Argos is moving into the TV home shopping market with the launch of Argos TV this summer. The news came as the general merchandise retailer claimed the place of the UK’s second largest UK internet retailer after a year in which it saw 400m visits to its website and made multichannel sales worth £1.9bn, almost half its total sales.
Argos TV, broadcasting through a leased Sky channel from the summer initially on a one-year trial, will showcase Argos’ full range of products, trial new product ideas and explain and demonstrate complex items from within its range. The initiative was announced in parent company the Home Retail Group’s full-year results today. Home Retail Group said the £750m UK TV shopping market was forecast to grow and the channel would be “a platform that Argos can build on for the future.” It added: “This is a cost-effective and low-risk way for Argos to trial TV shopping.”
But while multichannel sales grew at Argos, the Home Retail Group, which also owns Homebase, said its total sales fell by 3% to £5.8bn in the year to February 26 with pre-tax group profits down by 13% to £254m. Argos sales fell to £4.2bn, with like-for-like sales down by 5.6%. Homebase sales were at £1.5bn. Operating profits at Argos fell by £47m (18%), while at Homebase they rose by £6m (16%).
The Home Retail Group pledged to continue to innovate, despite the uncertain economic climate. As well as Argos TV, it is also set to release mobile Argos apps for the iPad and Android. It pointed to the success of recent innovations such as the Argos iPhone app, which has been downloaded 1.3m times since its May 2010 launch and now drives about 1% of Argos’ sales. Meanwhile at Homebase, a Reserve & Collect service has driven growth in internet sales.
During the year, some 36% of Argos’ sales were transacted over the internet, up from 32% at the same time last year. The remaining 10% of multichannel sales were ordered either instore or by telephone for home delivery. The store has also continued to use the internet to widen choice, with 12,500 internet-only lines now available, with 4,300 available for delivery to store. That compares with 23,300 featured in its Spring/Summer 2011 catalogue.
The company is also selling third-party ranges online, earning commission from sales and starting with a trial of book sales. Argos says that eventually it will offer 5,000 titles through the internet.
Chief executive Terry Duddy said: “Our focus on operational excellence and further investment in our multichannel leadership has delivered a solid performance and enabled us to gain or hold market share in our businesses.
“Although we remain cautious about the consumer outlook over the short term we will continue to invest and innovate in our customer proposition.”
The company, which said it had continued to maintain its market share, maintained a full-year dividend of 14.7p.
Oliver Stocken, Chairman of Home Retail Group, said “Economic uncertainty and a low level of consumer confidence continue to adversely impact customer spending patterns. Despite these challenges the Group continues to build on its strategic advantages to ensure that it will be well positioned for the economic recovery over the longer term.”
