Argos was acquired by Sainsbury’s from former owner Home Retail Group for £1.4bn in September 2016, as part of the grocer’s bid to strengthen its multichannel strategy.
John Rogers, then Sainsbury’s CFO, took the helm of the renamed Sainsbury’s Argos business, leading the integration between the non-food businesses while continuing to forge ahead with Argos’ digital transformation plan.
And while a level of integration and synergy was achieved, Argos continued to be to some extent a separate brand entity. However, there were signs of a change of tack when, in 2019, Sainsburys announced a five-year strategy to save £500m across the group that included replacing 70 standalone Argos stores with digital concessions within Sainsbury’s stores, and Rogers left the business.
A strategy update in late 2020 revealed that Sainsbury’s was going a lot further, with plans to close 420 Argos stores by 2024. Up to 150 Argos shop-in-shops would be added to its supermarkets, alongside up to 200 more collection points. The store closures would leave just 100 standalone stores in total, but create a network of more than 430 concessions and 400-500 collection points.
Prior to the announcement, Sainsbury’s had been steaming ahead with Argos’ digital transformation. Ecommerce is an intrinsic part of the strategy, but the overriding aim at Argos is about creating a cohesive multichannel strategy. Its market-leading delivery and collection proposition is a big part of this – and was one of the main draws for Sainsbury’s as it was looking to expand its ecommerce credentials.
Technology development is seen as being crucial to the transformation plan and Argos opened a dedicated digital hub in London in 2014 to drive innovation and convenient shopping. Meanwhile, in mid-2020 Argos announced plans to stop printing its famous catalogue after 47 years as it made a definitive shift to online.
At the same time, Sainsbury’s is aiming to leverage cross-channel potential, and is working on integrating its logistics and supply chain network, while assessing opportunities to bring together operations, in particular data centres, technology functions and fulfilment and vehicle fleets.
Argos topped Retail Week Indicator’s cross-channel category in 2019, which measures retailer’s initiatives to link stores and online. Indicator concluded: “If one retailer epitomises cross-channel excellence it is Sainsbury’s Argos, which has managed to create a near-seamless customer experience across stores and online.”
It said that Sainsbury’s Argos cross-channel experience blended digital capabilities and the strengths of a store network to offer shoppers a wealth of convenient options.
The Argos and Sainsbury’s businesses are clearly a good fit, particularly as operational integration ramps up and associated costs reduce.
Innovation rating: 4