Tablets Arrive at Argos to Make it a True Multi-Channel Hero

 

Under a five-year programme marking the company’s vision to become what it calls a “digital retail leader”, the UK Home Retail Group’s Argos variety store chain has rolled out at six test locations a new digital store concept to highlight its multi-channel credentials. The new store layout replaces paper catalogues with tablets and streamlines the queuing process.

Euromonitor International visited both a new store and an old-style outlet and assesses how the new concept will fit into its digital future and fend off the threat from pure-play retailers.

 

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Argos: new-style store, Old Street, London

A Marked Premium Shift, with a Little Help from Apple

The store fixtures are markedly different from the “old-style” stores and are somewhat reminiscent of the uncluttered and almost minimalist ambience found in Apple stores, albeit with a more colourful environment, with sharp colour contrasts. The overall impression is of a more premium store supported by a distinct contemporary and spacious feel.

In another nod to Apple, the stores are fitted with iPads to replace the bulky laminated catalogues, dubbed the “laminated book of dreams” by the comedian Bill Bailey. The company has justified using Apple tablets rather than Argos’ private label tablets, also launched at the end of 2013, by stating that the iPads have been tested for longer. The use of iPads may be a wise move as a device known and used by a large number of consumers should make them more confident in moving away from the catalogues.

The switch from paper to digital is also apparent on the walls as LED screens displaying marketing messages replace paper posters and give a more technology-oriented impression, while the freed up space also helps make the wall displays more eye-catching.

 

 

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Argos: new-style store, Old Street, London 

 

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Argos: new-style store, Chancery Lane, London

 

Seamless Ordering System to Retain Customer Base

The uniqueness of the Argos concept resides in that almost none of its products are displayed in the store but are instead stored in an adjacent warehouse and selected through a catalogue in the stores.

Argos claims that the old-style stores will reduce the waiting time to one minute for customers using the click-and-collect kiosks. When ordering in the stores, while it is not easy to notice a marked improvement in terms of speeding up the process of getting the products delivered, the old store format’s ordering system was already seamless and relatively fast. However, it did require customers to pay first and then wait for the product, and these two steps are reduced to one in its new incarnation. This simplified process is supported by the Argos website’s easy navigation both on tablets and smartphones, alongside its functionality allowing one to quickly check in-store availability. This should ensure that existing customers are not put off by the lack of catalogues.

However, the delays and technical glitches during the launch of the test stores, initially planned for November 2013, shows that converting a large proportion of its 700 stores may be more complex and time consuming than the company had initially anticipated.

 

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Argos: new-style store, Chancery Lane, London

 

 

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Argos: old-style store, Hounslow, London

 

Click-and-Collect Efficiency a Key Competitive Advantage

Argos is at the forefront of retailers building major multi-channel synergies, backed by its ability to check inventory in real time. As a result, it is a well-established and efficient multi-channel retailer, illustrated by the fact that 90% of its total transactions involve customers visiting a store either for payment or collection or to purchase, while over 40% of its sales involve online ordering. This was a major factor in the chain’s robust performance in 2013.

The new store layout enables it to cement this multi-channel expertise and simplifies the ordering process as every product order is recorded through the Argos website. This has given Argos the opportunity to use its larger stores to serve as fulfilment centres for smaller stores, whereby products can be delivered within two days. This enables smaller stores to offer a click-and-collect option for an assortment comprising the 20,000 SKUs of large stores, instead of their own 12,000 SKUs.

One of the inconsistencies of the chain’s business model remains the large proportion of products only available for home delivery. At a time when Amazon is aggressively expanding its range of collection points, notably with lockers in convenience stores and underground stations, Argos will need to offer the choice of home delivery and in-store collection for most items in order to fully exploit its inherent competitive advantage of having a large store network. This can be leveraged to solve the “last mile” equation, which is a thorny issue for pure-play internet retailers, especially for bulky items.

Beyond this pure-play versus brick-and-click dichotomy, the test launch of eBay collection points at Argos outlets in 2013 also highlights solutions for pure-play online retailers and store-based retailers to co-operate.

Meanwhile, the new store layout succeeds in giving the brand a distinctly more premium feel, which will improve its image and, combined with its efficient click-and-collect solutions, put the group in a strong position in its fight against the pure-play online juggernauts.