Interview: Terry Duddy’s journey from analogue to digital retail

As he prepared to stand down as Home Retail chief executive and deliver his last trading update on behalf of the Argos and Homebase parent, Terry Duddy might have been given forgiven if he had felt nostalgic.

But looking back is not high on Duddy’s agenda. There is little value in raking over the past, he maintains - it is little more than idle reminiscence.

And anyway, he is at pains to point out, he is not retiring so why would he look back over his career as if he were?

While Duddy is perhaps defined by 15 years leading Home Retail and its predecessor Argos Retail Group, he has spent a lifetime in retail and been part of many transformations of the industry along the way.

Whether it was the rise of out-of-town stores, the hardships of recession or the shift to ecommerce, Duddy has seen and confronted them all.

It is the last trend, driven by consumers’ adoption of technology such as smartphones and tablets, that Duddy thinks really matters. And it perhaps encapsulates his own retail journey from an analogue retail environment to a touchscreen-speed world.

The pace of technology-driven change has brought deep shifts in retail, Duddy believes, ranging from the most fundamental aspects to the power balance between retailer and shopper.

“The last two to three years are far more important than the last 15,” Duddy says.

“The commoditisation of product, a customer that wants respect and that doesn’t respect the authority of retailers - it’s a trend of empowerment.

“The other things are events that occur along the way. The most important thing is to be on the ball today.”

The combination of the shift to online commerce and pressure on consumer income during the downturn and its aftermath prompted some to question whether Home Retail’s flagship Argos business would last the course.

However, Duddy leaves Argos and Home Retail on the up and full-year profit will be at the top of expectations.

“The last two or three years are more important than the last 15”

Terry Duddy, Home Retail

He was able to report a 5.2% uplift in like-for-likes at Argos in the eight weeks to the beginning of March, bringing the full-year rise to 3.3%. At Homebase like-for-likes climbed 9.3% and 5.9% respectively.

The impact of the digital shift was marked - internet sales accounted for 44% of the annual total at Argos, up from 42% the previous year. The retailer rang up mobile commerce sales growth of 89% to represent 18% of revenues overall.

That is testament to the changes made by Duddy and Argos boss John Walden, who was brought in for his digital expertise and now takes the reins as Home Retail chief executive.

While during the downturn Argos’ customers suffered financially, Duddy has never agreed that the business is simply in thrall to what happens around it. Instead it acts to make the most of opportunity and position itself for the future.

“You need to be in touch with customers and know where they’re moving to and be on the trend. You have to keep thinking forward and not looking back. That’s the attitude of this business,” he emphasises. “It’s gone through a period since the crash when it had to be defensive and that’s not its natural state.”

Even as it took hits as consumers retrenched, Duddy was confident that Argos was moving in the right direction. “The thing you could see was that all the KPIs for Argos and internet growth were going forward, but we had to go through all these silly conversations about whether or not you need stores,” he says.

He points to the growth of Argos’ Check & Reserve service and the success of the retailer’s mobile app, launched in 2010, as examples.

“Within weeks that app did 1% of sales,” he says. “I thought it might have done the same sales as an average store but that became almost 20% in the last quarter.

“The fundamentals of the business and strategy were accelerating. It was taking the things customers wanted and the convenient way they wanted to shop.”

Ironically, Duddy believes that at present technology is holding retailers back in some respects.

“We waited an age for this convergence and now it’s happening in spades. Right now, to some extent, we may be a bit curtailed by technology not moving fast enough.

“Customers need mobile payment. They have it in Kenya and Tanzania, yet here we are in western Europe…”

A proliferation of competing mobile payment services and the slowness of banks to adapt means nothing has yet really taken off. “It will happen and, when it does, click-and-collect becomes your payment method,” he says.

While technology and its opportunities and repercussions may be front-of-mind for Duddy, some have argued that it was a failure to keep up with the rise of ecommerce and multichannel, after being an early pioneer, that became a problem for Argos.

