Argos and Homebase need caffeine shot like Whitbread

Sales are nothing to write home about for the owner of Argos and Homebase, and yet coffee shop owner Whitbread is cooking on gas...

by Michael Northcott
Last Updated: 19 Aug 2013

It is difficult to read what kind of an economic situation the average consumer is in at the moment, what with double-dip recessions, but falling inflation and fuel prices. But the answer is a mixed bag and Home Retail Group knows it only too well. It has announced that Argos like-for-like sales in the first quarter to 2 June fell 0.2%, but that this was a slower fall than the previous quarter, when sales fell 8.5%. Homebase sales fell 8.3%, in this most recent quarter and HRG is putting this down to the bad weather. 

The bad weather justification is probably fair, given that the gardening gloves would definitely have come out by now if it weren’t for the two soggy months of rain causing flood warnings all over the UK. 

But jump sector, and consumers are not shy of spending a few quid. Whitbread, the hotels and restaurant group, has announced that in the 13 weeks to the end of May, its like-for-likes grew 4.5% on the same period in 2011, with total sales rising almost 14%. 

For some reason, the British public is prepared to stick its hand in the wallet for the firm’s Costa coffees as well as stays at the Premier Inn. Maybe those cheesy, lullaby-like Lenny Henry ads have struck a chord in the national psyche? Costa coffee has seen total sales jump a massive 25.3%, Premier Inn 12.4%, and Whitbread has also recently unveiled plans to create 3,500 new jobs across its national network of offerings. 

It’s certainly a strange socio-economic shift: cash-strapped Brits shunning cheap home wares for expensive coffees. Perhaps Argos should scrap the unusual store and the frustratingly secretive queue-and-collect system for freshly roasted Arabica beans. Looks like that’s the way the market’s headed, folks…

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