10 things you didn’t know about Home Retail Group

Multichannel is big business. Argos multi-channel sales penetration increased to £1.9bn or 48% of total sales this year, up from 46% the year before. Online Check & Reserve is still the fastest growing channel, representing 39% of all sales. In the run up to Christmas this increases even more, with Check & Reserve in categories such as technology and toys increasing by around a further 10%. Nearly 90% of all sales at Argos still involve the store in some way.

According to Home Retail, Argos is now the second largest internet retailer in the UK with over 430 million site visits during the year.

Mobile shopping at Argos has grown threefold to represent 6% of total sales by the end of the financial year.

Homebase is now in its third consecutive year of market share gains.

Argos is struggling in the consumer electronics market, outside of laptops and tablets. Excluding the growth in laptops and tablets, Home Retail says 80% of Argos’ 8.9% sales decline was accounted for by the weak electronics market, with televisions and video games systems performing particularly badly. Overall, Home Retail’s sales fell 6%.

While multichannel may not suit Homebase’s business model in the same way it suits Argos – it represents 4% of sales - it has still seen online growth driven by Reserve and Collect services. Visitors to the Homebase website have grown by 15% during the year, and Reserve and Collect sales have risen by 35%. An online decoration tool, designed to inspire customers when they embark on a decorating project, has been introduced and 1,400 online exclusive lines have been added.

The Group is keeping a close eye on its property estate. Around 300 store lease renewals or break clauses are due over the next five years, representing nearly 30% of the store portfolio. Home Retail says this gives it the flexibility it needs to “manage proactively the size of its store estate”. Argos has approximately 230 store lease renewals or break clauses due over the next five years, and ten older stores are likely to be closed in 2012/13. Around 65 Homebase stores will be closed over the next 5 years.

During the year 200 stores were refurbished bringing the total number of refurbished stores to around 350. The refurbished stores have produced average sales uplift of 2.5%, which is ahead of the business case requirement of 1%.  Refurbishment costs are averaging approximately £100,000 per store.

Argos has around 9,000 internet-only product lines which are on top of the 24,000 lines in the current catalogue.

Own brand is important. Argos’ own Alba and Bush electrical brands now account for approximately £200m of annual sales.