The year of the snake started with a bite for Argos’ fledgling business in China, which is being shut just months after launch.
The year of the snake started with a bite for Argos’ fledgling business in China, which is being shut just months after launch - the latest rapid withdrawal from an emerging market after the retailer’s earlier failure to crack India.
Run in partnership with Chinese electricals giant Haier and based in Shanghai, the hope was that the Chinese business would provide Argos with an opening into what many retailers see as one of the world’s most exciting consumer markets.
For that reason, the decision to high-tail it back over the Great Wall is undoubtedly disappointing.
However, the reasons for Argos’ withdrawal are also understandable. Since the tie-up with Haier was disclosed, much has changed at the home shopping group. Most importantly, John Walden was named managing director of Argos in February last year.
Since taking the helm, Walden has laid out a strategy to modernise Argos and turn it into a digitally led business. The high street stalwart had struggled during the recession and downturn, when its strategy came under attack from City critics.
There are signs now that Argos is making a bit of a comeback. The retailer was able to report a like-for-like sales advance of 2.7% over Christmas, and over the last three months parent Home Retail Group’s shares have risen by more than 14%.
The view inside Argos is clearly that to come good on the new strategy there can be no diversions, so the Chinese venture, like the dabbling in TV shopping, is for the chop as all energy is directed into a UK revival.
The snake is associated with wisdom in China, so that is probably the right thing to do. Cracking China, even with a local partner, would take time and resources. But the fact that Argos has decided that entering such a fast-growing market would be a distraction from its real priorities is surely a sign of how much is still to be done at home.