Duddy rejects that idea. Argos’ early innovations were “self-built”, he points out. As time went on other retailers were able to buy off-the-peg ecommerce systems from big suppliers “and move very quickly to where we were”.

But he says Argos did not take its foot off the pedal. “Argos has moved very quickly in the last three years,” he insists, and it retains a pioneering role as a business moving from analogue to digital.

Business rigour

It is all very different from Duddy’s early days in retail. He joined electricals giant Dixons in 1984 - which he acknowledges in those days was a “carnivorous” place - and went on to hold the roles of sales director at Currys, group product marketing director and managing director of PC World.

“Most of what Dixons taught me were things that you shouldn’t do,” he laughs. But while much has changed, there is plenty he learned there that remains as true today as back then.

“There’s still the absolute reliance on standards in-store. How to make money - that was what we were about. We were about how to trade the business every day.

“There’s no lack of customer focus here. Homebase has maintained the idea that an individual can make a difference, but the environment is much more respectful.

“I’m not a believer in the internet taking over and people having to close lots of stores”

Terry Duddy, Home Retail

“What Dixons was great at was customer acquisition - blasting ads in the papers, plastering a shop window with great big displays.

“Now it’s different but, as you go from analogue to digital, how do you acquire and keep customers? It’s things like the use of digital marketing and it’s probably more subtle.”

Argos gets most of the attention at Home Retail and stablemate Homebase can often be overlooked. The merits of its acquisition in 2002, when Argos was still part of GUS, have sometimes been questioned since.

Duddy counters: “We bought it for all the right reasons and they still pertain.

“Has it been value-creating? It’s been tough-going at times. It’s been in an area where the market has been in decline, but it’s actually a very vibrant business.

“The strategy now, with exclusive brands and store development, probably makes it the most advanced in décor in the UK. And it’s supported by a great multichannel experience.”

Property remains a big element of multichannel retail as shopping habits change. “I’m not a believer in the internet taking over and people having to close lots of stores,” Duddy says. “The growing phenomenon isn’t delivery to home, it’s click-and-collect.”

Property frustrations

In Duddy’s view, changes to property rules are needed in recognition of the move from analogue to digital. He is frustrated by what he sees as the artificial distinctions associated with A1 open consent and bulky goods.

A lack of development, whether of new malls or retail parks, means that there is a “fairly consistent” estate for retailers generally but the strictures mean it cannot be deployed to best effect.

“The capacity exists,” Duddy says. “What restricts it is we’ve decided for legacy reasons only certain retailers can be on this or that park.”

As he says goodbye to the chief executive’s desk at Home Retail, Duddy mentions that he never once sat at it in all his years at the business - a Mr Men cardboard cut-out left over from an Argos event years ago has been ensconced there most of the time (pictured).

It is a telling detail perhaps, reflective of Duddy’s down-to-earth nature and a focus on getting the job done rather than the trappings of the role. He is confident he leaves the group in good shape.

The prudent financial management of Home Retail - for which Duddy pays tribute to finance director Richard Ashton - means it has been able to invest but still sits on a £400m “war chest”.

The next phase will be up to Walden, and Duddy will do something new. When he revealed he would stand down from Home Retail he was irritated that one broadcaster reported he was “retiring”, but that is not on his mind.

He is, however, in no hurry to take up a new position. “I’m not rushing to do anything,” he says. “People who have been in this position themselves have been very kind with their time and what you get is good, conflicting, advice. The advice that’s been most consistent is maybe to take a decompression period.”

But given his interest in all things digital, perhaps that is the direction Duddy will continue to follow. It is what he would suggest to anybody starting out in business today.

“I’d get into a company with a good digital strategy,” he advises. “You can have companies that are very successful without - Primark is one - but, starting today, getting a good grounding in digital would help your career.”

Duddy, who initiated and led Argos’ move away from paper catalogues and stubby pens to apps, iPads and m-commerce, has trodden the path from analogue to digital himself.

He gives the impression he’d like to follow it further still in future.