How a Penneys online offering could 'cannibalize their own consumers'

The retailer is to invest €250m into the Irish market
Jack Quann
Jack Quann

21.56 26 Nov 2021

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How a Penneys online offering...

How a Penneys online offering could 'cannibalize their own consumers'

Jack Quann
Jack Quann

21.56 26 Nov 2021

Share this article

Any move by Penneys online is likely too late, and could actually hurt its existing business.

That's according to business lecturer and corporate advisor Emmet Oliver, who was speaking as the retail giant is to create 700 new jobs in Ireland over the next three years.

It is part of a €250m capital injection plan into store expansion and redevelopment.


This includes the development of a warehouse and distribution facility in Newbridge, Co Kildare.

Primark CEO Paul Marchant 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 hugely value our incredibly loyal Irish customers who have supported us over the years."

The homepage of the Primark website is seen in January 2018 The homepage of the Primark website is seen in January 2018. Picture by: Chris Dorney / Alamy Stock Photo

Asked if Penneys plans to start selling online, Mr Marchant says: "Right now our focus is on bricks and mortar, it's what we believe in.

"It's what our customers tell us that they want, so the announcement today is all about investment in bricks and mortar.

"And that's what we're focused on right now".

But Emmet told The Hard Shoulder the retailer is almost too late to the online game.

"They do have a website, just about, they're planning to launch a new one next year - but you can't get delivery.

"They do have a social media account, but if you want to find out how many things are in a Penneys store you have to pick up a phone.

"This is a real outlier business model".

'A candy store for the shopaholics'

He says there are several reasons for this approach: "One is price, but also volume.

"When you go into the place, the amount of goods that are there - stacked up and available to you - it is a candy store for the shopaholics.

"Can they keep it going for years and years from here? The strategy is a little bit flakey around the edges."

Emmet says they are starting to row back in some areas.

"They have indicated recently that click and collect is on the agenda; this was absolutely out a few years ago in the Primark/Penneys model.

"That seems to be coming in"

But he says they are likely too late to take advantage of any online presence.

"The reality is they have lost the space online - coming in this late and going up against the giants of the H&Ms, the Gaps - dare I say Amazon.

"They're coming very very late to this particular frontier, and it's going to be hard for them to turn it around".

However he says if Penneys did make a big move to online, their price reductions would likely be eaten up.

Using an example of a €50 product that Penneys may sell for €40, he explains: "If they have to put in place a very expensive online expensive operation - they've to put delivery trucks on the road, they've to have a big online infrastructure... would that 10% gap evaporate?

"Would they be able to maintain their pricing advantage online that they do have in physical bricks and mortar?"

A Penneys store entrance is seen in a shopping centre in May 2019. A Penneys store entrance is seen in a shopping centre in May 2019. Picture by: aphperspective / Alamy Stock Photo

Online alternative

And he says a shift to online for Penneys could actually damage the company itself.

"Are they going to cannibalize their own consumers?

"Are their own consumers who are trooping in faithfully... are they going to simply not turn up in the physical stores if there's an alternative?

"So that's an issue if you're paying rent on all these physical stores and maintaining them and so on".

Emmet says while Penneys isn't going anywhere, it will likely have to change.

"They're not going to disappear; they're an extremely successful, well-resourced cash rich company.

"But I would say that the model is going to have to be tweaked in the next five to 10 years.

"Producing clothes and garments in Bangladesh, sticking them on ships and bringing them half-way around the world into the main markets of the US and Europe - in a climate change, decarbonising world - how sustainable is that going to be?

"I'm not saying the wheels are going to fall off this company by any means... but I think a Penneys/Primark store in about five years time will look/sound/feel a little bit differently [than] today."

Primark was founded in Ireland in 1969 under the Penneys brand.

It now has 399 stores across 14 countries in Europe and North America, and employs more than 70,000 people.

How a Penneys online offering could 'cannibalize their own consumers'

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Main image: A Penneys shopfront is seen in the Blanchardstown Shopping Centre, Dublin in September 2018. Picture by: Michael Grubka / Alamy Stock Photo

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