"The beginning of the end": Popular fashion chain has to close branches
Created: 06/12/2022 05:02
By: Lisa Mayerhofer
Many fashion retailers are suffering from the consequences of the corona pandemic.
(Archive image) © Bernd Wüstneck/dpa-Zentralbild/dpa
Many stationary retailers are suffering from the consequences of the corona pandemic and high inflation.
Now the next fashion giant is under pressure.
Berlin – For a long time, the Primark fashion chain's strategy of selling clothes at the cheapest prices was extremely successful.
But now the company is slipping into a major crisis, and the first branches in Germany have to close.
Is that only due to the sinking consumer mood?
Inflation: People in Germany switch to cheaper products
After all, according to a survey by the market research company NielsenIQ, people in Germany are tightening their belts because of the drastically rising prices.
According to NielsenIQ, based on a representative survey of more than 10,000 people, a good half of consumers (52 percent) only buy products that they really need.
"It is currently striking that more and more people are apparently asking themselves what they can do without and then actually do it," said NielsenIQ expert Lothar Staiblin.
“People also use many other savings strategies.
They compare prices more closely, pay more attention to special offers, switch to cheaper products such as private labels or buy more frequently from discounters.”
Primark forced to close stores - 'beginning of the end'
The paradox is that while discounters like Aldi and Lidl are benefiting from increasing thrift, the fast-fashion retailer Primark isn't making it with its cheap concept.
According to the trade journal Textilwirtschaft
, Primark plans to
close two branches in 2023, one on Schlossstrasse in Berlin and the other in Weiterstadt near Darmstadt.
The leases expire next year.
Industry insiders expect further closures.
A trade expert told
Wirtschaftswoche
that Primark in Germany is experiencing the "beginning of the end".
According to the magazine, the parent company ABF announced just a few weeks ago that it would write off the value of its activities in Germany by around 240 million euros and reposition the business.
Unions now fear far-reaching cuts.
Meanwhile, Primark assured
Wirtschaftswoche
: "We remain committed to our loyal customers in this important market and are now examining options to make our business in Germany profitable again in the long term."
Primark has completely overslept online trading
But the group not only has to fight because of rising energy prices and consumers' declining willingness to buy due to inflation.
Primark also completely slept through e-commerce, which hit the company hard during the coronavirus pandemic.
The sales of the fast fashion retailer in Germany have more than halved since 2019: they fell from 916 million in 2019 to 380 million last year.
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In addition, according to
Wirtschaftswoche
, the company expanded too ambitiously: large loading areas in expensive inner-city locations in major German cities result in high additional costs.
Meanwhile, its Chinese competitor, fast fashion retailer Shein, is thriving in Germany – especially online.
With material from the dpa