As profits fall at Argos, what should the shoppers make of a model that would be difficult if you were starting from scratch?
Unlikely to be top of the popularity stakes for saying this, but having heard the news that Argos profits have taken a pretty major hit in the year to February 26, it seems odd that this hasn’t happened before. Put bluntly, if Argos didn’t exist, would you bother inventing it and if you did, would anybody shop there?
How many other retailers can you think of where nothing much is on display and where you choose your product by leafing through a catalogue that bears close comparison with a mail order catalogue of old? Isn’t the idea of a shop that you go in to get down and dirty with the merchandise rather than viewing it at a distance via catalogue or computer screen?
Well, yes it is, but it has to be said that one of the advantages of the Argos model is that it should be relatively low cost to operate as in-store display, visual merchandising and suchlike shouldn’t form a major part of what it’s all about. Yet, it’s still necessary to make visiting an Argos as much an experience as anywhere else. The one major plus that this retailer has over online operators is that there is almost instant gratification in terms of getting your hands on the stock. You go in, you choose, you pay some money and then you leave, product in hand. On this reading, Argos isn’t quite as strange as might be supposed and to its credit it has done well in making what could be a really lacklustre in-store environment, better than might otherwise be the case.
The question that remains unanswered is what could be done to add further pizzazz to the in-store experience? Argos has been refurbishing its stores and says that the uplift from new-look branches has been higher than anticipated. Argos is therefore faced with a tricky decision. Remodelled stores are part of the solution to the problem of sharply falling profit, but presumably converting the stores to this template will involve considerable capital investment. It’s a dilemma that faces many retailers and at its most basic boils down to cash flow. Arguing for substantial capital expenditure is always difficult and never more so than when money is in short supply. It would appear to be a problem that needs to be addressed at Home Retail. It’s still a weird idea in retail terms, but one that can find favour, providing the ‘shops’ offer an experience.