Clicks and mortar may just work

IT’S easy to be sceptical on Home Retail Group. Sales have fallen for three years on the trot, and benchmark profit – down 10 per cent last year – has been on a downward slide for five years. But its ambitious plans to revamp Homebase and drag Argos, best known for its hefty laminated catalogues, into the digital age appear just six months on to be bearing rather significant fruit.

Argos delivered its first like-for-like sales growth in five years of 2.1 per cent last year and crucially over half of its sales came via online and mobile orders. Admittedly, launching a digital strategy in 2012 is coming rather late to the party, but interestingly a factor that could be seen as a downfall – its 700-strong portfolio of actual shops – may be proving advantageous. Unlike purely online rivals such as Amazon you can physically collect your order in store, immediately if you visit, or the next day if you order online.

No more cards through the door saying you missed your parcel. And an actual person to complain to face-to-face if you don’t like what you receive. This appears to be appealing. Argos’ online check and reserve service accounted for 31 per cent of sales last year – its fastest growing channel. At Homebase, reserve and collect is also the driving force behind its admittedly still low internet sales.

While it’s wise to be cautious – Argos’s profits have fallen from £376m to £100m over the past five years, while Homebase’s profits are down 76 per cent over the same period – the situation is now clearly improving. And Home Retail Group still has cash to spend on its turnaround. It’s planning to splash £175m a year for the next three years.

Clicks and mortar may just prove to be a winning formula.