Posted at 01.01.2019
Argos is a dealer catalogue merchant, located in United Kingdom Republic of Ireland; who offers products using printed laminated catalogues waiting for you, which customers can browse through and buy things. Argos is had by Home Retail Group and is one of the biggest household stores in Britain. Typically within an Argos store products aren't usually on display with the exception of jewellery, watches and some discounted toys and games/ sales items. Instead customers choose their items from the catalogue, make a payment at the checkout till or automated kiosk located inside the store. After making the purchase, the goods are supplied at the collection point.
Argos also offers online shopping service where customers have the option of reserve and collect (payment manufactured in store) or home delivery where payment is made online. In comparison to other retailers Argos has reduced overhead costs as they don't have large show rooms or shop surfaces. Argos has been battling within the last few years credited to high competition.
In April 2011 the then Handling Director of Argos, Sara Weller was required to resign scheduled to health issues and Terry Duddy (CEO, Home Retail Group) stepped in to take over. The same calendar year Home Retail Group faced about 50 percent street to redemption in their market talk about. In Feb 2012 the board recruited John Walden who had previously caused US Retail giants like Best Buy and Sears to run the Argos retail business. On 24th Oct 2012 Argos came up with their proper or business review conclusions and declared that their target is to reinvent Argos as a 'Digitally-led' business.
This article summarises Argos' new Strategic Review, its findings & implications and also surveys the many factors considered through the review, the strategy they might choose and also examines if this new step would be beneficial for the expansion of Argos in the long term.
According to John Walden , listed below are a few range of areas considered.
Argos offer - customers and products
State of digital channels
Stores & Catalogues
Systems and key business processes
As per the recent proper review, Argos aspires to target more on web and mobile mediums of business by changing printed out catalogues to its digital equal. They are also planning to kick off more high end products aimed at the affluent customer bottom. Although the principal focus is on the digital medium, paper catalogues will not be completely withdrawn. Instead catalogue sizes will be reduced and redesigned into new forms. In-store Wi-Fi connectivity will also be rolled out to assist customers who want to use their own devices and purchase products instantly. There is an 18% drop in catalogue use and 21% increase in online visits over the past two years.
To transform as an electronic retailer Argos aims at providing high quality digital experience to their customers and producing digital catalogues for smart phones and tablet pc's. Having determined their customers spending habits, they have got countered the decline popular for electro-mechanical goods, furniture and video gaming by promoting products in medical & beauty and clothing categories. Argos is likely to increase a percentage of their overall sales by adding more luxury branded products which would catch the attention of premium consumers towards them.
The tactical plan also unveils their intentions to alter delivery options and offer their customers with more flexible options such as click & pull together, following day delivery and same day delivery services the latter two being already made available from their key competition, Amazon (same day service recently introduced in United States yet to be trialled in United Kingdom)
In addition to the aforementioned there are ideas to shut about 75 stores over the UK. Expecting to transform the business around, they may have earmarked 100m for every of the next three years focusing on building an efficient IT infrastructure and also have budgeted a supplementary 50m to support any unforeseen expenditure. Argos declared that 75 percent of its store house will be on rent terms, about 5 or less by yr 2018 which would give them more overall flexibility to respond to market changes.
As Nick Bubb , the analyst says Argos was a solid retailer which is huge at present too, as it takes on an important role on the whole merchandise retailing. He highlights about the progress of Amazon. com which made catalogue businesses vanish in many countries all over the world. Nick Bubb also says that in regards to to the success of Argos the plan is ambitious, and questions whether the plan is possible. He concludes that even though Argos Strategic Plan is effective regarding multichannel methodology and development of useful delivery networks, it faces an uphill job to be at the same level as other retailing giants.
The reactions of different analysts on Argos' Strategic Review  are the following:
"You can find little in the current strategy that, inside our view, will arrest the current decrease in Argos' income. We still imagine Argos will have no choice but into a restructuring programme reducing the number of stores, which could impact the company's currently strong balance sheet and support provided by its total of the parts valuations. " - says Seymour Pierce analyst Freddie George.
"We'd have liked to visit a more radical change in Argos' strategy that leveraged its distribution network, perhaps for much more third celebrations. Though we do word there appears to be an increased give attention to collecting data from 12m customers, which can only help Argos bring in personalised offers but presumably also offers a marketable value in its right. Overall though we aren't yet convinced this solves the structural and competitive risks Argos faces. "- says Caroline Gulliver, Esperito Santo analyst.
Argos' Strategic Review uncovers that they are following an expected Strategy, which is propagate over a 5 season period focusing on impending changes to be produced in line with digital tendencies. Argos is also adopting a proper option; by retrenchment they would be closing a few of their stores within the next few years and also curtail catalogue sizes and change to digital equivalents. In doing so and increasing investment/develop services a clear course is being laid towards expansion of the business.
They have recognized their opponents, developed a plan (which they claim indicates the steps mixed up in process) and plotted their route. The main way forward appears to be to make use of the web/mobile platforms to enhance into a digitally-led company with ideas like digitising catalogues, release of luxury brands to catch the attention of wealthy customers, develop customer offer with common appeal also to close few of their stores with a minimal customer count. Also, they are possessing a clear direction to achieve all these by 2018 with a plan of trading 100 million each year for consecutive three years from 2013.
Since the arrival of economic turmoil income have shrunk and customer spending vitality has reduced. This coupled with intense competition from other stores have forced Argos to revise their current technique to that of retrenchment and development.
To begin using their existing strategy possessed flaws in the way they do business. A person walking into Argos spends lots of time in three different locations (finding out about item, paying for the item, collecting the item) within the store before getting their purchased product. This specific lay out was a significant disadvantage to potential prospects. This is because, as products are not on display (apart from jewellery and designer watches), most people shopping at Argos would really know what they would like to buy. Therefore they might much rather like to spend only a small amount time as it can be in the store rather than want to undergo the three steps currently necessary to buy something.
Argos' strategy looks really encouraging (and also would be helpful for them compared to their current strategy) for the fact that this change would help them build a database (collection of customer's private information) that they could possibly use to market and promote products based on individual purchase histories.
To sustain and compete with fast growing technology changes Argos must take action fast (moving out its strategy over an interval of 5 years seems a slow response to the current market environment). With ecommerce forecasted to grow exponentially over the next couple of years Argos is lowering its likelihood of tapping into this fast growing market by making these changes over a longer period. To become successful they have to be extremely competitive on price. It is to be mentioned that Argos' strategy wouldn't normally be an immediate threat to some of its rivals since most them curently have a very strong online existence and are online only suppliers. Example - Amazon
The real threats that Argos encounters are structural and competitive. The plan to transform itself as a digital retailer alone wouldn't normally help, as the strategy will not pay attention to how the current drop in sales can be tackled. Reaching its goals by 2018 seems unrealistic because the competition is merely getting tougher and unless these are aggressively competitive on price they might not exactly have the ability to attract clients.
In addition some of the supermarket communities have already founded an online platform which stocks household retail products similar to that of Argos with satisfying loyalty programs. Example - Tesco Membership card.
To summarise the Argos Strategic Plan although beneficial compared to its current strategy, can't be sustained in the long run as the changes have been designed to be phased in over a 5 yr period which is too long and unless prices strategies are not carefully prepared Argos may conclude with a extended decline in sales.