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Sainsbury’s Argos takeover cleared by competition authority

What Sainsbury's and Morrisons said about multichannel this week

Sainsbury’s planned takeover of Argos has been cleared by the UK’s competition authority.

The two retailers today welcomed the news of the go-ahead from the UK Competition and Markets Authority, which clears the way for Sainsbury’s to create a multichannel giant that some suggest could rival Amazon in the UK. The deal is still subject to approval from stakeholders including Home Retail Group shareholders and the Financial Conduct Authority.

Sainsbury’s has said it sees this as a union of multichannel capabilities, building on the retail logistics that have enabled Argos’ Fast Track same-day delivery. It will also benefit from Argos’ fast growth in mobile commerce, which now accounts for 29% of total sales.

In its latest financial results, Argos said that 49% of the £868m it turned over the 13 weeks to May 28 came over the internet, following a first quarter in which online sales grew by 16%. Overall sales were up by 2.6%, following a 2.5% expansion in net space. But like-for-like sales, which strip out the effect of those store openings and closures, were up by just 0.1%. The retailer is three and a half years into a transformation plan to become a digital-first trader.

Meanwhile, in its latest results, Sainsbury’s said that it was well on track to delivering its customers the multichannel experience that they want – and that its acquisition of Argos’ parent company the Home Retail Group would further that strategy. Its group sales of £23.5bn in the year to March 12 were 1.1% down from £23.8bn at the same time last year. Pre-tax profits of £548m recovered from a loss of £72m a year earlier, but underlying profits of £587m were 13.8% down on last time.

At the time, chairman David Tyler said: “Our strategy is built on the fundamental strengths of our business – great heritage, quality food, fair prices and strong values. It recognises that customers will increasingly shop through multiple channels and according to their varying needs. Our business will continue to evolve and adapt to changing shopping needs, ensuring that we exceed customer expectations in an increasingly fast-paced, digital world.”

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