Managing International Business: Primark Entering Canada
An Internationalisation Plan for Primark to enter into Canada
Problem Statement:
With the company ‘Target’ exiting the Canadian retail market, and with local retail market sales booming, now is a perfect opportunity for Primark to enter the Canadian market.
Executive Summary:
Primark launched in Dublin, 1969, as a subsidiary of Associated British Foods (ABF). ABF is a major conglomerate operating in segments such as retail, sugar and groceries (Primark 2015). With recent profits in ABF’s sugar industry plummeting by 60%, we suggest that in order for ABF to rebalance its revenue it should redirect its focus on the growth of its largest financial contributor, Primark – in the form of internationalisation (Felsted and Aglionby 2014). Primark is an Irish retail company that specialises in low price, and fashionable high street clothing. With a collection of over 270 stores spread throughout 9 countries within Western Europe (Primark 2015), Primark has shown itself to be one of Europe’s leading retailers. It also has forecasted sales at £5.5bn for September 2015. This makes Primark well experienced and equipped to finance an internationalisation plan to further expand and capture sales from a new market (Felsted and Aglionby 2014).
Macro-Environment
Demographics
Demographics are used to identify consumer markets based on numerous characteristics of population segments such as age, income, race, gender, and ethnicity (Grewal, et al. 2012). Primark currently targets 15-54 year olds (Limited 2015), so there is a profitable opportunity to expand its business into Canada and target a large portion of Canada’s population (Appendix A).
On top of this large segment of population, Primark also has the opportunity to target the age group aged 55+ in order to further increase their profits. In regards to income levels in Canada, individuals aged 18-34 make an average annual household income of $36,856.75, and individuals aged 35-64 make an average annual household income of $56,784.68 (Euromonitor International 2013). These age groups comprise the highest earning populations in Canada which are all equal opportunity for Primark to target higher earning markets. Furthermore, currently more than half of Primark’s sales are to middle aged women (Limited 2015), thus entering into Canada’s retail market is prosperous since 28% of Canada’s female population is aged 15-54 (Statistic Canada 2015). The above opportunities will help ease Primark’s entry into Canada, as long as their entrance strategy is implemented correctly.
Economic Forces
There are many factors which influence consumer behaviours including household income,