PRIMARK GOES GLOBAL

Primark opened its first German store three years ago in an attempt to capitalise on German shoppers’ nose for a bargain - a long-standing phenomenon to which the country’s many ‘hard discount’ grocery chains bear witness.

‘Germany is a very discount-oriented market,’ says Clive Black, an analyst at Shore Capital. ‘Primark has come along with good sites, fabulous merchandising and good customer service at attractive prices. It is a very good fit for the market.’

Primark has only nine stores in the country so far, four of which opened in the past financial year, but the retailer has given an indication of its long-term expansion plans by opening a distribution warehouse in western Germany, from where observers expect it to push into the Benelux countries and France.

Primark has already told analysts it sees potential for 150 German stores.

Primark’s revenues rose 15 per cent in its past financial year to €3.5bn as it added 19 stores, but only three of these were in the UK or Ireland.

Primark’s largest overseas market remains the Iberian Peninsula. Last year, it added 11 stores and 45 per cent more sales space in Spain and Portugal, despite the economic crisis there.

Nevertheless, Germany remains a difficult market for foreign retailers. Wal-Mart, for example, failed in its German hypermarkets venture.

Isabel Cavill, a senior retail analyst at Planet Retail, says Primark’s emergence in Germany could become a threat to retailers such as KiK, a discount fashion chain with 2,600 German branches and sales in 2011 of €1.7bn, and Takko, another ‘value’ fashion retailer that Apax Partners, the private equity group, bought in a €1.3bn deal two years ago. ‘What Germany really missed was a big low-cost fashion brand,’ Ms Cavill says.

C&A, the European clothing retailer, is another that will be worried, she says.

●●Should German retailers be worried from Primark’s success?