‘As Argos celebrates 50 years, it’s a testament to retail’s ability to reinvent itself’

The occasion was marked with a birthday dinner – the room decked out in Argos memorabilia such as old catalogue covers and iconic products such as Big Mouth Billy Bass (a singing fish that was a big Christmas hit at the turn of the millennium) – hosted by Argos owner Sainsbury’s chief executive Simon Roberts, who’s not much older than Argos itself.

Since its launch, Argos has successfully been reshaped more than once. That has enabled it to outlast many of the high street neighbours that sat alongside it in the 1970s and 1980s – Woolworths being the most obvious example – and even some of the new generation of apparent disruptors that laid claim to be being the future of retail.

Argos’ enduring place in the retail pantheon epitomises the impact of transformation, which has been a theme and ambition of retail for some time.

“It was a business model, I remember one consultant observing, that no other retailer really copied – which in his opinion showed it was living on borrowed time”

Argos started as a store where Green Shield Stamps could be redeemed. It became a giant whose stubby blue pens and catalogue – memorably dubbed the “laminated book of dreams” by comedian Bill Bailey – seeped into British culture.

It was a business model, I remember one consultant observing, that no other retailer really copied – which in his opinion showed it was a model living on borrowed time as businesses such as Amazon encroached into its core markets.

The rise of Amazon was widely seen as a prime driver of Sainsbury’s £1.4bn acquisition of Argos in 2016, which it was envisaged would create a multichannel competitor to the Seattle juggernaut.

By that time, under the leadership of John Walden and as the flagship business of Home Retail Group, Argos had been transformed again – after ups and downs – to exploit its supply chain capabilities to deliver impressive services such as rapid collection or delivery. Its come-into-the-store-and-order model was turned on its head as it became a poster child for click and collect.

M&A success story

When the Sainsbury’s deal was announced, there was much polarisation of opinion and speculation about its implications.

The reality was more prosaic – there were opportunities to improve the proposition through the addition of more general merchandise from Argos, cut costs and boost footfall by locating Argos in Sainsbury’s branches rather than running standalone stores, and “bring together multichannel capabilities including digital, store and delivery networks to provide fast, flexible and reliable product fulfilment to store or to home across a wide range of food and non-food products”.

In such respects, while there have been periods of weak performance, the ambitions of the deal have been met – not a small achievement when many mergers and acquisitions have had a tendency to turn sour.

“Rather than being seen as playing second fiddle to its parent company, its role is key lieutenant”

In its most recent quarterly update, Sainsbury’s reported that sales at Argos were up 5.1%. In the last full year, Sainsbury’s noted that “by offering a wide range of great quality, affordable general merchandise products alongside our food range, customers can do more of their shopping in one place and as a result, more are choosing to shop with us”. While Sainsbury’s is pursuing an overt food-first strategy, Argos is ticking the boxes from the time of the acquisition.

Argos’ connection to supermarkets goes back a long time. It was Tesco’s involvement in Green Shield Stamps that gave birth to Argos in its original incarnation. In that respect, Argos was created explicitly to support grocery growth from day one.

So, happy birthday to Argos – not perfect, but a great example of how retail businesses can be transformed. Rather than being seen as playing second fiddle to its parent company, its role is key lieutenant – and it has won a distinct place in shoppers’ hearts along the way.