Digital strategy pays off for Argos

ArgosThe digital makeover of catalogue chain Argos showed early signs of progress after strong trading figures for the peak Christmas period.

Its owner Home Retail Group said internet sales now accounted for 42% of all Argos business as more shoppers took advantage of the chain's new tablet and smartphone apps, as well as click and collect services.
%VIRTUAL-SkimlinksPromo%
Argos sales rose 2.7% on a like-for-like basis in the 18 weeks to January 5, meaning Home Retail's profits for the year to March will be £10 million ahead of current City forecasts of £73 million. Shares opened more than 14% higher.

The Argos business, which sells products in 739 stores as well as online and through a television channel, took a total of £1.74 billion over the 18-week period, a rise of 1.6% when store closures are accounted for.

Consumer electronics, particularly tablet computers, drove the improvement, while there was also growth in white goods, toys and core electricals. This was offset by weaker trading in homewares and jewellery categories.

Home Retail announced plans in October to scale back circulation of its catalogue and revitalise the business through its digital presence.

Stores will be kitted out with internet access and wi-fi, with a fast-track collection service and customer service for orders.

Home Retail hopes to grow Argos sales from £3.9 billion to £4.5 billion a year in 2018 in an "ambitious but achievable" overhaul that comes after a period of declining sales.

Matt Piner, of retail consultancy Conlumino, said the figures showed the popularity of "click and collect" shopping over Christmas. He added: "Downsizing its store portfolio to provide an optimum network of click and collect hubs will now be crucial if the retailer is to build on this performance."

Home Retail's Homebase division, which has 337 stores, saw total sales decline by 4.5% to £453 million, including a fall of 3.9% on a like-for-like basis.

7 PHOTOS
High Street casualties
See Gallery
Digital strategy pays off for Argos

Administrators sounded the death knell for Woolworths in December 2008, leading to store closures that left 27,000 people out of work. Since its collapse former Woolworths stores have become a blight in many town centres and more than 100 of the large stores still lay vacant in January 2012.

Loyal customers didn't have go without the family favourite store for long however as it reappeared online as Woolworths.co.uk in 2009, after Shop Direct Home Shopping bought out the Woolworths name.

The greetings cards specialist became the latest highstreet casualty in May with 8,000 jobs on the line when it was forced it into administration. Its biggest supplier, American Greetings, then bought Clintons out of administration and put the retailer through a rebrand including a new logo and complete in-store revamps.

Its contemporary format includes new fixtures and fittings and easier to navigate stores, and will be rolled out to all 400 UK stores at the cost of £16million. Bosses aim to bring the brand back to profit within two years.

Poor sales in the run up to Christmas was the final nail in the coffin for several struggling chains, including lingerie retailer La Senza, which went bust in January 2012 with 146 shops and 2,600 staff. Kuwaiti retailer Alshaya bought part of the business, which saved 60 shops and 1,000 staff.

La Senza has been struggling in a similar way to other specialist shops such as Game and Mothercare, which have been hit by cut-price competition at supermarkets and have no alternative products to help shoulder losses.

Stricken retailer Blacks Leisure, which employed 3,600 staff across 98 Blacks stores and 208 Millets stores, went into administration in Janurary 2012 after failing to find an outright buyer.

Soon after its stores were bought by sportswear firm JD Sports in pre-pack deal - an insolvency procedure which sees a company being sold immediately after it has entered administration – which saw most of Blacks' £36 million of debt wiped out.

Fashion chain Bonmarche, which was part of the Peacock Group, was sold in January when the group collapsed due to unsustainable debts, resulting in 1,400 job losses and 160 store closures. Private equity firm Sun European Partners bought 230 stores, which continue to trade with 2,400 staff.

Peacocks collapsed under a £740 million net debt mountain in January 2012 in the biggest retail failure since Woolworths. Despite being sold out of administration to Edinburgh Woollen Mill in a deal that saved 380 stores and 6,000 jobs, administrators from KPMG were forced to close 224 stores with immediate effect. This lead to 3,350 redundancies from stores and Peacocks head office in Cardiff.

The high street name continues trading as bosses work to stabilise the situation, yet a further blow was dealt this month with news that the firm's pension fund is in £15.8 million shortfall as a result of the collapse.

Game buckled under its £85m debt pile in March 2012 and was placed into administration after being unable to pay a £21m rent bill. Administrator PwC immediately closed 277 shops, with the loss of 2,000 jobs. Soon after, investment firm, OpCapita bought 333 Game stores, saving more than 3,000 jobs.

Game's demise followed a string of profit warnings and the failure of nervous suppliers, including leading names Electronic Arts and Nintendo, to go on providing the latest games, further damaging poor sales.

HIDE CAPTION
SHOW CAPTION
of
SEE ALL
BACK TO SLIDE


More stories
Read Full Story

FROM OUR PARTNERS