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Argos moves into Sainsbury’s stores in its quest to get closer to the customer

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Argos has taken its strategy of being where the customer is a step further – by opening its own digital stores in branches of Sainsbury’s .

The general merchandise retailer will open 10 of its new-format digital stores in existing supermarket stores, varying in size from 1,000 sq ft to more than 5,000 sq ft, by this summer. The two retailers are united in declaring that the move will broaden choice and make shopping more convenient for customers: shoppers will be able to buy a range of more than 20,000 non-grocery products in store via tablets, or reserve them online to pick up either the same day or the next day. They can also order from an extended range of about 40,000 products for home delivery.

“Our new distribution model allows us to provide customers in any Argos location with a choice of around 20,000 lines within hours, regardless of the size or stocking capacity of the store,” said John Walden, chief executive of Home Retail Group. “This strategic capability has opened up options for a variety of new Argos stores and formats, and the possibility that we can now cost-effectively reach more customers and neighbourhoods with an Argos presence. I look forward to the results of the 10 store programme with Sainsbury’s and to understanding the full potential of this exciting opportunity.”

Mike Coupe, chief executive of Sainsbury’s, said: “These 10 Argos stores will complement our supermarket offer, giving customers the opportunity to shop for an extended range of non-food items. They will bring something new and different to our customers, and fit well with our strategy of making our supermarkets more convenient. As well as looking at carefully selected partners, we continue to roll out our ranges of own brand clothing and general merchandise in our supermarkets to give customers even more choice and value.”

Our view: This move is most interesting for the way it sets up cooperation rather than competition between retailers. Argos has already worked with other retailers, enabling eBay buyers to collect from its stores, while supermarket Tesco enables shoppers to buy from third-party retailers through its website. More recently, House of Fraser has put its collection point in a Cambridge branch of Caffe Nero.

But we think this must be the first time two leading multichannel retailers have worked so closely as for one to put a store inside the other’s shop. If this initiative works, and doesn’t founder on the iceberg of Sainsbury’s losing electricals sales, it could mark a milestone in customer-focused retail that puts the shopper’s convenience first with the rationale that it’s better to be where the shopper is, no matter if that’s at a potential rival store. We’ll watch with interest to see how this develops, and whether others follow in their steps.

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