fourth quarter to September 12 and UK and Ireland have fared a little better, with sales up marginally by 0.4 per cent, while it’s been a struggle across continental Europe where they fell 4.3 per cent. The European market arguably also needs a home delivery boost, but it’ll have to wait as the new delivery service is only reserved for the UK, for the meantime. So, there’s no quick fix available yet for Primark’s sliding sales in key markets, while the roll out of home delivery system in the UK won’t come cheap. So investors are turning increasingly sceptical about Primark’s prospects with ABF shares down by more than nine per cent in early trading.”