Mobile commerce at Argos more than doubled in the first half of its financial year to account for 16% of sales, one year into the general retailer’s digital transformation plan.
Some 43% of its total sales were made online, including through its Check & Reserve service, with commerce over both tablets and smartphones growing by 124%, and powered by new smartphone and tablet apps. In all, multichannel sales now represent 52% of Argos total sales – some £899m during the period.
Meanwhile, sister company Homebase saw multichannel sales grow by 28% in the half-year.
The two companies are owned by Home Retail Group, which today announced a 3% rise in sales to £2.6bn in the 26 weeks to August 31. Like-for-like sales at Argos rose by 2.3%, while Homebase sales grew by 5.9%. However, pre-tax profits fell by 70% to £14.2m, down from £46.7m at the same time last year, when the company benefited from an exceptional credit of £35m, compared with exceptional costs of £12.6m this time, related to the costs of its digital transformation programme and “other restructuring actions”. Disregarding those exceptional costs, benchmark pre-tax profits came in £27.4m, 53% up on last year’s £17.9m.
Argos’ transformation plan rests on four key pillars: repositioning its channels for a digital future, providing more product choice, available to customers faster; developing a customer offer with universal appeal and operating a leaner and more flexible cost-base.
Key innovations in the half-year include the extension of its hub and spoke trial to 50 stores, enabling faster fulfilment to stores, the development of digital concept stores that feature fast-track mobile collection and see the traditional Argos catalogue replaced with tablets, and the trial of a UK collection service for eBay. Argos continues to widen its product range with a view to widening its audience. It is adding 6,000 new lines over the Christmas, while it has also introduced 10 new brands including the more upmarket Denby crockery and Stoves.
Dynamic pricing technology will enable automated pricing recommendations in key categories, enabling, said the interim statement, “faster and more data-driven pricing decisions.”
Argos is shortly to introduce a digital version of its Christmas gift catalogue with rich content that will include the use of augmented reality. Improvements scheduled for the second half of the year will include the introduction of a single customer log-in and a shopping trolley that stays consistent across devicees, as Argos looks to make the customer journey consistent across channels.
Homebase refitted five stores, closed three, and improved its delivery options as it looked to differentiate itself as a “multichannel home enhancement retailer.”
Home Retail Group chief executive Terry Duddy said Argos and Homebase were making good progress with their investment plans and “remain on track to deliver long-term strategic objectives”.
Looking to the future, he said: “We expect consumer spending will remain subdued, and whilst some macroeconomic indicators are improving, these have not yet led to an increase in household disposable income. Overall we are making good progress and are in excellent operational shape as we approach the key Christmas trading period.”
Our view: Home Retail Group’s results are primarily of interest for a check-in on how one of the early digital innovators, Argos, is faring as it moves towards a digital first model. Despite what remains a challenging economic environment, the company is growing sales, with online, and within that mobile now driving growth. It’s a reminder to retailers those who don’t enable mobile and multichannel commerce won’t simply find that customers shop in their stores instead – they’ll find that customers shop elsewhere, and with someone who does.
