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Argos Retail Group
Argos Retail Group (ARG) continued to build on the
strength of the Argos and Home Shopping brands and on its mission of delivering
exceptional choice, value and convenience. Profits of £255m were 20% ahead
of last year.
ARG is today a leading multi-brand, multi-channel retailer, enabling consumers
to match the shopping experience to their particular needs and lifestyles.
The shared infrastructure and merchandise pool facilitates new product
development and significant economies of scale.
Argos
Argos was undoubtedly the star performer within ARG,
with sales up 19% and profits up by 27%. Against a backdrop of strong
consumer demand in the UK, Argos continued to outperform its markets through
a programme of major growth initiatives.
The product range was considerably expanded, with over 9,200 products
in the latest Spring/Summer Argos catalogue, an increase of 7% on the
previous one. This included expansion into new areas such as white goods,
digital cameras and office equipment.
Prices were lower on many of the product lines, with independent consumer
surveys showing that the Argos reputation for value had been strengthened.
The programme of store openings and refurbishments was accelerated to
provide greater customer convenience and an enhanced in-store experience.
An increasing number of customers chose to have purchases delivered directly
to their home, with Argos Direct now accounting for 16% of sales.
Argos Additions, the fashion and home catalogue, was rolled out nationally
in January 2001. This provides competitively priced products from the
Home Shopping range and has generated sales this year of £130m, compared
to £55m in the previous year.
E-commerce continued to grow, as more customers opted for the convenience
of shopping online. Sales via the awardwinning Argos website more than
trebled during the year. The Jungle.com website, best known for computer
products, was re-launched and new systems put in place for improving customer
service.
Home Shopping UK and Ireland
UK Home Shopping made further good progress in creating a smaller, but
more profitable agency business. At the same time, it continued to explore
opportunities in the growing market for direct catalogue sales.
The number of active agency customers continued to reduce, as the business
focused on more profitable customers, while average sales per agency customer
increased by 7%. This was supported by a range of marketing initiatives,
including new seasonal and specialist catalogues. The business also began
introducing customer relationship management technology to ensure that
customers receive correctly targeted communications and are directed towards
the most appropriate catalogue.
Sales through the main direct catalogues, which include Marshall Ward,
Abound and Style Plus, increased by 17%. The Abound catalogue was launched
in August 2001 and offers contemporary, branded fashions at high street
prices, with flexible credit options. In its first season, Abound attracted
more than 100,000 customers, many of them new to Home Shopping.
Financial Services
The Argos store card was launched nationally in January 2001 and has been
very successful, with over 625,000 account holders at the end of the year
and outstanding balances totalling £105m. The store card is creating additional
sales at Argos, as well as providing a valuable source of customer information.
Over 5% of Argos sales were made using the card.
Argos Personal Loans was launched in February 2002 in a further extension
of the Argos brand. The credit management systems were developed by Experian,
which also processes the Argos store card.
Home Shopping Continental Europe
Wehkamp in The Netherlands increased sales by 5% and now accounts for
over 80% of Home Shopping’s sales in Continental Europe. At Halens, our
Scandinavian business, sales were slightly down in a very competitive
market.
Wehkamp celebrated its 50th birthday during the year, creating substantial
publicity for the business. Its popular website generated 12% of sales
and the Wehkamp catalogue was voted by consumers to be the best in Holland.
Both Wehkamp and Halens are working closely with ARG in the UK to improve
their product sourcing.
Reality
Reality, the Group’s logistics and customer care business,
continued to make good progress in reducing costs for ARG and winning
external contracts. Sales to external customers in the core logistics
and call centre activities increased by over 10%.
Home delivery has become a vital part of ARG’s multi-channel offer and,
since April 2002, Reality has been reporting into ARG. At the same time,
Experian has taken over responsibility for call centre services to external
customers, principally financial services companies.
Reality was created from the Group’s warehousing, delivery and call centre
operations and has been successful in optimising the cost effectiveness
of these major assets. The call centres, in particular, have been working
at near maximum capacity for most of the year as a result of the growth
in demand from ARG and external customers. New state-of-the-art call centre
facilities are now being opened in Worcester to manage the increased demand.
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