Primark favours a ’pile them high, sell them cheap‘ approach, and ASOS is all about ’warehouse them and ship them out‘. The synergies between the two companies could give them access to a whole new group of consumers. Primark has spent time, energy and money gaining a high-street and shopping centre presence, while ASOS has focused its efforts on setting up a modern website and an excellent distribution service. Similarities between this deal and that done between Morrisons and Ocado are easy to see.
The tie-up will offer Primark, a subsidiary of Associated British Foods (ABF), the ability to assess the online retail market without the expense of starting up a website and creating a distribution network. Over the last couple of years, the demographics of UK and European retail have increasingly migrated away from the high street and onto the internet. Of course, those retailers selling non-perishable goods have most to gain by shifting away from the costs of high-street store rentals and staffing.
ASOS will gain from this venture with increased exposure to potential customers, and hopefully the ability to cross sell non-Primark goods to those shoppers brought online by the high street chain. This potential increase in volume of business could see the company’s status jump from being a barometer of online sales to a top-tier clothing retailer. Time will tell, but there is much to be optimistic about for both parties.