ARGOS BUSINESS

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Up until October 2006 Argos was owned by GUS plc. However, at this time the Argos business came under the control of the Home Retail Group, this new company also includes Homebase. Argos began in 1973 and continued to operate on its own up until 1998. At this time Argos was then bought by GUS plc. In this same year the Argos website was launched. In 2002, GUS plc also took over control of Homebase. A year later Argos released the Argos Extra catalogue, which offered around 17000 products, giving a much broader choice for customers.

In 2005, Argos bought the Index brand, which included 33 stores. Argos Extra went national, and sales from the Argos online website hit 1 billion. In 2006 Argos demerged from GUS plc to become the Home Retail Group. The Argos business now has over 1000 superstores throughout the UK, and they plan on opening 30 stores every year. The business sector that Argos operates is very lucrative, the home and general merchandise shopping sector is worth 59 billion per year!, and Argos is the market leader with around a 9-10% share, so you can see just how much money is at stake.

In one of my other pages i asked just how many Argos vans could be seen every day on our roads, well this is with good justification because Argos makes over 7 million deliveries each year. With all these deliveries it is no surprise that Argos and Homebase had sales of almost 6 billion last year. This is a vast amount, but it is certainly not an even share between the two. Argos is by far the most profitable business, with sales of just over 4 billion. Argos also has over 4 million customers through its website and phone orders, and via its stores it caters for 130 million customers each year. The Argos website is the second most popular retail site in the UK.

The Argos business has continued to grow every year, and this growth has increased more rapidly since it was bought by GUS plc in 1998. Since then sales have jumped from just under 2 billion, to almost 6 billion. This may look impressive, but the actual operating profits are around 300 million. One of the key advantages that Argos has over all its competitors is that it offers more choice because it has more products than anyone else. This is possible due to the huge number of suppliers Argos has, and the special relationships they have. Now this can pose problems for the suppliers because we now have the "tesco effect" again, meaning that Argos squeezes their suppliers on prices so they can offer their products for less to us, the customers. The customers get a great bargain, but the suppliers make less profit, and no doubt find it more difficult to pay decent wages to their employees. We could be in a catch twenty two scenario, because lower wages mean people are less able to afford the very same products that Argos are selling.

These "special " relationships with suppliers also means Argos can get ahead of the game by buying more products for less, and also enabling them to source more in-demand items, helping Argos to take the lions share, thus increasing profits. Argos is now the number one in the UK for sport equipment, toys, jewellery, small appliances, furniture and homeware

In October 2007, Home Retail Group bought 27 Focus DIY stores for around 40 million. in 2008, these stores will be converted to Homebase stores at the cost of about 29 million. This will greatly expand the Homebase business, and whilst the profits will take a hit next year, it would seem that these stores will be making profit in the not too distant future. Another important expansion plan for Argos is to open stores in other countries, and Argos is to open in India. World domination is not far away!