After two years of pandemic restrictions, shoppers returned to physical stores across Europe in time for the Christmas season. This led to better-than-expected trading for European clothing retailer Penneys-Primark, leading parent company Associated British Foods (ABF) to report strong sales. However, the company also cautioned that economic headwinds may impact consumer spending in 2023. Let’s look at how Penneys-Primark has been weathering the economic storm of the pandemic.
How Penneys-Primark is Adapting to New Shopping Habits
Penneys-Primark trades from 416 stores across Europe and the US. It does not trade online but is trialing a click and collect offer for children’s products in Britain, and launched a new digital site in the Republic. The recent full reopening of its Bank Buildings store in Belfast city centre demonstrates that physical stores still hold value for customers, even after two years of pandemic restrictions. Expansions such as this one in Galway’s Eyre Square show that Penneys-Primark remains committed to providing an enjoyable shopping experience for its customers.
The Impact of Economic Headwinds on Consumer Spending Despite strong Christmas sales, ABF has warned about potential economic headwinds that could dampen consumer spending in 2023. The pandemic has caused many people to lose jobs, resulting in decreased consumer confidence and reduced spending power. This could be a problem for Penneys-Primark that relies on shoppers coming into its physical stores to buy their clothing needs. As such, it will likely have to focus more on driving up customer loyalty by offering discounts or other incentives if it wants to survive these challenging times without relying solely on online sales channels like some other retailers have done over the past year.
Penneys-Primark reported better than expected trading during the Christmas quarter due to shoppers returning to physical stores across Europe following two years of pandemic restrictions. Despite this news, ABF has cautioned that economic headwinds may affect consumer spending in 2023 and thus affect Penney’s Primarks’ own performance as well.