Primark picks Slovenia for first CEE store opening

Primark picks Slovenia for first CEE store opening
So far Primark's stores have been concentrated in Western Europe and the US. Its store in the Aqua Shopping Centre, Portimão, Portugal is pictured.
By bne IntelliNews March 13, 2019

Fast fashion retailer Primark will open its first store in Central and Eastern Europe (CEE) this summer. Plans to open a store in the Slovenian capital Ljubljana were confirmed in a trading update from its parent company Associated British Foods. 

Primark, whose arrival in the CEE region has been anticipated for years, follows fellow international fast fashion giants H&M and Zara into the eastern part of the continent. 

In addition to the Ljubljana store opening, Primark has also signed the lease for its first store in Poland, following this up by signing the lease for its first store in the Czech Republic too, in Prague city centre.

In total, the retailer plans to open 0.9mn square foot (sq ft) of new selling space in the current financial year. In the next quarter alone, a net 0.4 million sq ft of additional selling space is planned, the trading update said, with new stores in Hastings, Bluewater, Belfast and Milton Keynes in the UK, Bordeaux in France, Brussels in Belgium, Wuppertal in Germany and Utrecht in the Netherlands. 

There will also be some changes to existing stores: in April Primark will relocate to new premises in Birmingham which will become the chain’s largest store at 160,000 sq ft. Meanwhile, Primark’s smaller store in Oviedo, Spain will close, and selling space will be reduced at the King of Prussia mall in Pennsylvania, the US. 

“Sales at Primark are expected to be 4% ahead of last year in the first half, at both constant currency and actual exchange rates, driven by increased retail selling space partially offset by a 2% decline in like-for-like sales,” the trading update said. “With a much higher margin, profit is expected to be well ahead of the same period last year. Early trading of the new spring/summer range has been encouraging.”

Several of the leading fast fashion brands have been present in Central and Eastern Europe since the early 2000s. While Primark is about to become the latest entrant to the Central and Southeast Europe markets, with its stores so far concentrated in Western Europe the US, analysis by bne IntelliNews showed that rival retailers H&M and Zara have shifted their focus from developed to emerging markets over the last decade. 

This trend is expected to continue. “West European markets becoming quite saturated, with the largest fast fashion retailers … showing slow growth or even decline. Naturally these companies are looking to expand to emerging economies in Eastern Europe, Asia or Latin America where their presence is smaller and they can expand and show faster growth rates,” Euromonitor International’s research manager for beauty and personal care, Mantas Kaluina, told bne IntelliNews in a 2018 interview. 

Consultancy McKinsey calls 2017 the end of an era, after which “the West will no longer be the global stronghold for fashion sales”. From now on, it anticipates, more than half of apparel and footwear sales will take place outside Europe and North America, as the spending power of the growing middle classes in emerging markets increases.