Any move by the Penneys online would likely be too late, and could actually damage their existing business.
That’s according to business lecturer and corporate consultant Emmet Oliver, who has been speaking as the retail giant will create 700 new jobs in Ireland over the next three years.
It is part of a €250 million capital injection plan to expand and redevelop the store.
This includes the development of a warehouse and distribution facility in Newbridge, Co-Kilder.
Paul Marchant, CEO of Primark, says: “We are proud to announce a significant long-term investment in our Penneys business to improve and grow our Irish stores by creating 700 new jobs across the country.
« We greatly value our incredibly loyal Irish customers who have supported us over the years. »
Asked if the Penneys were planning to start selling online, Marchant said, « Right now our focus is on bricks and mortar, and that’s what we believe in.
“That’s what our customers tell us they want, so today’s announcement is all about investing in bricks and mortar.
« And that’s what we’re focusing on right now. »
but Emmett said hard shoulder The retailer was almost too late for the online game.
“They have a website, roughly, they’re planning to launch a new one next year — but you can’t get delivery.
“They have a social media account, but if you want to know how many things are in the Penneys store, you have to pick up a phone.
« This is a real weird business model. »
« Candy shop for shopaholics »
There are several reasons for this approach, he says: « One is the price, but also the size.
“When you go to the place, the amount of merchandise there is – piled up and available to you – it’s a shopaholic candy store.
« Can they keep working for years and years from here? The strategy is a little weak around the edges. »
Emmett says they’ve started canoeing in some areas.
“They have recently indicated that tapping and aggregation are on the agenda; this was an absolute a few years ago in the Primark/Penneys model.
« Looks like this is coming. »
But he says it’s too late to take advantage of any online presence.
“The truth is they lost space on the internet — they came in this late and faced the giants of H&Ms, The Gaps — I dare say Amazon.
“They are coming too late to this very border, and it will be difficult for them to change the situation.”
Still, he says, if the Penneys take a big step into the internet, their price cuts will likely be devoured.
Using an example of a €50 product that the Penneys might sell for €40, he explains: « If they have to do a very expensive online operation – they have to put delivery trucks on the road, they have to have a great online infrastructure … Will the evaporation gap of 10% this?
“Will they be able to maintain their online pricing advantage that they have in physical bricks and mortar?”
Penneys store entrance seen in a mall in May 2019. Photo by: aphperspective / Alamy Stock PhotoOnline alternative
For Bennis, he says, switching to the Internet could harm the company itself.
“Are they going to break up their consumers?
“Are their consumers honestly mobilizing… would they simply not turn up in physical stores if there was an alternative?
« That’s a problem if you’re paying rent for all these physical stores and you’re maintaining them and so on. »
Emmet says that while Penney isn’t going anywhere, he’s likely to change.
“They are not going away; they are a very successful, well-resourced, money-rich company.
“But I would say the model will have to be adjusted in the next five to 10 years.
“Clothes and apparel are produced in Bangladesh, put on ships and brought halfway around the world to key markets of the US and Europe – in the context of climate change and a world of decarbonisation – how sustainable is that?
« I’m not saying the wheels will fall out of this company by any means…but I do think a Penneys/Primark store in about five years’ time will look/look/feel a little differently [than] Today. »
Primark was founded in Ireland in 1969 under the Penneys brand.
It now has 399 stores in 14 countries in Europe and North America, and employs more than 70,000 people.
