Primark’s price cuts expose the cost of competing with Shein

Primark has cut prices by up to 29% across hundreds of bestselling lines. The move has strengthened its value credentials, after recently reporting a like-for-like decline. However, the reset has also put the store-based fashion retailer into closer price competition with online giant Shein, whose cost advantage is coming under regulatory pressure as evidenced by results released this week (27 July).

The permanent reductions form part of Primark’s new Iconic Value initiative, which launched on 20 July across its 19 markets. They cover selected adult and childrenswear products entering stores now and throughout the autumn/winter season, rather than the full assortment.

A women’s boyfriend pyjama set has fallen from £17 to £13, while cotton-rich jeans cost £9 and pure-cotton pyjamas start at £7. Menswear hoodies start at £9, with selected cotton-rich childrenswear separates available from £2.

Cocoon Yarn™ Jumper, £16

The retailer is backing the cuts with clearer signage, simplified merchandising and a marketing push spanning stores, radio, social media and digital channels. It has also pledged to keep investing in quality, fit, durability and fabrics.

Matt Houston, Chief Customer Officer at Primark, said the retailer wanted to retain its position as the high street destination for affordable fashion. “Value matters to customers today more than ever and for more than fifty years customers have trusted us as the destination on the high street for great value fashion at prices you can’t find anywhere else,” he said.

Primark-commissioned research found that 61% of UK consumers regarded 'good value' as the most important factor when buying clothing. Some 46% placed 'obtaining the best value for money' first when shopping for family clothing. This is backed up by recent research carried out on behalf of supply chain intelligence firm Zero100, which shows that price is the first driver of purchase across a range of categories including 40% for clothing, 42% for toiletries, 42% for household goods, and 43% for food and drink.

Lower prices follow weaker like-for-like sales

The pricing overhaul at Primark arrives after like-for-like sales fell 2.2% in the 16 weeks to 20 June. Total third-quarter revenue rose 4% to £2.9 billion, but new stores contributed five percentage points of growth.

In the UK, like-for-like sales were essentially unchanged, while continental Europe saw a 3.6% decline. US sales rose 16%, boosted by three openings that took Primark’s estate there to 41 stores.

The price reset is therefore more than a seasonal promotion: Primark is lowering visible entry prices while its established stores are selling less, using bestselling essentials to reinforce the perception of value and potentially improve footfall. The approach carries a direct commercial cost. Permanent reductions lower the cash generated per item unless Primark secures corresponding sourcing savings, sells more units or encourages customers to add higher-priced products to their baskets. Its continued expectation of an adjusted operating margin of about 10% makes the impact on margins worth watching.

Primark has close to 500 stores worldwide

Speaking recently to the BBC, retail analyst Natalie Berg said Primark's hand had been forced. "It's the kind of headline you'd expect from M&S or Next," Berg said of a price-cut announcement from an already low-price retailer. "You don't want to join a race to the bottom. But when Shein is selling dresses for £3, you've got to respond, right?" It also doesn't help that retailers, such as M&S and NEXT, who are more expensive than Primark, are also placing a greater emphasis on value, meaning pressure is coming from above and well as beneath it.

Unlike Shein, Primark also has an extensive physical estate to fund (there are close to 200 stores in the UK alone, while the global figure is close to 500). While stores provide immediate product access (aided by Primark's recent move into Click & Collect) and avoid delivery charges for shoppers, but they bring rents, staffing costs and the risk of holding seasonal inventory across many locations. Shein’s online, demand-led model has less exposure to conventional store overheads and unsold stock.

(Alamy/PA)

Shein’s import advantage is narrowing

Shein’s latest results, however, show that its model is not insulated from cost pressure. The online fashion group reported a $99 million net loss in the first quarter, compared with a $395 million profit a year earlier. Revenue increased only 1.1% to $9.05 billion.

The loss included a $328 million accounting charge tied to special investor shares, so it cannot be blamed entirely on trading. However, Shein said the end of the US 'de minimis' exemption had hurt American sales and overall revenue growth.

The former US regime allowed qualifying packages worth $800 or less to enter the country without duties and taxes, enabling Shein to send individual orders directly from China. According to the US International Trade Commission, Shein and Temu accounted for more than 30% of US de minimis imports in 2022.

The US ended that treatment for packages from China and Hong Kong in May 2025. The EU introduced a €3 duty per item on low-value imports this month, creating another cost pressure in a region that generated about one-third of Shein’s sales last year.

Shein has said it is considering price increases in the US and Europe to offset higher duties. It also cautioned that the European change could have an effect equal to or greater than that already seen in America.

The UK remains the uneven battleground

The UK still permits overseas parcels valued below £135 to enter without import duty. Reforms are planned, but implementation is not expected until 2029, leaving domestic store operators competing under a different import structure for several more years.

The value of goods entering the UK within the threshold reached £5.9 billion in the year to April 2025, up 53% from £3.9 billion. Consumer Edge estimated that Shein held about 30% of the UK fast-fashion market during the second half of 2024.

Primark’s cuts therefore target today’s competitive conditions, while Shein’s possible price rises reflect regulatory changes in other markets. Primark must absorb the economics of lower shelf prices now, while maintaining its stores and product investment. Shein must show prospective Hong Kong investors that its growth and margins can withstand the loss of import privileges.

The immediate contest will be decided at product level. Primark has placed £9 jeans, £13 pyjamas and £2 childrenswear at the front of its offer. Whether those prices lift established-store sales without weakening its 10% margin target will provide the first measure of the strategy.