A year after Sainsbury’s splashed out £1.4 billion to acquire Argos and Habitat owner Home Retail Group, Mike Coupe said that the company’s rapid expansion will help take the fight to rivals such as Amazon.
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The launch of Argos click and collect in Sainsbury’s convenience stores is part of a longer term plan to have 2,000 “points of presence” for the general goods retailer.
Coupe said: “Customers are demanding more and more flexibility and more speed in terms of the way they shop with us.
“We would argue very strongly that with the 2,000 points of presence, the great Argos digital capability and the supply chain that backs that up – and the fact that those businesses have access to 27 million customers a week – it gives us a reasonably powerful combination to compete in future.
“But I don’t pretend for a moment that Amazon and others aren’t going to be significant competitors.”
The extended roll-out of click and collect, which will enable shoppers to pick up Argos and Tu clothing products at convenience stores, comes alongside an integration programme that has seen the expansion of Argos stores with Sainsbury’s supermarkets.
Sainsbury’s currently has 100 “stores within stores” and plans to increase that to 150 by Christmas as the battle for festive shoppers begins to pick up pace.
Coupe added that he envisages a time when Sainsbury’s, like Amazon, partners with independent retailers and uses them as delivery points for Argos goods.
“Over time you can imagine there might be different kinds of arrangements, with local community stores for instance as drop off points,” he said.
The chief executive also wants to sell new categories through Argos, such as clothing. Since its takeover, Argos has enjoyed a period of solid sales growth while Sainsbury’s has floundered, which has made the deal look like a shrewd move.
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“We would have faced more criticism if Argos hadn’t performed comparatively well during the period we’ve owned the business,” Coupe said.
“But the real test is not whether it trades well for a year, the real test is ultimately whether it makes sense over the medium to long term.”
Eyebrows were raised when news of the takeover first broke last year, with observers musing that a tie up between upmarket Sainsbury’s and value-led Argos was a brand mismatch.
But Coupe again dismissed the notion: “I was always confident. There was a sense that if a Sainsbury’s customer saw an Argos customer walk towards them, they would cross the road or indeed turn around and run away.
“But you don’t find anybody that says ‘This is a really bad idea, and I will never shop at Sainsbury’s again because there’s an Argos’.
“They are both mass market consumer brands, two-thirds of the population shop at Argos, two-thirds at Sainsbury’s and 40 per cent at both – it’s the sweet spot of where you want to be.”