Fashion retailer Primark's plans to keep its phenomenal growth story going, and then some, by conquering the United States hinge on the strategy that has already made it big in the United Kingdom and Europe.

From humble beginnings in Dublin in 1969 under the name Penneys, it has become one of the great retail success stories over the past 20 years. From a real estate perspective, that has been striking because it has done so by eschewing an online sales strategy while amassing 419 stores across 13 European countries, moving from small shops to bigger and bigger ones and then on to 100,000-square-foot-plus anchor units. Along the way it has created thriving positions in malls, and on high streets or main streets, by leasing in the traditional manner or buying entire malls to get the space it wants.

The fast fashion clothes, footwear, homeware and beauty group has had its sights set on the United States for some time, debuting there in 2015 via a seven-store deal with department stores group Sears. It has been taking its time since, but in the last 12 months has ramped up those ambitions again. In its recent global expansion statement it said its goal is to get to 60 stores in the United States by the end of 2026, part of a global drive to get to 530 stores worldwide in the same time frame.

A number of critical features remain in place for the business, which is owned by London-headquartered multinational Associated British Foods. First, it still has little interest in having an online business apart from a recent and growing flirtation with shopping over the Internet and picking up the product at the store. This has liberated it from the hefty processing costs faced by rivals committed to online platforms. There is also the focus on affordability, and its drive to leverage its position as the "only show in town" by snapping up space left behind by struggling larger department store chains and, in doing so hammering out very good real estate deals.

Primark's prices for its goods are turning heads in the United States, as they have done in Europe, with accessories sold for as little as $3 and jeans and jackets tagged at under $50. And the relatively low price point continues to transfer into big revenues. Associated British Foods reported in its half-year results to end March 2023 that Primark total revenue was up 21% at £9.56 billion, but net profit fell 3% to £663 million.

A slight sticking point has been Germany, where it is proving popular but facing some resistance to the Primark magic. In its latest results it said like-for-like sales have lifted 13% year on year but believes sales densities across the estate, as a result of the “size of some existing stores and their proximity to one another,” remain too low. As such, it has announced a restructuring and growth plan in the country and few would bet against it hammering out the issues.

Primark has a strong presence in the United Kingdom, and is getting that way in European countries such as Spain and France, leading to a renewed focus on the United States.

Stephen Springham, partner and head of United Kingdom retail research at Knight Frank, says Primark is arguably the most successful retailer of the past two decades: "The reasons for that success are simple and retail done properly is very simple. It is the fundamentals of brand, product and price and it ticks all of those boxes. What is astounding is how it has sustained this over such a long period, all through everything seen over the last 20 years. And now in two of the hardest markets in the world to crack, Germany and the US, while it is relatively early in each, it seems to be doing it."

Primark opened its first United States store in 2015 in Boston. It did so after entering into lease agreements with Sears Group for seven standalone stores in the Northeastern United States as the famous name scaled back space. The deals were for more than 500,000 square feet and included space at King of Prussia Mall near Philadelphia, Pennsylvania, and Staten Island Mall in the state of New York, as well as Burlington Mall in Burlington, and South Shore Plaza in Braintree, both on the outskirts of Boston. Sears continued to have a significant retail presence in the malls, which were owned and operated in large part by Simon Property Group.

Throughout 2020 and 2021, the company opened a sprinkling of new locations, in New Jersey’s American Dream mall, as well as in Chicago and Philadelphia. And then it began ratcheting up the pace. In 2022, Primark announced 10 new openings, doubling its United States footprint, including one in Brooklyn’s City Point complex. It has mainly focused on the Northeast but is spreading its wings to Maryland and North Carolina. A lease has been signed for Orlando, Florida, and it is preparing to sign leases for stores across other Southern states and Texas, it said last month. It will take up a 547,200-square-foot distribution centre in Jacksonville, Florida, in September.

And progress is looking good. Total sales in the United States were 11% higher than the previous year with good trading across the 16 stores, according to its recent results.

Jonathan De Mello, founder of retailing consultant JDM Retail, explains that Primark's successful real estate strategy has been aided by the retail downturn and the pandemic in the United States as well as Europe.

