Retail Theory and Practice

This report discusses the changes in the macro and micro environment of Primark, a fast fashion retailer. It analyzes the political, economic, social, technological, legal, and environmental factors affecting the company. It also suggests strategies and tactics that Primark can apply to deal with the challenges in the industry.

Retail Theory and Practice

Table of Contents
Retail Theory and Practice/Practical...............................................................................................1
INTRODUCTION...........................................................................................................................3
MAIN BODY..................................................................................................................................3
Relevant Changes in Macro-Environment...................................................................................3
Relevant changes in Micro-Environment....................................................................................5
Strategies and Tactics that Primark can apply.............................................................................6
Recommendation.........................................................................................................................8
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
Primark, an Irish fast fashion retailer founded in 1969 and headquartered in Dublin,
Ireland. The store and fashion retailer is subsidiary of food processing and retail company ABF.
The company operates at Europe and United States at around 373 locations. Products of the
company are clothing, cosmetic and house wares. The area served by the company is Austria,
Belgium, France, Germany, Italy, Netherlands, Portugal, Spain, Slovenia, UK and US. First store
of company was started at Dublin in 1969 and its success in Ireland led to its international
expansion. The company was initially started as Penneys and in Ireland is known as Penneys but
outside Ireland company operates as Primark. Product range of the company includes baby,
children clothing, womenswear, menswear, homewear, accessories, footwear and beauty
products. Primark competes with Zara and H&M and contributes to contemporary and fast
fashion. This report will discuss changes in its macro environment with help of PESTLE
Analysis and analysis of its micro environment which includes analysis of competitors and
internal analysis of the company. Later strategies that company can use will be discussed and
suggested in the report and what retailers can do to deal with challenges.
MAIN BODY
Relevant Changes in Macro-Environment
External environment and more specifically macro environment is ever changing and
changes which are difficult to predict. This can be identified and understood with the help of
PESTLE analysis model. The model provides information about factors which exist in Macro
environment of the Primark. These factors are-
Political
Political factor plays significant role in operations of the company and Primark operates
its business in many countries and get exposed to political certainties of all those countries
(Perera, 2017). Some of the factors which are included in this factor of Primark are political
stability and how important retail sector in the economy of respective country. Interference of the
government in the retail industry and Primark also distributes in many countries so one of the

important factor which affect Primark and its profitability in any country is trade regulations and
tariffs related to consumer service. Primark is a Irish company this is why Brexit and political
situation in the country also impact the business. This also affects business of Primark in the UK
and their policies and taxation and policies.
Economic
This factor of the macro environment determines inflation rates, saving and expenditure
rates, interest rate and foreign exchange rate etc. Factors which affect Primark and its business in
particular country are expenditure rate, stability of the economic system because stable economic
system helps in prediction of long term potential impact of the country on the profitability of the
Primark (Rastogi and Trivedi, 2016). Currency and its stability in the particular country is also
important factor in this environment.
Social
This is one of the most important factors for Primark because the company deals in
fashion and clothing products and the change in the industry is very frequent and unpredictable.
Primark needs to timely analyse these environment so that it can keep with the changes. Some of
the factors which impact and affect this environment are demographic and skill level of the
people. This is important because Primark sell its product online to other countries and people
who can buy from online mediums will only be its customers. Culture of the country and what
type of clothes they like to use and perception of the people of respective country about online
shopping are factors to consider in this environment.
Technological
This factor is not likely to affect business of Primark because its products are clothes and
accessories but what affects this is technology being used by company to deliver its product.
Factors in this environment of Primark are, utility of its website and its usability in the different
country. How well the website can present the products and offerings to the people of various
countries. Another technological factor that affects this environment of the company is
technology and value chain activities of the company and effectiveness of technology in its value
chain structure.

