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Digital kiosks fail to stem Argos sales decline

Retailer Argos reports a small increase in sales in comparison to its last quarter, but still suffers revenue decline year-on-year despite digital initiatives

Argos announced a drop of 0.4% in total sales of £897m in its second quarter figures covering the 13 weeks to August 29.

But sales were up by £51m on last quarter as the retailer added 52 stores to its portfolio, bringing its total store estate to 840.

These included the 44 digital kiosks the retailer opened inside Homebase and Sainsbury’s stores offering popular products instantly available, and the ability to order in more than 20,000 products for pick-up later that day.

This is part of a wider strategy to transform Argos into a digital retailer, including the development of a research and development (R & D) centre for flexible working, the inclusion of technologies such as tablets in store and the creation of initiatives to grow digital inclusion.

"Argos delivered an improved sales performance in the second quarter. It made good progress with new stores, opening more than 50 digital concessions within Homebase and Sainsbury's, which have generated encouraging early results,” said John Walden, chief executive of parent company Home Retail Group.

“Consistent with our previous guidance, Argos's sales continued to be adversely impacted by the performance of a number of key electrical product categories as well as weaker overall market conditions in August.”

In July 2014, Argos CIO Mike Sackman told Computer Weekly that physical stores would always be a great part of the Argos estate – but there may begin to be a place where people choose to pick up things they’ve ordered online, as opposed to the point of contact where people make a purchase.

There was an increase in the number of online sales for the retailer, accounting for 46% of total sales, a 2% year-on-year increase from the same quarter in 2014.

This included an increase in mobile sales by 22% year on year, which now represents a quarter of the retailer’s total sales.

Sister company Homebase also saw a drop in sales as its parent company continues to reduce its store real estate, with overall sales dropping by 2.8% to £378m.

Christmas less predictable

Home Retail Group hopes Homebase will follow in the footsteps of Arogs in its mission to become a digital retailer, with a three-year transformation project set to grow its digital, online and mobile channels.

But the group is relying on the peak trading Christmas season to boost profit, with Argos announcing it will sell many new products including its own-brand mobile phone and tablet technology, as well as other traditional technology brands.

"The outcome for the Group's full-year generally depends on the important Christmas trading period at Argos which, this year, seems less predictable than usual, due to a less certain promotional environment,” said Walden.

“Our teams have made solid progress preparing for this period, including substantially completing the technology and operational steps necessary to introduce new store collection and home delivery propositions to our customers."

Read more about Argos

Argos has unveiled its first digital concept store, as part of the retailer’s aim to become a digital retailer over the next four and half years.

Argos will provide 10,000 free tablets and broadband access to encourage UK adults lacking digital skills to use the internet.

 

 

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