UK high-street and catalogue retailer Argos announced today that it is moving its focus more towards online sales, following a comprehensive review of the business over the last six months.
Home Retail Group (LSE:HOME), which owns Argos, said that the retailer intends to develop its online, mobile and tablet channels to become the primary channels for interacting and communicating with customers. Stores and catalogues will remain important, but their roles will be adapted in order to support the digitally-led business.
At the same time, Argos hopes to make available a wide range of products for rapid fulfilment, building on its existing stores and replenishment capabilities to offer market leading immediacy of fulfilment on a wider range of items. In addition, express delivery options will be introduced for larger items.
Acknowledging that Argos “has historically been more biased towards less affluent customers”, the company also said that it will seek to develop a broader appeal. To do this, the retailer plans to extend its product ranges and double the penetration of exclusive brands to a third of total sales over the next five years.
Lastly, Argos will work to lower its costs and shift its investment towards digital marketing. The size and circulation of the familiar Argos catalogue will fall and some stores will close.
The company’s 739 stores have been reviewed on the basis of several factors, including profitability, attractiveness of location, complexity of operations and overall fit for the new strategy. Over a five-year period Argos expects to close or relocate at least 75 of its existing stores as their leases come to an end.
Remaining stores will have web-based browsers instead of catalogues and primarily they will be focused on product pick-up and customer service for transactions that will increasingly be managed online or through mobile. Wi-Fi will be available to enable customers to use their smartphones and tablets in-store, and there will be a fast track collection service for goods purchased online or via mobile device.
Home Retail Group, which also owns DIY chain Homebase and home furnishings company Habitat, reported today a 37% drop in group pre-tax profit to GBP18m for the six months to the start of September. Profit for Argos in the half-year amounted to GBP3.3m, down slightly from GBP3.4m a year earlier.