Primark has announced plans to launch a home delivery service in Britain, four years after entering the e-commerce space. The retailer has acquired a warehouse in Sheffield to facilitate shipping products directly to customers' homes. While the company has not specified a launch date, it indicated that home deliveries present an opportunity for profitable growth, particularly following subdued sales attributed to recent hot weather.
Analysts noted that this move comes after years of resistance to online sales, including during the pandemic, and suggests Primark is facing significant competition from ultra-fast-fashion brands like Shein. Primark did not sell goods online until 2022, when it introduced a click-and-collect service requiring customers to pick up their purchases in-store.
Associated British Foods (ABF), the parent company of Primark, stated that the fashion chain would continue to expand its click-and-collect service while planning to offer home delivery in Great Britain in the future. ABF forecasts a 1% growth in Primark's UK sales for the fourth quarter, although like-for-like sales are expected to remain flat in the UK and decline by 3% globally.
The company reported that sales of autumn/winter clothing were delayed due to the summer heat but improved as temperatures dropped towards the end of the quarter. Primark is struggling to compete with brands like Shein and Boohoo, as well as platforms such as TikTok Shop and Vinted, and announced plans to reduce prices on hundreds of clothing items in July.
Retail analyst Julie Palmer remarked that Primark has been lagging in the e-commerce sector, and the introduction of home deliveries is a defensive strategy as much as it is a growth initiative. She emphasized that the profitability of home deliveries at low prices will be a critical challenge for the brand, especially as competitors have set new expectations for convenience.
ABF plans to separate Primark from its food business next year. Analyst Natalie Berg commented that Primark's late entry into e-commerce reflects the significant changes in the retail landscape, noting that the costs associated with returns may be higher for online purchases compared to in-store shopping.
Dan Coatsworth, head of markets at AJ Bell, highlighted that competition among delivery firms has reduced shipping costs significantly in recent years. Retailers in the UK are currently facing increased labor and energy costs. On the same day, John Lewis reported widening half-year losses, indicating a challenging trading environment and rising operational costs due to recent heatwaves.