Filene's Basement was a pioneering retail institution in Boston. Located in the famous, now closed Filene's store at Downtown Crossing in the centre of the city, customers went on a shopping treasure hunt seeking out elegant items of clothing made abroad at a discount in piles of bargains.
Upstairs, Filene’s department store dated back to 1881 but it revolutionised shopping from 1908 when the retailer opened Filene’s Basement as a means to shift surplus merchandise from the store above.
It is fitting that Primark, the most successful retailing export to emerge from Ireland (where it is better known as Penneys), should choose to open the company's first US store in the Burnham Building in Boston where the celebrated Filene family made such a mark on American clothes retailing.
Primark has been the star in Associated British Foods, the food and retail conglomerate that owns the high-street retailer, due in large part to Dublin retailer Arthur Ryan who founded the shop on Mary Street in Dublin in 1969 and inspired the expansion of the low-price clothing chain into the UK and western Europe.
Ryan stood down as chief executive in 2009 after 40 years at the helm. His successor, Paul Marchant, a respected retailer, has continued the chain's aggressive profit-spinning expansion.
Over the past decade, Primark has dominated the “cheap chic” retail catwalk by transforming high-fashion trends into affordable high-street clothes, earning the brand the “Primarni” nickname.
Now one of the fastest growing retailers in Europe, Primark has 269 stores in nine countries, including Spain, Germany and France, a market it entered in the past year.
Up-to-date fashion
The expansion has fuelled extraordinary growth. In the latest set of financial results, profits soared by more than a quarter to £298 million (€362 million) in the half-year to March on sales worth £2.3 billion, up 14 per cent in a year.
The company that couldn't call itself Penneys when it expanded into Britain in 1973 because the American retailer JC Penney had the UK trademark on the name is now bringing Primark to the US.
Venturing where other major British retailers such as Tesco, WH Smith and Laura Ashley have faltered, Primark has noticed the foothold taken in the United States by some of the international clothes retailers that it competes with in Ireland, the UK and other European countries. Swedish-owned H&M, Spanish-founded Zara and Japan's Uniqlo have all shown that they can challenge the major US retailers.
"We think the combination of up-to-date fashion and great price points in a good shopping environment will be attractive to US shoppers," George Weston, the chief executive of ABF said this week, noting how the timing of Primark's expansion into America's northeast was right.
“We don’t open in the hope they will be successful, we do it when the offer is right,” he said.
Primark has signed a lease on the 6,500sq m (70,000sq ft) building in Boston that is still under construction and is planning to open in late 2015. The retailer will take most of the first four floors in a city centre location with a shabby image that is undergoing a facelift with new shops, restaurants and apartments that are commanding very high prices.
The cut-price retailer is said to be in negotiations on another eight stores in the US northeast with warehousing to keep the shelves full of new merchandise.
"It is a competitive space and it is going to get a lot more competitive. There are some European retailers doing very well and it certainly won't be easy for them," said John Kernan, an analyst covering the retail industry for the New York-based financial services company Cowen Group.
In the American “fast fashion” space, the competition is not just the European clothing discounters that are making a mark but the so-called off-price channel of the large established stores. US retailers such as Macy’s offer steep discounts on clothing in sales with further reductions for loyalty members.
Consumer spending
The closest American competitor to Primark is the popular Forever 21, which opened an outlet in the Jervis Centre in Dublin in 2010 across the road from the birthplace of Penneys.
"Retail is very Darwinian," said Mark Schwartz, chief executive of Palladin Consumer Retail Partners in Boston, a turnaround investor in retailers who was until last year chairman of Dublin retailer Arnotts.
“You succeed at the expense of others. There is a limited supply of sweaters that people will buy. It’s a positive play to have another good retailer like Primark in town – it raises everyone’s game.”
Weston noted that Boston’s large Irish population would be familiar with Penneys, making Boston an ideal testing ground for the brand’s first foray into the US. Boston has the additional benefit of having more affordable and available property than the more obvious US retail entry point – New York City.
Consumer spending at the low and mid-market end of US retailing remains weak in an anaemic economy, but struggling markets haven’t stopped Primark’s march across Europe in recent years.
Go-getting retailer
Replicating a successful uniform offering of low-price fashion to other parts of the US would prove much trickier, which may explain why Primark, a go-getting retailer, is concentrating on the northeast.
“It’s not a one size fits all for every market here when it comes to curating an assortment of merchandise,” said Schwartz. “Even in the US, customers in New York, Boston and LA will be different to what people might be looking for in the midwest and the south.”
For the Dublin-founded new market-hungry chain, Boston, home to one of America’s largest communities of Irish shoppers, is a good beachhead to attempt its most ambitious retail invasion.
