The rapid rise of Dublin, Ireland-based value retailer Primark at U.S. malls has little to do with the luck of the Irish and everything to do with the disappearing American middle class, retailing experts say.
Primark, the fast-fashion retailer that churns out high volume (selling a million socks a day globally) at nearly rock-bottom prices, on Tuesday opened its fifth store in the United States - and second in Pennsylvania - at Willow Grove Park Mall.
Five more stores along the East Coast are on the way.
Primark debuted to a few hundred eager shoppers at Willow Grove, including Kim Meiklejohn, 47, of Broomall, who gave up on malls a few years ago, claiming that department store prices were often too high for items of poor quality. She came to the Primark opening with her teenage son and daughter, and her daughter's 15-year-old friend. Meiklejohn quickly filled her basket.
"It's got everything under one roof," she said of Primark.
And the prices?
"I'm a bargain shopper, and the prices here are good."
She got herself two dresses ($5 each) and two T-shirts ($3.50 apiece). She also got jeans for her daughter that retail for $7.
It's shoppers such as Meiklejohn that Willow Grove mall owner Pennsylvania Real Estate Investment Trust (PREIT) is desperately trying to win back. PREIT is wagering on a newcomer such as Primark to turn the tide.
Primark had a bigger, louder grand opening last November at King of Prussia Mall, where its two-story store sits beside a Dick's Sporting Goods. Primark and Dick's replaced Sears, a former mall anchor.
It's the same story at Willow Grove. Primark took over the top two levels of a former three-story Sears. Sears now occupies only the ground level.
The new Primark at Willow Grove sits next to a Nordstrom Rack - part of another trend of upscale brands that started off-price divisions.
National retail consultant Howard Davidowitz, chairman of Davidowitz & Associates Inc. in New York, maintained that there is something more fundamental than trendy clothes fueling Primark's rapid popularity.
He said the value-conscious shopper has never fully returned to pre-2008 recession spending levels.
"Retailers are trading down because consumers have less money," Davidowitz said. "The middle class has shrunk, and traditional department stores with higher prices continue to lose market value as many consumers look for lower prices."
"This is why off-price retailers are growing, including TJ Maxx, Ross Stores, and Marshalls, as well as some international entrants like Primark," he said.
Ironically, Primark is known as Penneys throughout Europe.
Davidowitz said Primark's ability to sustain its success "depends on its merchandising skills and a speedy supply chain."
To ensure that, Primark invested in a 600,000-square-foot distribution center in Bethlehem to supply its U.S. stores.
Amazon also has a fulfillment center in the Lehigh Valley; FedEx is considering a massive distribution hub near Lehigh Valley International Airport.
"With so many of the distribution centers now gravitating to Pennsylvania . . . the Delaware Valley has become a natural expansion point for a retailer such as Primark," said Steven H. Gartner, managing director of retail services at CBRE Inc.
On Saturday, Primark opened a store at Freehold Raceway Mall in New Jersey. Last month it opened in Danbury Fair Mall in Connecticut. It will open five more U.S. stores by 2018.
Primark - a subsidiary of Associated British Foods - now boasts 312 stores and about 60,000 permanent employees spread over 11 countries.
Breege O'Donoghue, group director for business development, said talk of expanding into the U.S. began in 2012. The East Coast's 50 million people are closest to its home base.
"We did our due diligence years ago when we wanted to cross the pond and see what this great market would hold for us," she said at Tuesday's grand opening. She was dressed from head to toe in Primark apparel.
"It's been look, learn, listen, and learn from our customers."