For our latest case study, it was Primark, the budget fashion giant known for its cheap clothes. It announced a fall of 3.1% for like-for-like sales against last year. This decline is coupled with the company expecting a “subdued” retail environment to keep a lid on its sales at least through 2026. The mostly privately held company currently owns or operates 475 stores in 18 countries. Weak consumer confidence has led shoppers to spend less—particularly when it comes to discretionary items like fashion.
Even with all of the retail spending stimuli that come from good weather, Primark has had a hard time making its sales. British consumers are tightening their belts due to rising prices on the high street, prompting many to turn to cheaper competitors like Shein and Temu. Inflation remains the central concern. Rates still remain persistently high, at 3.8% for the year until September, well over the Bank of England’s target of 2%.
Chancellor Rachel Reeves is widely expected to propose tax increases in the upcoming budget, which could further complicate Primark’s situation. From April, both the minimum wage and employer National Insurance contributions are set to increase. This would raise the cost of hiring for retailers, further squeezing their already slim margins.
George Weston sounded a note of caution about the future, admitting to being ‘cautious’ about what lies ahead. He’s optimistic for 2026, but this optimism is predicated on the shifting consumer landscape. He noted that the current market conditions are “particularly unpredictable at the moment.”
The impact of these trends on consumer behavior has been echoed by Randeep Somel, a fund manager at M&G Investments. He remarked that the decline in Primark’s sales reflects a broader trend where “the consumer is staying at home and seeing how the Budget goes at the end of this month.”
Richard Hunter, head of markets at Interactive Investor, characterized Primark as the “jewel in the crown” of its parent company, Associated British Foods. He emphasized that Primark “requires laser focus to capitalise on its own growth prospects,” particularly overseas where the brand is gaining traction.
Primark’s challenges are not isolated. Just look at how many household name retailers have cratered or gone bankrupt over the last year alone. Bodycare, Claire’s and Pizza Hut have recently had to shut stores or go into administration. This is yet another reminder to retailers of the exceptional challenges that persist in a bruisingly competitive and financially challenged marketplace.
As Primark continues to address these market uncertainties, its leaders will have to pivot strategies to stay robust. How well the company can adapt to shifting consumer tastes and economic pressures will be key to Chipotle’s long-term success.