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Westons’ fast-fashion chain lands in North America

Whenever a big European retail chain announces plans to launch on the other side of the Atlantic, you hear the sound of air sucked through teeth. Eyes roll upwards and someone says "It's a graveyard." The casualties are noisy and embarrassing. Marks & Spencer mismanaged Brooks Brothers, Laura Ashley was a disaster and more recently Tesco, the grocer, pulled the plug on its U.S. convenience stores. So, you can expect that the Weston family did their homework before they took on a big downtown site in Boston to launch the first Primark store in the U.S.

Few Canadians will be aware of Primark, a British fast-fashion emporium where your teenage daughter could buy a dress for a big night out and still get change from £10 ($18.60). The garment may not last for a second outing but that's not the point and the Westons have chosen well in selecting Boston – a North American city with a large student population, a vibrant after-hours culture and the sort of social mix that might appreciate Primark's cheap and cheerful up-to-the-minute street fashion.

It is coining money in Britain, thanks to clever public relations and a ruthless policy of selling on price points – £10 shoes, £5 skirts and believe it or not a £3 dress. It looks more like a charity shop than a global fashion business but the customers seem to get a cheap thrill out of the chaotic rails of jumbled stuff. It benefited from the patronage of TV celebrities, such as Gok Wan, who would trawl the racks for bargain outfits for his fashion advice program – How to Look Good Naked – in which the shy and aesthetically challenged were encouraged to shimmy down a catwalk in flashy frocks and high heels. It's a formula that delivered a 26-per-cent boost to operating profit in the half year to the end of February with improved margins. Meanwhile, the venerable Marks & Spencer struggles to raise its sales while profits are crimped. The cheeky girl's favourite is now snapping at the heels of Mum's choice with £4.2-billion in sales, expected soon overtake the M&S clothing business in turnover, a harsh lesson about how the middle market is being squeezed between fast fashion and designer brands.

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The Westons ought to know all about this phenomenon. In the U.K., Galen Weston owns Selfridges, the upmarket London department as well as Brown Thomas, a Dublin equivalent. The same part of the empire controls Holt Renfrew and Ogilvy's in Canada. Primark is owned through Associated British Foods, a publicly traded baking and sugar processing business. Likewise, in Canada, there is a publicly traded arm of the empire, George Weston Ltd, which deals in the meat and potatoes side of the business, literally in the case of Loblaws, as well as Joe Fresh, the down-market fashion brand. The family seem to find it convenient to keep separate businesses that serve different markets. But the posh shops are recent additions to the portfolio; the business that George Weston founded in Toronto in the late 19th century was a bakery and a biscuit factory, and he is widely credited for having a sardonic view of consumer tastes: "People will eat horse shit if you put enough icing on it."

Primark is the Weston family's weapon to take on the huge market of Americans who desperately want to look good on Friday night but only have $20 to spend. In a nation that is not just economically divided but is now torn asunder between those with wealth and those who endure, the part of the market that counts the pennies is still a huge profit opportunity if you get the economics right. There are other foreign competitors, such as H&M, the Swedish chain and Topshop, Sir Philip Green's fashion emporium which is graced by the image of fashion model Kate Moss.

Still, neither gets the price points quite as low as Primark. In achieving those economies, Primark has sought out the services of seamstresses in Bangladesh and last year the company found itself under fire when the Rana Plaza factory, a key supplier, collapsed in Dakha. Primark and its parent ABF were quick to acknowledge the connection and have undertaken to support the victims and their families. It was a harsh reminder of what is involved in the production of a $10 frock. However, the relative ease with which Primark rode through the media and NGO scrutiny while enjoying soaring sales and profits in its stores is also a reminder of the power of consumer pricing and marketing.

With Primark, it's about glitter, a skimpy top with spangles, what gets you noticed at 2 o'clock in the morning while clubbing in London's West End. Old man George Weston would have understood.

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About the Author

Carl Mortished is a Canadian financial journalist and freelance consultant based in the U.K. With a career spanning investment banking, journalism and consulting for global companies, he was for many years a financial writer and columnist for The Times of London. More

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