Legal
This includes rules and regulations governing retail business and online activities in
particular companies where Primark is operating (Banahene, Ahudey and Mensah, 2016). This
environment of Primark also includes rules for export and import of the business. Primark also
have to consider data protection law as this is a online business.
Environmental
This factor includes impact of environment on the activities of the Primark. The factors
that affect this environment of the Primark are physical environment of the country where
Primark is operating and its product offerings which get affected from Weather and climate of a
country. For Example, Primark have to consider climate and weather for its product offerings.
For example in winter it has to offer winter clothing. Attitude of the country for green and
ecological products is another factor for Primark to consider in this environment.
Relevant changes in Micro-Environment
Micro environment and its factors equally affect the business and they affect more
closely but the only difference is that micro environmental factors are semi controllable and
internal factors in this are totally controllable (Ho, P.H., 2016). To Analyse these factors of
Primark Five Force model can be used. This model includes competitive forces of the company
and these are-
Competitive rivalry within the industry
In this competitive force of the Primark it can be said that Primark position is at moderate
level. This is because Primark have many competitors like Zara, H&M, Zalando, Boohoo,
Missguided etc. and all these competitors create strong competitive rivalry within industry. This
is why Primark stands at moderate level because of its wide network and position in the industry.
Bargaining Power of the Buyers
This is the power of the buyers which means customers of a company. Primark in this
competitive force can determine its position based on two factors which are number of buyers
and number of sellers. For Primark both these are high in number, less number of buyer

strengthen power of buyers in the competitive force and less number of sellers strengthens
competitive position of the seller in the industry (Ho, P.H., 2016). Position of Primark in this
competitive force is at moderate level because the number of seller and number of buyer both are
high in number.
SWOT Analysis of Primark
This analysis gives knowledge about internal factors of the company and how they can be
capitalized for utilizing external opportunities and restrain impact of threats on the operations of
the company.
Strengths
Highly skilled workforce, Primark has provided excellent training programs for its employees
and this have resulted in highly skilled workforce of the company (Sarathe, A and et.al., 2018).
Strong Brand portfolio of the company is strength of Primark. Strong distribution network is also
strength of Primark and have managed to distribute its products in many countries.
Weakness
Marketing efforts of the company are limited. Company’s investment in new technologies is not
sufficient. Profitability ratio is below than average of the industry.
Opportunities
Lower inflation rate is opportunity of the Primark. Upgrading technology also provides
opportunity for the Primark. New trends and changing customer behaviour and outlook for
online shopping is also an opportunity for the company.
Threats
Increasing pay level of the employees is a threat for the company (Sarathe, A and et.al., 2018).
Shortage of skilled workforce in certain economies is also a threat that can affect performance of
the company.

Strategies and Tactics that Primark can apply
From the analysis of the Macro environment of the Primark it can be said that some of
the major changes that company might have to face are in its technological and social
environment (Schawel and Billing, 2018). Social environment includes changes in taste and
preference of the customers and technological environment includes technological advancement
of the competitors and uses of technology for marketing of the companies which is limited in
context of Primark. These are most relevant influence for the operations of the company.
Regarding strategies that company can employ, it can use strategies from the Ansoff Matrix. This
model provides four type of strategy that company can employ. The strategies are-
Market Penetration
This strategy is for existing product and existing market and this is a suitable strategy for
Primark. Primark operates and sell its products in many countries and this is why it does not need
to develop any new market (Dawes, 2018). In this market company can increase and strengthen
its exiting market reach and this can be done by improving marketing and promotional efforts of
the company. Primark needs to enhance its marketing and promotional efforts and for this
company can use technology and digital marketing.
Product Development
This strategy includes development of new product and existing market. This strategy
includes that company develop new products and sell these products in existing market of the
company. Primark can use this strategy in its existing market by developing and increasing its
product range.
Market Development
This strategy includes development of new markets and selling existing products in that
market. Market and reach of Primark is already very large and increased and this is why this
strategy not very suitable for the company. This strategy can be utilized by the company by
developing markets in the countries where Primark sell its products.
Diversification

