IBTimes UK: Argos-meets-online-challenge-this-christmas-click-collect

IBTimes UK Video Link: Argos Meets Online Retail Challenge This Xmas


Christmas present spending has hit an even greater excess this year, an estimated £350 per person and £604 per household in total, by far the largest of any European country (Figure 1).

Black Friday, yet another US consumer import of dubious merit to these shores, has fuelled a high street spending frenzy akin to that of Amazonian piranhas swarming to feed on a hapless victim.

1: British Spend Big At Christmas

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Source: ING

While this might sound like the best of times for the retail sector, in reality this is far from the truth. One only has to look at the ongoing woes of supermarket giant Tesco (LON:TSCO), now 50% down for the year after four successive profit warnings (Figure 2).

2. The Fall and Fall of Tesco

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Source: Bloomberg


Surviving the internet's deflationary effect

But why is that? As always, UK shoppers are demanding ever-better prices on food and non-food goods alike – and we have become savvy as to the price-cutting powers of online price comparison sites like PriceRunner and Kelkoo, allowing us to sniff out the cheapest prices for all manner of goods, electrical or otherwise.

Equally well, access to online shopping sites while at work in front of our computer screens is very tempting for time-poor employees, and a boon for online retailers such as Amazon, eBay and Boohoo.

This shift in shopping patterns has evidently boosted online shopping to the detriment of traditional high street footfall, with online shopping posting 12% growth and hitting over £70bn this year, according to eMarketer (Figure 3).


3. Online Ecommerce Sales Over £70bn in 2014

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Source: eMarketer.com

Of course, this has not been bad news for all retailers – some traditional high street chains have in fact evolved quickly to meet the online challenge head-on.

One such successful shift in business model towards the "Click and Collect" online shopping paradigm has been Argos, whose listed mother company is Home Retail (LON:HOME), with a total of 44% of sales at Argos are now ordered online (Figure 4).

4. Argos Reaps the Benefits of Click and Collect Shopping

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