"It has been successful taking on leases where some landlords had excess spaces in shopping centres and where department stores went into administration or needed to scale back. Some landlords carved out space for them like Simon Property Group with a number of stores straight off the bat."

The question in the United States is could it compete in an already saturated budget fashion retail market. So far the signs are good. The global cost of living crisis has no doubt helped but shoppers in the United States appear to be as taken with its wares as those in Europe.

De Mello says: "At the value end it is proving very, very fashionable again from the perspective of the US shopper. It is not for those shopping in the designer-led space but for US consumer products it is quite different. There has been a placement in the mindset again that it is fashionable but extremely affordable. Real estate-wise it has successfully expanded at the expense of bigger department stores that have failed and it has capitalised on the excess of retail space in the US. To that extent they can write their own ticket as to what they pay. The only exceptions of where they can open is in super prime areas, in New York and LA for instance."

That follows the pattern seen in the United Kingdom. De Mello points out: "In some ways they are a bit of a saviour taking up big spaces when not many others, particularly in retail, have been doing so."

Kevin Tulip, Primark’s United States president, in a recent interview with Modern Retail, said the company has been taking a gentle initial approach to expanding in his region, as it has done elsewhere, proving profitability first before aggressive expansion, testing the model at the first store in Boston’s Downtown Crossing.

He said the biggest lesson was store space. "In most of our continental Europe market, we typically open in a space that’s over 50,000 square feet. But here, we’ve downsized our stores to about 35,000 square feet, which has shown to be more profitable."

In fact that is how it all began in the United Kingdom. De Mello said that's where Primark started with 20,000 square feet to 30,000 square feet before progressing to much bigger stores.

Knight Frank's Springham says the pace of development has been measured in the United States. "That is important, to not get ahead of yourself. Primark has decided to walk before it can run. But they get good stores at softer deals as they are a major footfall driver. The US is overshopped in different ways to the UK and there are some rich pickings if you want large floorplate stores."

De Mello says that in the United Kingdom, Primark remains opportunistic in terms of new locations. "It will take on an old Debenhams or House of Frasers department store, but there are not that many new locations for them to go to. The real growth is in Continental Europe and the United States. The Spanish love Primark for instance. Perhaps that is because rivals in the space Zara and H&M are everywhere in Spain already. They are making similar inroads in other markets with consolidation and upsizing where possible."

If the United States is looking to the United Kingdom for examples of where it all might lead, Primark leased a 137,000-square-foot store on the east end of London's key retail thoroughfare Oxford Street in 2012 and to many people's surprise helped to refocus the street's prime retail pitch away from the traditional western end to the struggling east. The store was subsequently sold to Zara owner Amancio Ortega's Pontegadea.

In the West Midlands city of Birmingham, taking advantage of the impact of the Bullring shopping centre on the nearby retail centres, Primark decided to buy the entire 250,000-square-foot Pavilions centre for £40 million from the UBS Triton Fund in 2015. It occupies around 150,000 square feet of what has become a key retail destination away from the Bullring in the city. This is its largest store alongside Manchester's Market Street, which has 150,000 square feet.

De Mello points out: "The Bullring opened and decimated the Pavilions and Primark saw the opportunity. Primark trades now from these big anchor stores where it adds experience to the retail and also F&B and services."

That includes a concession with high street staple bakery chain Greggs, which raises the prospect of the United States market being introduced to the delights of pasties, sausage rolls and iced buns.

De Mello questions how long the group's decision to ignore creating an online channel will last. "They can afford to ignore online basically because the business is so successful and it is so costly to process online sales as a clothing retailer. They could really move towards it but don't have the infrastructure at present. The only way to do it successfully is in partnership with existing online players."

Primark's Tulip said in all countries the deciding factor is the company needs to be in a location that already enjoys heavy foot traffic, and is around its competitor set. "It's all about being in a space that will be profitable."

Knight Frank's Springham says anyone expecting Primark to move into online will be waiting a long time:

"There is no reason for Primark to go online. It would dilute earnings and brand and would not increase sales by very much. It is not a gap in its model, which is all about the thrill of the chase treasure hunt as you come into the stores."