Date:24 October 2012
Argos reveals 5-year transformation plan in shift to online
Argos will close or relocate at least 75 of its 700 stores over the next few years, as part of its “five-year transformation plan”. Under the overhaul of the chain, parent company Home Retail said Argos will focus on e-commerce sales to reinvent itself as a digitally-led business, rather than predominantly catalogue-led. The retailer has suffered from falling sales due to competition from online retailers and the tough economic climate.
Earlier this year Home Retail Group appointed John Walden to head up Argos in an effort to revitalise the company. He drafted in consultants to undertake a radical review of the retailer which revealed that Argos faces challenges including customer preferences shifting from stores and catalogues to online sales. The review also found that over 70% of UK households shop at Argos at least once a year.
Argos will upgrade its computer systems with the aim of collating customer data on a large scale, as part of its plans for repositioning itself as a digital retailer. The stores will be focused on order collection and customer services, with computers instead of catalogues for ordering and in-store wi-fi to allow customers to order via their mobile phones in-store.
Home Retail Group is aiming to increase sales at Argos from £3.9bn in 2011/12 to £4.5bn a year by 2018. The retailer reported pre-tax profits in the six months to September of £51.1m, up 74% from the same period last year. However, that figure includes an exceptional £35m from the retailer reducing its future liabilities by closing its final salary pension scheme. Stripping out that gain and other one-off items, profits were down 37% to £17.9m.