Associated British Foods PLC’s (LON:ABF) Primark is a tough competitor for high street retailers, as shown by the closures of competitor Gap.
The US fashion giant has announced plans to permanently shutter all stores in the UK and Ireland, where it will keep operating from its e-commerce platform.
READ: AB Foods raises full-year expectations after Primark reopening delivers strong performance
The same will happen in France and Italy after a strategic review of the European business.
Meanwhile, Primark has been back with a bang after third-quarter sales topped expectations.
Gap to close all UK stores...20 years ago it had the same market share as Primark pic.twitter.com/7hPIh4kJAx
— Patrick O'Brien (@pat_gdretail) June 30, 2021
The fast-fashion designer said it even captured more market share, despite its stores have been closed for months on end and it couldn’t operate online as it doesn’t have e-commerce capabilities.
The departure of Gap from the high street is likely to help it attract more customers when they are out shopping.
“With these impressive numbers, Primark seems even more unlikely to reverse its decision not to launch a digital sales platform. Primark may look increasing like an anachronism, a bricks and mortar island fighting off an encroaching online tide, but it has shown that with a strong social media presence it can still entice queues of shoppers through its doors,” said Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown.
“When GAP burst onto the British retail scene in 1987 with its brand of American style casual clothing, it was a breath of fresh air for the high street… GAP’s own brand apparel clearly needs revitalising and a fresh sense of direction, with so many other brands now competing in the casual space.”
With UK retail footfall languishing at 75% in high streets and 73% in shopping centres, analysts expect that more brands will close shop to focus on their online presence.
In turn, this is piling pressure on councils to review town and city centres spaces, perhaps turning former stores into hospitality venues, office centres or even housing.
“This is going to need significant investment from the public sector with costs likely to be too high for commercial property landlords to go it alone,” Streeter continued.
“As campus style developments, our distressed city centres may once again find a new lease of life and bring fresh energy back into the retail ecosystem.’’
Shares in AB Foods surged 5% to 2,326.19p on Thursday morning.