Argos sales growth accelerates as it targets more affluent customers

Argos’s sales growth is accelerating as it efforts to target more affluent customers through improved product ranges, more exclusive brands and new digital store formats start to pay off.

Argos get set go
Argos’ latest marketing campaign highlights its new brand positioning

Sales at stores open for more than a year were up 2.9 per cent in the quarter ending 30 August, an improvement on the 2.3 per cent increase a year ago and marking the ninth consecutive quarter of growth. Within that, internet sales accounted for 43 per cent of sales while mobile commerce grew 45 per cent to account for 22 per cent of sales.

Speaking on a conference call following the results announcement this morning (22 October), John Walden, chief executive at Argos’ parent Home Retail Group, said Argos sees a “significant opportunity” to grow the business by widening its appeal among more affluent customers.

The retailer is doing this by improving its product ranges, securing deals to sell more “aspirational” brands such as Bose, and focusing on fewer power brands, including Heart of House and Chad Valley.

It has also launched a new brand positioning, “Get set go Argos”, that Walden said aims to portray Argos as “more innovative and energetic” and highlight its “market-beating proposition” and broader product range.

“Historically Argos’ marketing has been biased towards less affluent customers. By having an offer that is more appealing across the range of its customers, there is a significant opportunity to grow the business and build greater brand awareness,” he added.

  • Like-for-like sales at Argos increase 2.9 per cent.
  • Mobile accounts for 22 per cent of total sales, the internet for 43 per cent.
  • Total sales at Argos up 3 per cent to £1.77bn.
  • Sales at Homebase stores open for more than a year slow to 4.1 per cent.
  • Ecommerce accounts for 7 per cent of Homebase sales, up 12 per cent.

At sister brand Homebase, like-for-like sales were up 4.1 per cent. However, Walden said the Homebase brand “lacks distinction” while the customer experience was mixed.

Some 30 Homebase stores will now close this year, with the plan to cut the number of stores by 25 per cent. In a move that appears to rule out selling the business, Home Retail Group will pursue a three-year turnaround plan to improve productivity, strengthen its proposition and accelerate digital capabilities, starting with a new website and mobile apps.

“Customers don’t rate Homebase highly on customer service and pricing, while it has a large store estate relative to the market and trends towards digital,” he said.

Overall, sales at Home Retail Group increased by 3 per cent to £2.67bn.