Sainsbury’s finance chief John Rogers steps into the hot seat at newly acquired Home Retail Group next week, following the £1.4bn acquisition.
Rogers will play a central role as the grocer begins the process of integrating Argos into its business and maximising the potential synergies between the two retailers.
Retail Week runs the rule over Rogers’ top priorities in his new role as chief executive of the newly acquired division, which is being renamed Sainsbury’s Argos.
Meet colleagues
Number one on Rogers’ to do list come Monday morning will be to meet store staff to get a feel for the business from the front line.
It is understood that he plans to spend much of his time next week visiting stores to assess performance, while also communicating Sainsbury’s values and the grocer’s plans for the business to his new workforce.
Sainsbury’s Argos – formerly Home Retail Group – employs around 30,000 staff across the store network and central operations of flagship business Argos and Habitat.
Some staff members will feel that uncertainty hangs over their roles. Speculation continues to swirl about how many standalone Argos stores Sainsbury’s could opt to shut in favour of concessions in its supermarkets or click-and-collect points.
But Sainsbury’s has insisted the acquisition will lead to more jobs in the long term. Rogers will be keen to allay any employee fears and get staff singing from the same hymn sheet as soon as possible, particularly with a crucial trading period rapidly approaching.
Christmas trading
The so-called golden quarter, which is now just around the corner, will also be uppermost in Rogers thinking as he takes the reins.
Argos found itself languishing towards the bottom of the Christmas trading league table last year after like-for-like sales dropped 2.2% in the 18 weeks to January 2.
One of Rogers’ biggest immediate challenges will be to ensure some festive cheer for Argos at the end of another challenging year – like-for-like sales inched down 0.1% during the most recently reported quarter to May 28.
But that will be far from straightforward. Even before December is upon him, Rogers will have some big decisions to make around Argos’s Black Friday involvement after it struggled to cope with demand last year.
Argos was forced to apologise after a number of customers reported delays with their orders, while others said they were unable to get through by phone to track their orders. It also suffered problems with its website as it stalled amid high traffic volumes.
However, it appeared to have learned lessons from that disappointment when it harnessed its Fast Track same-day delivery service to go toe-to-toe with Amazon on the etailer’s annual Prime Day in July, offering free same day delivery on all products ordered before 10pm.
Rogers will already be mulling other ways Argos can win back shoppers and grow sales during the hotly-contested golden quarter.
Integrating the Argos business
In its rationale for acquiring Home Retail Group, Sainsbury’s said it expects to achieve EBITDA synergies of “not less than” £120m in the third year after completion, but anticipated one-off costs of £140m in order to achieve those savings.
Given his background as Sainsbury’s finance boss, Rogers is the perfect man to steer the ship and ensure the integration process remains on track to hit those targets.
Although it is thought that Sainsbury’s and Argos will initially operate as standalone businesses, Rogers and Sainsbury’s boss Mike Coupe will quickly turn their attentions to the integration process.
Rogers will have a number of difficult calls to make, with several key decisions to be taken surrounding Argos’ property portfolio. The retailer has 734 stores, but around half of those leases are due to expire within the next five years – and Rogers will have the ultimate say on which ones will be renewed or allowed to lapse.
Sainsbury’s has already admitted that some Argos stores will close, although it is yet to place a figure on how many and insists that the number of Argos “touch points” will increase once the businesses have fully integrated.
As the emergence of Amazon Fresh in the UK places further pressure on the established grocers, Rogers and Coupe will also be masterminding how the fulfilment networks of Argos and Sainsbury’s can combine to usurp the etail titan’s same-day delivery offer.
Shape his senior team
While Sainsbury’s has remained tight-lipped on what the deal means for the future of Home Retail’s top executives, the acquisition is almost certain to prompt a degree of change. The fact that Rogers is replacing John Walden at the helm provides early evidence of that.
A number of roles will be duplicated across the two retailers and it is plausible that Sainsbury’s could seek to streamline the Argos operation by expanding the remit of existing Sainsbury’s directors.
Either way, Rogers will no doubt spend his first few months in the job running the rule over his senior teams, quietly assessing all areas of the business to pinpoint any divisions that require strengthening.
However, as Rogers has seen first-hand in the ever-changing grocery sector, assembling the right team around him could prove to be a long-term project.
Make a decision on Habitat
A largely forgotten element of the £1.4bn deal is the fact that Sainsbury’s will also be snapping up Habitat as part of the Home Retail stable.
The supermarket chain has kept its cards close to its chest about any plans for the brand, which has a number of standalone stores and concessions across the UK.
Rogers will have a number of options at his disposal when considering the future of the homewares business.
He could elect to keep many of its stores open and trading as a standalone business as well as sell a selection of Habitat products within the general merchandise offer in larger supermarkets.
However, Sainsbury’s could opt to shutter the standalone Habitat outlets and perhaps open shop-in-shops, helping it make use of excess space in larger sheds.
Less likely is the option of selling off Habitat altogether, but Rogers will be keen to make a decision on its future sooner rather than later in his bid to integrate the Home Retail business.
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