On top of Primark’s already planned first U.S. store at Downtown Crossing in Boston, the Dublin-born company recently announced a deal to sublease approximately 520,000 sq. ft. of real estate from Sears in seven shopping centers in Northeastern United States.
If you’ve never been inside a Primark store, they are truly a force of nature. Extremely low prices and extremely fast fashion create a shopping frenzy among European consumers. There are individual Primark locations that do in excess of $200 million a year. Given Primark’s market segment—low priced clothing—the number of units the retailer pushes through the doors is truly staggering.
We expect Primark to have the same type of success in the United States as it does in Europe. Low prices and fast fashion are a formula that seems to translate well across countries. The success of H&M and Uniqlo here is evidence of this and Primark would take the low price proposition to yet another degree.
There are a number of factors at play here:
Primark could well have a ripple effect on other apparel retailers operating in the shopping centers it plans to occupy. They are a force to be reckoned with.
At the same time, the sublease deal is another signal of the slow and steady death spiral that Sears has been on for much of the past decade. While Sears announced the transaction with great fanfare (but little detail on what properties are going to be impacted—all are supposed to be regional malls in the Northeast), the assumption is that Primark has taken the best properties that Sears has. While the department store chain might benefit from some short-term rental income as a result, it’s troubling that it is selling off its best properties and further eroding its retail presence.
The retail cycle of life continues. The winning retailers find a way to succeed and grow. Companies that have failed to adapt cede their space—in this case literally and figuratively.