Associated British Foods PLC (LSE:ABF) is a ‘buy’ with Shore Capital, which says the click-and-collect trial is a "welcome step in Primark’s slow digital evolution."
Clive Black, a retail analyst at the broker, said the launch has shown that Primark can be a 24-hour window shop, something that physical stores cannot simply do.
As well as that, Black believes that Primark is the central component to the investment thesis of its owner, ABF.
Black said the service “chips away at a brick that prevents some investors from engaging.”
He also hinted that the website crashing yesterday could have been a way of drumming up interest, given nearly all major retailers have some sort of online presence.
For a long time, Primark has been staunch in its position as a pure brick-and-mortar player, even losing up to £1bn during the pandemic as its stores remained closed.
From the trial, which is available to 25 stores and only offers childrenswear, Shore Capital is interested to see how well the ranges available perform, as well as if there is any impact on footfall.
Importantly, the trial should be seen as a stepping stone to increasing Primark’s addressable market.
If successful, the site should launch nationwide, possibly even globally in its other markets, and offer a wide range of products that are not available in stores.
That is not only beneficial to its customers who can 'shop' where and when they please, but also Primark as it opens it up to a group of investors who previously would have stayed away.
Black believes Primark is primed for strong medium-term growth, with 160 extra stores expected to open by 2026, taking the global number to 560, although difficult macro conditions will continue to persist.
“We hope that it is a success and leads not just to access of a bigger addressable market, which in time could be transformational for the label, but also enhancement of the division’s reputation and so the group’s investment credentials,” said Black.