Sales of the Irish cheap fashion chain Primark in Germany have been shrinking for years, according to a report by Wirtschaftswoche. Young people in particular appreciate the extremely cheap fashion styles and buy large quantities of so-called fast fashion there. Primark expanded and opened more and more branches in German inner cities. But there seems to have been a change, because sales have been falling since 2019. In 2021, only 380 million euros in sales were generated, in 2019 it was 926 million.
The reason for this could be the bold expansion policy of ABF, the parent company of Primark. “ABF, blinded from the beginning, overestimated the German market,” said an ex-employee to Wirtschaftswoche. They have expanded into too many cities, leased too large shops and offered too many goods. “The group thus deviated significantly from the strategy it was pursuing in other countries.”
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As a result, the profit margins in Germany were significantly lower than in other countries. Now the high energy prices are an additional burden on the shop rents in good inner-city locations. And the customers are also staying away. In addition, competitors were still able to generate sales with their online shops during the closures in the Corona peak phase. But Primark doesn’t have an online store.
The first branches in Berlin and Weiterstadt were already closed at the beginning of this year when the respective lease agreements expired. A few weeks ago, the parent company ABF announced that it would write off the value of its activities in Germany by around 240 million euros. A repositioning should make the business “sustainably profitable”.
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The original of this post “Fashion discounter Primark has to close more branches” comes from chip.de.
