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Argos on how to combine online and physical retail

While the recent headlines of the demise of Maplin and Toys R Us are still ringing in retailers’ ears, John Rogers, CEO of Argos, calls on the industry to “think long and hard” about combining physical and digital propositions.

Speaking at the Retail Week Live conference in London this week, Rogers said he believes stores still play a critical role in retailer today.

Despite Argos receiving 1.2 billion hits to its website every year and claiming the title of the third most visited retail website in the UK (after eCommerce giants Amazon and eBay), Rogers said the retailer still depends on its network of stores.

“Online only is not the answer,” he said.

He remembered how two years ago when Sainsbury’s first announced the acquisition of Argos, press and analysts were sceptical about the choice. “Ironically, six months later Amazon announced the acquisition of Whole Foods, and it was a validation of the strategy we embarked upon – the need to combine both physical and digital,” he said”

Argos big stats

  • Argos is the UK’s 3rd most visited retail website after Amazon and eBay
  • It receives 1.2 billion hits online annually
  • Argos was the 1st UK retailer to hit £1 billion in mobile sales
  • It was also the 1st UK retailer to hit £1 billion in app sales
  • Argos’ Fast Track fulfilment service now delivers to 90% of UK households within four hours
  • But 80% of orders are fulfilled through an Argos store
  • When Sainsbury’s places an Argos within its store, food sales increase by 1-1.5%

He added: “It's clearly true the world is moving more online, and we predict in the future it could be as high as 85-90% of business could originate online. While it’s 60% today, 80% is fulfilled through our physical store network.”

Rogers described how its Fast Track delivery service can now fulfil orders to 90% of UK households within four hours.

“You can order something at 6pm this evening and have it delivered this evening or pick it up in a thousand-odd locations in the UK.”

And it is clear Argos, as the pioneer of Click & Collect, won’t be turning its back on stores anytime soon. Even Sainsbury’s has been including Argos stores in its superstores with excess space, with 126 net stores added since the merger.

“The economics of this are very important – we’re paying rents and business rates already and it’s zero cost to the Argos business to put a store in a store.”

He described the “halo effect” felt by Sainsbury’s after adding an Argos offering in-store, with food sales typically increasing by 1-1.5%

“It’s a great example of how we combine the online world with the physical retail world,” he said. “We’re sweating the asset harder by bringing the Argos offer to Sainsbury’s customer.”