Sainsbury’s purchase of Home Retail Group has been everywhere, but only half the story is being told. Arguably the most important half of the picture is what’s being missed.
The real impact will not be solely in-store, but the online, logistical and fulfilment capabilities it unlocks for Sainsbury’s. It could well be what drags the slow to adapt grocery market into the 21st century.
Argos has a formidable online multi-channel capability, unmatched by other retailers, and if applied to the Sainsbury’s model the implications could be huge. Almost overnight it will enable Sainsbury’s to rival Amazon, not only on grocery space but overall. Online is the real battle ground for grocery chains, who are struggling more than any other area of retail to innovate and strike success in the online space.
This is the value Sainsbury’s is really set and looking to gain from Argos; how to add a new era of convenience to the grocery market and the next level of intelligence in how they break down barriers to sales.
Customer shopping habits are changing rapidly, with an increasing pressure on retailers to ensure their online offering matches up with consumer expectations. Stores are less about acting as sole retail points, and more about being enablers for the convenience of online. With its 750 outlets and catalogue of over 50,000 products this is what Argos does better than any other. This is most critical in the online grocery market, which at this point is up for grabs.
The retailers we are seeing have success in-store, such as Aldi and Lidl, haven’t seen this success online as of yet. Online only grocery retailers, like Ocado, have seen success but nothing like the opportunity that Sainsbury’s has at its feet.
No one in the UK is better at multi-channel retailing than Argos. It has built the digital stores of the future, which are transformational in the way people browse, buy and collect products. This is the competitive advantage that has seen Argos transform and flourish online. Sainsbury’s has a lot to gain from looking at what Argos does online, and applying this to its own business.
Argos will make Sainsbury’s smarter about how it predicts and manages retail periods to match the way people now shop. Argos’ check and reserve service, the ability to pinpoint stock and deliver this to the customer as an almost real-time click and collect, is unsurpassed in the UK.
This deal is much more interesting than a discussion of super-stores and real estate sell-offs. Rather, it has the potential to drastically change what the grocery industry looks like in the next year.