Primark Versus Boohoo Becomes Case Study About Need for Online

(Bloomberg) -- Discount fashion chain Primark is becoming a case study in how bad it can get for retailers that have no e-commerce business to fall back on during the pandemic.

Primark, which only runs brick and mortar stores, said Thursday that the latest lockdowns in Europe may cost it more than 1 billion pounds ($1.4 billion) in lost sales. That contrasts with online-only rival Boohoo Group Plc, which raised its revenue forecast for a second time, predicting growth of as much as 38%.

Results from Tesco Plc, Britain’s largest grocer, also emphasized the need for e-commerce as consumers wary of the risks of catching Covid-19 increasingly avoid stores. The company reported record Christmas sales and a surge in online ordering Thursday that added 1 billion pounds to revenue.

Tesco Chief Executive Officer Ken Murphy said online demand is “unprecedented” and over Christmas the supermarket delivered 7 million orders containing about 400 million individual items. Tesco added 100,000 click and collect points in its stores over the holidays to make it easier for customers who want to order online but collect the order in stores.

As lockdowns in Europe have led to closures of non-essential shops, companies such as Primark have born the brunt of the pain. Shares of parent company Associated British Foods Plc fell as much as 2.1% Thursday and have dropped 14% in the past year.

Read more: U.K. Dynasty Behind Primark Put to Test After Sales Dive to Zero

Running shops has become more expensive. Tesco said the costs of keeping its physical stores operating safely will hit 810 million pounds this year.

To be sure, Primark’s physical stores have kept their allure for some shoppers when they reopened in June and July. In late August, about 1,000 shoppers lined up for the inauguration of its seventh Primark location in Paris.

While Primark has committed to keep opening stores, including three in the U.S. market despite the pandemic, the retailer hasn’t announced any plans to enter e-commerce.

©2021 Bloomberg L.P.