Created the factories. By focusing on the development of

Created in 1969 in Ireland, Primark has become one of
the heavyweights of clothing distribution. Generating 30% of the Associated
British Food’s revenue, Primark is already established in seven European
countries particularly in the United-Kingdom, Ireland, Europe and United
States. We will examine the recent internationalization of Primark in France,
particularly in the Paris region during December 2016.

Primark’s mission statement and corporate
objectives aim to always be consumers’ first choice and maintain this position
so that the consumers do not go for opponent brands. Primark’s goal is also to
achieve an improvement on sales and make an expedition on the market share. For
that, its business strategy primarily focuses on finding cheap sourcing
supplies and in parallel directly purchase from the factories.

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By focusing on the development of its international
retail presence, Primark aims to continue to entice new customers by providing
affordable, trendy and good quality products in an ‘exciting, fashionable and
fun’ in-store environment. ‘With a unique
combination of the latest fashion and

The Irish giant
discount fashion celebrated Tuesday the doubling of the surface of its store in
Créteil, now its largest in France. There are already 8 stores but targets 13
by the end of 2017, and has just confirmed that it will also arrive in Le Havre
and Strasbourg.

 

 

 

I.                   
REASONS FOR & ROLE OF INTERNATIONALISATION

 

As taking full advantage of the economic crisis
striking deep into Europe, Primark, with its ‘made in Asia’ labels and
reputation of imposing ruthless conditions on its suppliers, is already positioned
as the number one fashion in volume in England, Spain and in Portugal.

After conquering the UK market, its expansion toward
Europe has started in 2006 in Spain, following the Netherlands in 2008,
Portugal in 2009, Austria in 2013 and finally arriving in France. Planning this
internationalization into the French market marks the opportunity to meet
typical French consuming needs and experience in a French environment.

In 2016, its overall turnover reached 5.9 billion
pounds, increasing by 9%. With 320 stores of at least 3,500 m² and more than
68,000 employees worldwide, Primark is a European giant still poorly known in
France by its location, mainly on the outskirts of cities, in shopping centres.
This should change however next year, because the brand has taken over the
building Galeries Lafayette in the centre of Toulouse.

 

 

 

II.                 
CHOICE OF THE TARGET MARKET CONSIDERING THE STATED REASON FOR INTERNATIONALIZATION

 

France is seldom an evident option as a sales base,
rather its rooted position as a fashion hub and site of haute couture gives
space to strong valuable branding initiative.
With Stan Smith-inspired sneakers at 11 euros, 6 euros shirts, 3 euros bras or
59 euros costumes, Primark is far for being affected by the crisis of clothing.
In France, where fashion sales stumbled more than 4% in July, Primark’s have remained
stable and have been doing well ever since. More than confident, the Irish juggernaut
of low prices fashion maintain its success by planning immense stores at Le
Havre and Strasbourg.

In the process of internationalization, choosing
Marseille as the first anchor point in France was not a coincidence. When
opening in other countries in Europe, instead of opening in capital cities,
Primark opened next to the most important cities as a solution for lowering
costs when expanding to France by having a test area. Thanks to rents lower
than Paris, the Irish group has been able to evaluate its success and
popularity without risking its volume policy. 
This first opening in the south of France has benefitted from a segment
of population with few means. The opening in the Paris region in 2016, as a
fashion capital, raises the brand image both for tourists and French consumers.

The stagnation of the French apparel market since 2012
has created a strong demand for low-cost offerings that do not compromise on
style and the recent implementation of Topshop has begun to develop a taste for
British fashion. It is evident that France a valuable retail market following
the success in other European countries such as Spain.

France is no stranger to fast fashion with brands such
as Zara and H&M which are present in multiple regions, as a matter of fact,
the top five clothing brands in France are low prices brands. As a matter of
fact, domestic first price brands such as Kiabi and La Halle will be strongly
impacted by the arrival of Primark on the market. In comparison, the average
price of a Primark item is two times less than its Swedish competitor H&M.

Studies showed that French consumers’ needs were
mainly based on retailing, price, proximity and convenience. In parallel with
Primark, the factor of price was already dealt with, with regards to the convenience
and proximity, their strategy of implementing their stores in places like
shopping malls seemed to be the most ideal location especially as Primark
targets a market of youth, some may not be able to drive so shopping malls
would be easier access as opposed to industrial zones.

