Bloomberg News

Argos’s New CEO Considers Shakeup to Fight Back Against Amazon

February 23, 2012

Feb. 23 (Bloomberg) -- Home Retail Group Plc’s Argos chain will consider offering other retailers the use of its 750 stores as order-collection points and may close some outlets as it seeks to revive slumping sales, its new managing director said.

Changes to the shopping experience will also be evaluated, John Walden, who joined three days ago, said in an interview today, without being more specific.

Argos could potentially use the stores “in a different way,” Walden said. “I will certainly look hard at the store franchise and how we use the stores both from a customer experience standpoint in terms of convenience and speed, but also how else can we use the stores strategically.”

The executive said Home Retail Chairman Oliver Stocken has given him a clean sheet to consider the future of the chain, where sales slumped 8.8 percent in the 18 weeks ended Dec. 31. , Walden has two decades of retail experience in the U.S. including a year as chief customer officer at Sears Holdings Corp. and eight years in various roles at Best Buy Inc.

Using outlets for other purposes such as offering online retailers the space for their customers to collect orders “is an interesting possibility” Walden said. Store closures are “definitely something” that the retailer would consider as leases come up for renewal, though all are profitable, he said.

“We need to determine how we best use those, whether we merchandise them differently, whether we have different offers in stores or use them for other purposes than picking up product in stores,” Walden said.

‘Strategic Asset’

At Argos stores, shoppers pick products from a catalog and have it brought out from a back room or delivered. The chain’s sales have declined as supermarkets including Tesco Plc and Web retailers such as Amazon.com Inc. have expanded into areas including toys and consumer electronics, according to analysts.

Walden says the small-format, town-center locations of the outlets may help Argos to differentiate from the competition.

“The stores potentially are a real strategic asset for us as we think about a multi-channel offer that is better relative to people we compete with, whether that’s Amazon, other e- tailers or grocery chains expanding their offer or others,” he said. “They can be used and assembled in a way that we could potentially offer a real difference in the market place.”

Walden said he shared the observation that shopping in Argos stores can be a difficult process for customers, and take longer than it should.

“We will see what we can do to re-evaluate the customer experience and that’s not the first time I’ve heard that.”

The executive said he didn’t know whether Argos’s own-brand offerings such as Bush electronics and Chad Valley toys are as well-displayed or as well-known as they should be.

Home Retail, which had net cash of 200 million pounds ($314 million) as of Aug. 27, has the financial “flexibility” to make investment in change, Walden also said.

--Editors: Paul Jarvis, Andrew Noel

To contact the reporter on this story: Sarah Shannon in London at sshannon4@bloomberg.net.

To contact the editor responsible for this story: Sara Marley at smarley1@bloomberg.net


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