To Argos first, where sales at stores open at least a year fell by 8.5% in its final quarter. Oddly, that seemed to be driven by video games sales, which fell by more than a third. Could the nation’s youngsters have discovered the great outdoors? Internet sales over the year grew slightly – they now account for 40% of the chain’s total, up from 36% the year before. But falling high-street sales were reflected by the 12 stores it closed, while it said another 35 leases will come up for renewal in the next year.
You can understand Argos’ difficulties: after all, many of its customers have a low income, and are thus disproportionately affected by the downturn. The same can’t be said of Homebase’s customers, though: in fact, DIY stores should, by rights, be doing rather well as consumers choose to do up their homes, rather than buy new ones. Nevertheless, like-for-like sales at the chain dropped by 6.5% in the year to the end of February – despite the fact that gross margin was up by 175 basis points.
So what’s going on? Obviously, the lethargic economy is partly to blame – but there are also concerns the group (and Argos in particular) is suffering from Woolworths syndrome – ie. it’s not really sure what it’s trying to do. Or, as James McGregor from consultants Retail Remedy put it: ‘When it comes to their identities, both are clutching at straws.’
What’s encouraging is that new Argos CEO John Walden – formerly of Sears and Best Buy – has been given a free rein to ‘examine all the options’ (that’s putting it delicately) to save the business. Whether that means a lot more store closures as it moves online, a la the rest of the retail world; or simply a drastic change of image (goodbye tiny blue pens?) is difficult to say. Presumably, it’ll involve a combination of both.