 

III.               
COMPANY’S MARKET ENTRY STRATEGY / compare
with other market entries

 

Primark aims primarily at implementing in shopping centres
with 5,000 square meters average shops with the lowest possible rents. The decision
of locating their stores further way from big cities suggests that the brand is
renounces to the tourist-magnet flagship store trend but rather targets local
buyers as their central sales base for its rock-bottom prices products.

We identify the Uppsala model that is used by Primark
in Continental Europe, notably in France, Ireland, UK, Portugal, Netherlands
and Austria. The incremental internationalization of Primark in Continental
Europe is marked my sequent steps aiming for a developing foreign dedication.
Hence, Primark has exercised a step by step expansion by experimenting on
foreign markets that are physically close or neighbours. There is a strong
market commitment and less important market risks. The process is characterized
by the establishment of a foreign sales subsidiary as well as foreign production
(Johanson & Vahlne, 1977; 1990)

By looking at the French market in France, both
womenswear and menswear are equal value. In 2016, womenswear represented 51¨%
of overall value. Targeting the French market is very beneficial to the brand
as study has shown that women aged between 15 and 29 years old are the main
consumers in the clothing industry. Though Paris embodies the capital of
fashion, the brand might not fit into the basic minimum wardrobe of the Parisians
who focus more on quality and brands. France is a challenging market in terms
of legislation as it is characterized as inefficient and long in its
procedures, presenting high taxes, complex bureaucracy and regulations as well
as slow in its justice system but it is a strong economy opportunity as France
is part of the European Union which presents distribution advantages. When
looking at sociocultural opportunities and challenges, fashion is an important
part of their culture though there is a necessity for adapting the products to
the local tastes. France is a very competitive environment where international
brands such as H&M and Zara exercise fierce competition in addition to
French low-cost must-have brands.

Primark’s strategy operates within the long-run
through outsourcing, economy of scale and no advertising. By producing huge
volumes of output, the brand relies on manufacturing outsourcing in industrial
low-cost countries, mainly led nu Bangladesh. Especially since the European
Union has removed the rights to goods imported from such countries. But Primark
also reduces margins to the maximum, as well as its marketing and communication
costs. The group does not communicate, except on social networks, where more
than 8 million followers keep abreast of its news.

Primark’s focus for facilitating the French market
entry was to focus on hiring local job seekers, many of whom have never worked
before. In each store, a dedicated human resources management team trains them,
accompanies them, and internal promotions are encouraged to motivate them.

It is hard to find a lower price elsewhere in France.
The brand constantly adjusts the price according to the market, for instance if
the average market prices decrease. In stores, labels indicate falling prices
for sweaters passing from 13 to 10 euros, or little dresses reduced from 12 to
8 euros. Depending on the successes identified in each store by the managers
and team leaders, restocking and new products are ordered. This process is done
locally by the teams without going through computers which allows each store to
optimize assortments according to the demand as well as giving more
responsibility to employees. All the employees received trainings in which they
are taught about the international standards as one of their corporate
objective is to gain international organization for standardization standards.
Essentially, employees are taught about customer relationship management. This
pragmatic and permanent adaptation to local expectations is one of the reasons for
Primark’s success.

 

 

IV.               
IMPLEMENTING OF THE MARKETING MIX (success
or failure of adaptation? / standardisation of various elements of the mix)

 

4Ps model of transactional marketing (TM or marketing
mix)

In regard to the implementation of the marketing mix,
the product elements offered by the brand are very diverse with a broad product
mix ranging from clothing to home wear, accessories to beauty. However, they
fail in offering high standards of quality which is often one of the main
concern for French consumers. Primark’s product element market strategy
provides affordable and stylish apparel for kids as well as men as women of all
range of age, they approach the product element by primarily focusing on
clothing and do not use ways of advertising and communication such as fashion
shows or television publicity to publicize their clothing range but rather by
simply showcasing its look good pay less slogan that people see and
communicate. By embodying cheap chic to a new level and combining runway
inspired looks with rock-bottom prices, Primark maintains the same brand image
in very country even with different languages.  

