Why Primark's return to online sales does not herald the final death of the high street – Martyn McLaughlin

The high street has been administered the last rites so often over the past few decades it is a wonder that the signage of most shopfronts are not written in Latin.

For sure, the average main thoroughfare in a Scottish town or city is not as enjoyable an experience as it once was, with betting shops, discount stores, and vape outlets squatting cheek by jowl on most busy streets.

But the idea that retail businesses which decide to double down on bricks and mortar offerings are somehow doomed in the digital age looks increasingly foolish.

The rather excitable reaction to Primark’s announcement that it is to start selling its clothes online is a case in point.

People queue outside the flagship Scottish Primark store on Princes Street in Edinburgh after it reopened following the initial spring 2020 lockdown (Picture: Jane Barlow/PA Wire)

The development has been seized upon by some as evidence that even the sturdiest retail giants can no longer turn their back on e-commerce. One newspaper, keen to underscore the significance of the move, even described the budget fashion retailer as an “internet refusenik”.

There is no doubt that unforeseen circumstances have conspired to make Primark’s decision to stay offline a costly one in recent years.

As one of the only major shopping brands not to have an online presence, its bottom line was hit hard by the pandemic. In 2020 alone, it lost out on around £2 billion in sales after seeing its trading days slashed by a third. Even now, its like-for-like sales remain nine per cent below the level they stood at in 2019.

On the other hand, these numbers only tell part of the story. Primark remains a behemoth capable of bringing in vast sums of money, with a pre-tax profit of £725 million in the 2021 financial year.

All of which should provide some useful context for Primark’s move online. It is not being done to make up for falling trade, nor is it choosing clicks over bricks. Instead, it is a blunt instrument with which to make even more money and drive incremental purchases in store.

In any case, the reality is that this is not Primark’s first foray into online retailing. Nine years ago, it teamed up with the retailer, Asos, to sell some of its clothing ranges.

The three-month trial was designed as a fact-finding exercise as much as anything, and the demand was high, with Primark selling out several of its lines.

Even so, the project never took off, with Primark’s parent firm, Associated British Foods, taking the view that the cost of handling returns and deliveries – a must for any big online retailer – would leave it unable to guarantee its budget price tags.

The same is true this time around. For all that Primark’s decision is being depicted as a U-turn, it is hardly jumping into the world of e-commerce with both feet. If anything, it is merely dipping its toe in again to test the waters.

Unlike the vast majority of fashion retailers who sell online, Primark does not intend to offer a full-blown, bells and whistles, transactional website.

Instead, it will be a glorified click-and-collect service, rolling out across 25 shops at first, with a limited range of just 2,000 children’s clothing lines.

It could well be expanded and replicated nationwide in due course, but equally, it could be quietly phased out. Either way, the truth is that it doesn’t matter much to the company’s financial prospects.

Primark is one of a small but hardy band of retailers who have confounded industry trends by sticking almost exclusively to physical shops. Indeed, it is still pressing ahead with a store expansion programme, in spite of how Covid has impacted on shopping habits.

Several of the big names, such as Lidl, offer no online purchase options at all, while others, like Aldi, also stop short of a full delivery service, with click-and-collect the only way to buy its groceries via a phone, tablet or computer.

This is not digital Luddism on their part. Rather, it is a deliberate strategy designed to maintain an efficient business model and keep costs low.

Primark’s extraordinary profits are not the only sign that it works. Take another big chain, B&M, which has recently started a trial of an online delivery service for bulkier and higher ticket items.

It is a curtailed and cautious foray into the digital world and, much like Primark, it has no need to go too far, too soon. Where once the business was a small, loss-making chain in the north-west of England, it now boasts a network of more than 700 stores across the UK, on course to make annual profits of around £550m to £600m.

The success of both these companies is no accident. They offer basic items that are always in high demand, and they sell them for less than their competitors.

Not every retailer has the luxury of following that seemingly straightforward model of success, of course, but the fact is that in-store spending in the UK outstrips online purchases by around £13m a year. That gap will undoubtedly close in the years ahead. Whether it is reversed altogether is another matter.

One thing is clear, however. The myriad warnings that traditional retailers must adapt or die if they are to survive in the modern age are not always accurate, and the idea that they must have an all or nothing attitude to digital is misplaced.

The high street may not be in the rudest health, but news of its death has been greatly exaggerated.