Online shopping

Primark will test its first step towards online shopping

Primark is to take its first steps into online shopping with a ‘click and collect’ trial for children’s products, which could be the start of a wider move away from its in-store-only retail business.

The development is a significant shift for the discount clothing retailer, which has held back from moving sales online even though its business was hit hard during the pandemic when stores were closed.

Primark will pilot a click and collect service for children’s clothing later this year which will allow customers to order online and collect items from any of 25 stores in the North West of England.

The expansion could mark the start of a significant push into e-commerce for Primark, which is one of the only major UK-based clothing retailers not to offer an online service.

George Weston, chief executive of Primark owner Associated British Foods, said there was a “significant business opportunity” to make children’s clothing available via click and collect.

“We have a very strong children’s clothing business, but we’ve always been short of space,” Weston said. “We believe this will solve this space problem and give more shoppers more reason to come to our stores, more often.”

However, he said the retailer was unlikely to switch to online delivery. “It’s a very high cost, the return rate is horrible and I think it’s environmentally questionable.”

He said the group would “think about other places where we could gradually build the [click and collect] offers in other ranges and other categories”.

He added: “We’ll see how it goes, but we think the potential is there to expand our offering beyond children’s clothing.”

Barclays analysts said the lawsuit was “an important step, not just a foot in the water”, adding that it should “increase footfall” in stores. “If successful, a wider rollout is possible next year,” they added.

Clive Black, analyst at Shore Capital, said the development was positive but noted that Primark stores have been more resilient than expected in retail so far this year.

Primark’s click and collect service will initially offer 2,000 options for everything from nursery furnishings to children’s clothing. About 40% of this amount will be exclusive to click and collect.

Primark, which has stores in the UK, Europe and America, recorded revenue of £1.7bn for the three months to the end of May, marking an 81% increase on the same period one year ago.

The company, which is headquartered in London, said all Primark stores were open during this time, unlike last year when most were closed until mid-April.

He said sales growth was 4% higher than the same period before Covid-19 hit. Sales improved “significantly” in the UK and Republic of Ireland, although performance only started to improve at the end of the last quarter in Europe thanks to continued Covid restrictions.

Weston said customers will start to see prices rise on some products in the fall due to inflation.

Primark said it “remains on track” to deliver an adjusted operating margin of 10% for the full year. ABF, which includes the grocery and food divisions, said it was “trading in line with expectations” and the outlook was unchanged.