Primark’s communication is made with the last three
pieces of the marketing mix which are people,
process and physical evidence and not through the usual communication tools
such as advertising or personal selling as these are more expensive, they rely
more on word of mouth motion from loyal customers

Primark’s target market is less than 35 years old,
they use cost leadership which means that the brand provides the same range of
products as its competitors but at lower prices thanks to their low cost in the
manufacturing stage. Primark’s strategy is less driven by branding but rather
on buying and logistics by detecting fashion trends and collaborating with cheaper
suppliers. As a matter of fact, a bigger attention brought to in-store
purchases which is why there is a strong emphasis on the store design and
merchandising whilst the rest of the fashion industry increasingly turn to the
online channel. Primark relies entirely on its stores by paying high level of
attention to store design and visual merchandising and now includes new
features of video displays the new collection. Keeping the store modern and
enjoyable will be vital to Primark’s success. Its online website primark.com is
available in all the different languages in the countries they are operating
showing their multilingualism. Moreover, Primark has built a very strong
distribution network and efficient processes thanks to their warehouses
computerizing both sales and stock control.

While recruiting, Primark has incorporated managerial
teams of French speaking members preferably those who have lived in France for
a more efficient understanding of the culture and possible changes. All members
especially the ones without a French background need to go through an extensive
linguistic and cultural changes training so that they can become accustomed to
French people and culture

 

In order for Primark to remain on its game in the very
competitive and demanding customers environment, they have established new
rules and regulations changing languages by investing in updated IT for their
communications website. They have created a French website which helped in
attracting more French consumers. In stores, Primark has significantly built
upon the store’s design, the clothing lines are well staged, backlit photos on
the walls. Relaxation areas with phone chargers are available to customers. On
the other hand, the packaging is succinct, the furniture very sober and there
is no music. Primark has created a unique experience on the inauguration day
where all employees had to greet customers with music and songs, arms loaded
with blue balloons, a giant cake with Primark logo and a special buffet marking
one of Primark’s greatest successes.

Indeed, the average basket, from 35 to 40 euros, is
twice as high as in countries such as Spain. The French consumer market is very
diverse, mixing families, young people and seniors with both very small or
bigger budgets. The store is directly connected to Paris by metro, the
attendance is very local. As a matter of fact, Primark managed to attract a
quarter of the customers coming from the capital.

France might encounter possible difficulties while
internationalizing in France, fashion is an important part of their culture,
French people are religiously attached to their luxury brands and don’t usually
go for lesser brands or unbranded clothes. Primark is unable to provide French
consumers with high-end branded clothes.

The threat of a new entry is quite low since the cost
of setting up a company in France is high, but the competition is very strong
amongst the different brands along with the possible threat of product
substitution, thus the buyer power is fragmented into several brands. Big
competitors such as Kiabi or Zara could pose a big threat as these brands are
usually seen as trendsetters among the French population. According to Porter’s
Five Forces, we can conclude that there is a moderate competitive rivalry as
there are only a few retailers with such low-priced and vast ranges of
products.
Following the SWOT Analysis, Primark has succeeded in internationalizing in ten
countries with a very organized business structure and made known to consumers
for its low-priced fast fashion. However, Primark still lack of marketing
strategies which could give it a unique image as compared to its strong
competitors.

Porter’s value chain model shows the set of activities
that brands carry out to create value for their customers by looking at their
activities and how they are interlinked. As a matter of fact, how value chain
activities are performed constitutes costs and impacts profit. Primark could
potentially improve its marketing and sales by introducing a loyalty program,
as well as its procurement by introducing consumer online purchasing. Finally,
Primark could improve its technology development by upgrading customer
relationship management platform to be more flexible and able to report
customer buying patterns.

In addition, there are existing differences between French
and English fashion tastes. French women rather stay away from bright and bold
colours with loud prints and lots of embellishments whereas Primark consists of
lots colourful prints and designs. Primark needs to make an adjustment of these
products which would bring higher costs but also potentially higher prices.

 

Despite a drop in attendance since the attacks and a
gloomy summer, Primark continues to attract a lot, to the detriment of almost
all its competitors. And to recruit too, to the delight of the cities that host
the brand. The mayor of Créteil, but also the ambassador of Ireland in France
were thus present this Tuesday in Créteil, to thank the leaders of the brand
for having created 200 new positions at the store in Créteil, where 730
employees work. This brings to 4000 the number of employees of Primark in
France, where he already aligns eight stores, opened in just three years, since
his arrival in Marseille. “The figures are quite remarkable,” said
Ireland’s ambassador to France Byrne Nason, reflecting the influence of a brand
with striking strength. Only one store alone can make 40 million euros in sales
in its second year.

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