How Primark makes money selling $3.50 T-shirts

SET OUTTHM for a shopping trip with $100 and you can snap up a pair of Levi’s jeans or half an Hermès necktie. Or you could pop into Primark and fill a wardrobe. The discount purveyor of fast fashion, which is expanding in America from its base in Europe, will flog you a -shirt for $3.50 and trousers for a tenner. Such prices seem too good to be true to campaigners, who assume they can only be the result of corner-cutting in a sector rife with dodgy labour practices. Rivals such as Zara of Spain and & of Sweden, which used to be considered cheap before Primark came along, already run tight ships and squeeze suppliers hard. What is Primark doing so differently that it can sell wares for less and still make money?A lot, it turns out. Though Primark looks as if it is in the same trade as its budget rivals, beneath the seams its business model could not be more different. On strategic decisions the firm has zigged when much of the apparel industry has zagged. As other firms try new approaches, such as rejigging their business for the internet age, Primark has doggedly stuck to a stack-it-high-sell-it-cheap approach to retailing that would feel familiar to the manager of its first store, opened in Ireland in 1969. The strategy has limitations, particularly when it comes to new growth. But for now—and notwithstanding the odd pandemic—it is proving its worth.