This strategy includes development of new products and development of new markets for
the company. Primark can apply this strategy but this strategy possesses highest risk (Loredana,
2016). This strategy requires that company starts everything from zero and its existing image and
reputation does not have much effect on success as the products are also new along with market.
From the analysis of its macro environment and its changes it can be suggested that Primark
should adopt and implement Market Penetration strategy is best for the Primark. The strategy
will include penetrating the existing market and this can be done by efficient marketing efforts.
Marketing efforts of the company are limited and at the same time company also lack in
technological development and technology uses. While implementation of the strategy Primark
can enhance and increase its marketing and technology can be used by Primark to market and
promote its products.
This strategy can also include that Primark bring new products and keep up with changing trends
and consumer preferences (Peng, 2017). Primark can bring green and environment friendly
products to attract customers who are willing to buy such products and in addition, this is ever
increasing trend.
Marketing of the Primark is also one of its weaknesses and this will reduce impact of its
weakness on its success. Competition is another challenge and with this strategy and enhanced
marketing efforts company will be able to deal with that challenge as well.
Recommendation
Primark is facing some challenges and these are related with competition and changes of
macro environment. Challenges of Primark are regarding its competition because competition in
retail industry is very tough and Primark needs to deal with it. For this Primark can improve its
marketing efforts by focusing on its marketing mix.
Attrition of employees is another challenge for Primark and this is very difficult and important
because Primark invest significant amount for training of its employees and then their turnover is
loss for the Primark (Leonidou and et.al., 2017). Regarding this Primark should take actions
which legally bind employees with the company and along with this company should also work
on its human resource management practices and motivational aspect of the employees.

Technology aspect also needs be paid attention by the Primark. This is because this factor and
aspect is an opportunity and as well as weakness for the company. Company needs to make
investment for its technology.
CONCLUSION
On the basis of above analysis it can be concluded Primark gets affected from macro
environment and this environment includes affect from various countries and their environment
specifically political and social environment of various countries affect Primark. The reason
behind this is that Primark is a company that operates in many countries and its products are
supplied and sold to around 13 countries. This is why Primark needs to identify and analyse
impact of all the factors from all the countries in which company supply its products. The main
focus of the company remains on the countries which are potentially highly profitable for the
company.

REFERENCES
Books and Journals
Banahene, S., Ahudey, E. and Mensah, C., 2016. Analysis of Macro Environment for Strategy
Implementation: What is important to Handicraft Export Organisations in
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Dawes, J., 2018. The Ansoff Matrix: A Legendary Tool, But with Two Logical Problems. But
with Two Logical Problems (February 27, 2018).
Ho, P.H., 2016. Analysis of competitive environments, business strategies, and performance in
Hong Kong’s construction industry. Journal of Management in Engineering. 32(2).
p.04015044.
Leonidou, L.C and et.al., 2017. Internal drivers and performance consequences of small firm
green business strategy: The moderating role of external forces. Journal of business
ethics. 140(3). pp.585-606.
Loredana, E.M., 2016. The Use Of Ansoff Matrix In The Field Of Business. In MATEC Web of
Conferences (Vol. 44, p. 01006).
Ortega, A.M.G. and Okechukwu, C.U.U., 2017. Strategic means to launch business-Primark in
Denmark.
Peng, M.W., 2017. Cultures, institutions, and strategic choices: Toward an institutional
perspective on business strategy. The Blackwell handbook of cross‐cultural
management, pp.52-66.
Perera, R., 2017. The PESTLE analysis. Nerdynaut.
Rastogi, N.I.T.A.N.K. and Trivedi, M.K., 2016. PESTLE technique–a tool to identify external
risks in construction projects. International Research Journal of Engineering and
Technology (IRJET). 3(1). pp.384-388.
Sarathe, A and et.al., 2018. Recent Trends and SWOT Analysis of Food-Processing Industry
Infrastructure in India: A Review. Bull. Env. Pharmacol. Life Sci. 7. pp.107-116.
Schawel, C. and Billing, F., 2018. Ansoff-Matrix. In Top 100 Management Tools (pp. 31-33).
Springer Gabler, Wiesbaden.