Back in early 2012, Home Retail Group slashed dividends on the back of a slow Christmas sales period. Its Argos business was struggling due to sluggish consumer electronics sales, with like-for-like trading for the final part of 2011 down by almost 10% year on year.

In the 18 months since, however, there have been some sure signs of improvement as the group has invested significantly in its digital offering and found new ways to leverage its huge store portfolio in a retail environment where growth typically comes online rather than through the physical retailing space.

Much of this is a work in progress and comes as part of a recently launched five-year transformation plan that the business hopes will reinvent Argos as a digital retail leader. Similarly, the group is looking to position Homebase as "a clearly differentiated multichannel home enhancement retailer" with a fresh look and improved online operation.

So, what technology solutions and systems are behind the transformation plan, and how is the strategy panning out?

Multichannel retailing

For the 26 weeks to 31 August 2013, Argos saw like-for-like sales rise 2.3% year on year to £1.72 billion. Multichannel sales represented £899 million or 52% of total revenue during that period, with the retailer investing in new smartphone and tablet apps and pushing its Check & Reserve facilities and home delivery.

Website visits from mobile devices – the new preferred way consumers browse for products – have jumped up significantly from last year, and actual sales conducted through a smartphone or tablet device account for 16% of the overall total. The retailer is also using more intelligent digital marketing, with bespoke product recommendations being sent out to consumers based on online browsing behaviour.

During the first half of 2013, Argos also entered into an arrangement with management consultancy and technology services provider Accenture, which will see the company look after the development and ongoing maintenance of Argos's systems.

Andy Morrey, co-founder of the eNova Partnership consultancy, former head of eCommerce at Argos and the man who is widely perceived to be the inventor of the click & collect format while at the company, says that the retailer is currently making another digital push after being well-positioned at the onset of eCommerce.

He told Essential Retail: "Argos had a number of advantages in the early years of eCommerce, namely it already had imagery and product descriptions because of the catalogue. It also had one big advantage back then, namely a real time view of all its products in store.

"Argos has leveraged these advantages and it has allowed the retailer to focus more energy on new developments as opposed to lots of effort and cost on creating digital imagery and complex click & collect operations."

Reflecting on why it wasn't able to capitalise further on this prominent role in the eCommerce revolution, Morrey added: "It could be argued that as a company it sat on its laurels for a while whilst everyone else played catch up, but is now attempting to push ahead again, albeit with much more of a digital level playing field on the high street."

Augmented reality

As the all-important Christmas period approaches, Argos is set to introduce a digital version of its Christmas gift guide that will utilise new technology and rich content to offer interactive ways of shopping for its customers.

In addition, the catalogue version of the gift guide is using augmented reality to boost engagement levels further. Customers who have downloaded the Blippar app to their smartphone or tablet can scan any interactive page in the Argos catalogue to launch more product choice and information, as well as how-to guides and demonstration videos and competitions on their device. 

Commenting at the time the service was launched through a trial in the north-east of England, Argos digital director Bertrand Bodson said: "The technology allows us to springboard users from the catalogue to our extended range online, where they can find even more choice and Check & Reserve and purchase products. 

"It's about creating a more interactive and joined up shopping experience for our customers and we're very excited to see how they respond."

Partnership with eBay

Home Retail Group said recently that approximately 90% of all sales at Argos still involve a store, which is important for the retailer because it still operates 737 in total.

A new partnership was announced with leading e-tailer eBay in September, which will allow consumers to purchase goods from an eBay merchant and pick them up at one of 150 Argos stores around the UK. At the time of the launch, managing director John Walden said it was an opportunity to build fulfilment relationships with fellow retailers and to bring traffic into Argos stores.

The eNova Partnership's Morrey said the collaboration should be applauded for its inventiveness in the modern retail space, but he also suggested that the "jury is out" on whether it can significantly help Argos.

"If it had been two years ago, it may well have been a game changer, but with the rise of Collect Plus, it will take a lot to drive substantial traffic to make any material difference," he argued.

"It is also notable that they are carefully selected products from eBay that do not compete with the core Argos range, which may somewhat limit the uptake and appeal. The fact that only part of an eBay basket may qualify for delivery into an Argos store could put customers off using the service, especially when they can get all of their eBay purchases delivered to a Collect Plus store that is local and usually open much longer."

Homebase

Like-for-like sales at Homebase increased by 5.9% in the first half of the year, with total sales reaching £822.3 million for the 26-week period.

The DIY retailer has made some strides in improving its online operations, customer loyalty programme and delivery options since last year, with multichannel sales participation growing by 28% year on year to represent 6% of overall sales. The introduction of a next- or named-day delivery service to home or store has helped this part of the business grow compared to last year, with "good levels of uptake" reported.

Homebase has also rolled out Wi-Fi in all of its stores and it says that 'how-to' YouTube videos, which provide customers with home improvement tips, are proving popular. In terms of customer loyalty, the retailer has been trialling tailored Nectar offers to specific age groups, which it says is resulting in "greater brand engagement".

Following the positive half-year sales results, CEO of Home Retail Group Terry Duddy said that he is confident that the business is in a strong position to move forward over the coming months, although he is still cautious about the wider macroeconomic environment.

"Both Argos and Homebase are making good progress with their investment plans, and remain on track to deliver their long-term strategic objectives," he explained.

"The Argos transformation is well underway, including the introduction of new smartphone and tablet apps, the extension of the 'hub & spoke' trial, the launch of a digital Christmas gift guide and the development of digital concept stores.

"Homebase has completed five store refits, and plans to complete around ten further refits in the current financial year. These refitted stores are performing in line with our expectations. In addition, the introduction of improved delivery options has supported multichannel sales participation."

Working alongside Accenture and other solutions providers, Home Retail Group is progressing by putting technology at the heart of its strategy.

http://www.enovapartnership.com/

http://blippar.com/

http://www.accenture.com/gb-en/Pages/index.aspx