This action might not be possible to undo. Are you sure you want to continue?
Address: 489-499 Avebury Boulevard Saxon Gate West Central Milton Keynes MK9 2NW UK +44 (0) 1908 690333 +44 (0) 1908 692301 www.argos.co.uk Sarah Weller (Managing Director) Terry Duddy (Chief Executive Officer) UK, Spain, Ireland
Telephone: Fax: Website: Key personnel: Countries of operation:
Argos is a hybrid retail format. Selling from catalogues and large outlets, it is a cross between a catalogue retailers and a store based one. This format naturally lent itself to online retailing and the business has developed rapidly in that way. Strategic evaluation The strength and success of the Argos format is masked at present by the impact of the recession. It is inevitable that sales have been weak given the dramatic fall in demand for homewares, particularly large ticket item goods. The format is very strong, but the question is where next to take it. An obvious option would be to expand abroad. Argos has already set up in Spain and Ireland, paradoxically, the two weakest consumer economies in Western Europe at present. One problem with such a strategy is the novelty of the Argos format. While it is well known and understood in the UK, consumers might struggle to understand it elsewhere and it would take much longer to establish than a standard high street venture. The strategy in the UK has been to steadily expand the product offer. However, it seems likely that we are nearing the limits of growth in that respect. The introduction of internet only lines is a way of getting round the physical limitations of in-store warehouse capacity. Another aspect of Argos’ strategy is store expansion, but this seems a little illogical. With 26% of sales already coming from online it is odd that Argos should want more, larger stores, although there might be a case for expanded in-store warehousing in some areas. At the end of August 2009, Argos had 739 stores of which 329 stocked the full Extra
This report is supplied in accordance with Mintel's terms and conditions. Supplied to University of Hertfordshire. © Mintel International Group Limited.
Growth of 250% over the past five years highlights the potential for online operations. Stores act as order points and collection points and can make the full internet offer available. in 1998. Financial performance Argos’ performance has been lacklustre in the last couple of years. Goods can be delivered to the home address or collected from the store. offering over 8. the multi-channel strategy is the way forward. Supplied to University of Hertfordshire. as it has already proved. The paradox of internet development is that the more Argos develops a multichannel approach. But Argos is not alone. That means that the vast majority of the population has an outlet nearby and Argos is well set up for its multi-channel proposition. Like-for-like sales fell by 2% in the first half of the year and grew by just 0. and usually do. a 17.1% in the third quarter. More worryingly perhaps for Argos. the online segment is continuing to develop as an increasing number of consumers are drawn to e-commerce. particularly when backed up by Argos’ reputation for being very price competitive.argos.co. However. Argos is the most single minded multi-channel retailer.range. reflecting the impact of the recession on consumers. the sector traditionally hardest hit as consumers decided to cut back. Argos’ strength is in homewares. This report is supplied in accordance with Mintel's terms and conditions. can be ordered online or over the telephone. Items can be bought in-store. 2 . is that what Tesco does. The whole strategy is to make it as easy as possible for customers to buy from the business. And trading has been weak. Tesco is developing a similar proposition with its non-food catalogue. This flexibility is highly valued and Argos estimates that some 40% of its sales are now ‘multi-channel’. © Mintel International Group Limited. when consumer demand was much stronger.000 line catalogue Argos was bought by GUS. It differs in having fewer products on offer at present and in not having most goods available for immediate collection. even if there has to be a small delay for some goods to be delivered from a central depot.uk Acquired by GUS Website redesigned to become more user-friendly. The deal gave the business access to mail order expertise and so strengthened its position as an online retailer. That is a powerful proposition in the homewares arena. History 1973 1997 1998 2000 Early 2000s 2002 Green Shield Stamps catalogue showrooms rebranded as Argos Start of internet retailing on www.000 products plus online stock-checking and a ‘show me how’ function Launch of “Check & Reserve” Lauch of Argos Extra. copy. others (eg ASDA) can. But. then the UK market leader in mail order. the more the uniqueness of its proposition is eroded.
as the product mix chart shows. Retail offering Argos is primarily a homewares retailer. © Mintel International Group Limited.309 1.7 2008/09 4.381 304 7. PCs and iPods.377 1.380 463 310 8. 2004/05-2008/09 Latest year-end: March 2009 Sales (£m. an increase of 50% on the previous year.321 900 6.913 683 5.732 1.FIGURE 53: Argos: Group financial performance. Electricals includes the whole spectrum of brown and white goods from kettles and washing machines to TVs. but both are relatively small markets. It is UK market leader in toys and jewellery.7 2007/08 4. excl sales tax) Including: Online Sales (€m) Including: Online Operating profit (£m) Operating margin (%) 2004/05 3.5 2005/06 3.652 314 5. 3 . There are now 5. in both of which Argos plus its sister company Homebase are market leaders.000 301 7.5 2006/07 3. Supplied to University of Hertfordshire.1 SOURCE: Company Accounts and Annual Report/Mintel Interim results for 2009/10 reinforce the online story: ● ● ● 28% of orders now come online.314 376 8.893 471 5. This report is supplied in accordance with Mintel's terms and conditions.689 688 291 7. a total expected to reach 10. Home enhancement includes furniture and homewares.000 by March 2010. 18% of orders are on a ‘check & reserve’ (a service allowing customers to check availability from a large catalogue of goods and collect from their local store) basis.100 5.282 1.000 internet only lines.
Overall.0 This report is supplied in accordance with Mintel's terms and conditions. One of the keys to Argos growth has been a steady expansion of lines on offer. Market positioning Argos has always positioned itself at the price competitive end of the market.9 18.000 by September 2009 and another 5. Supplied to University of Hertfordshire. Argos has launched both an Argos Value range and the WOW Value range. 4 . Its online profile is similar with a strong bias to younger age groups.FIGURE 54: Argos: Product mix. In jewellery and furniture it is pitched at the lower end of the market.5 12. In electricals it is more of a middle mass market player.9 17. but Argos has also started to offer internet only lines – of which there were 5.3 18.000. lines was an important aspect of this development.1 23.4 18. Argos has a very strong price image and a somewhat downmarket appeal.5 12. simply reflecting the strength of brands in that sector.3 17. FIGURE 55: Profile of Argos online customers. © Mintel International Group Limited. The Argos Extra catalogue. In March 2009 there were 250 of the former and 300 of the latter. 2008/09 SOURCE: Company report & accounts/Mintel In a clear reaction to the recession.4 Argos % 19.000 planned for the second half. with 17.5 14. Nov 2009-Jan2010 All internet % Age: 6-14 15-24 25-34 35-44 45-54 55+ 10.2 17.
From the point of view of the wider market.5 1.5 31. 5 . This report is supplied in accordance with Mintel's terms and conditions.4 23.0 13.8 35. Supplied to University of Hertfordshire.9 6.Socio-economic group: A B C1 C2 D E Retired SOURCE: ComScore/Mintel Operational issues 7.7 Some 40% of sales in 2008/09 were multi-channel: FIGURE 56: Argos: Multi-channel sales.8 5. it is notable just how small a share of the total telephone ordering now takes. © Mintel International Group Limited. 2008/09 SOURCE: Company Report and Accounts/Mintel This flexibility is one of Argos’ great strengths.7 7.9 14.2 11.6 7. by channel.1 25. however.9 7.
This action might not be possible to undo. Are you sure you want to continue?
We've moved you to where you read on your other device.
Get the full title to continue listening from where you left off, or restart the preview.