Primark is a British retailer company which sells all kind of clothes. The company offers very cheap clothes of an acceptable quality. Some persons think that this company offers the best value for money. I went once in this store in London, it was the most crowded shop I had ever entered in. I did not buy anything, but I noticed that Primark offers some interestingly cheap prices, like big towels for £3. I asked myself one question: How could they do some profits? I think they make profit with the quantity of sales, low margin and poorly paid staff. In the store, I saw only cashiers, who were overflowed, clothes were scattered in the store and no one seemed concerned about the storage of goods.
Source : http://www.bbc.co.uk/
Thus, I imagine that they make low profit on each sold product, but they are interested in profit because the company has opened seven new stores in Britain.
So I did not understand the news that I read on Google news, saying that Primark will have an increase of its taxes linked to a huge increase in the price of cotton; which has doubled, letting Primak chose between two possibilities:
1) Take the same margin and higher their prices
2) Keep the same prices and absorb higher costs within the margin
They choose the second option, which will have an effect on the profit the company makes. I do not really understand this strategy because I do not know the concurrence of Primark, within the cheap clothes market. Nevertheless, to me, all people who are interested in Primark because of the low price are satisfied. If Primark amplifies this advantage against concurrence, I don’t think they will have more customers because the majority of customers in clothes market are not looking only at the price. So I am very confused about Primark strategy. If someone has an opinion in this subject, he is welcome to share it with me.
No comments:
Post a Comment