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shopping for the Company Case Argos: Creating Customer Value amid Change and Turbulence One of the biggest news items in the UK retail sector recently was for "Home and Garden," "Sports and Leisure," "Clothing," "Health the £1.4 billion acquisition in September 2016, of Home Retail and Beauty," "Toys," and many more. Group, the parent company of Argos, by Sainsbury's, one of the One critic noted that Argos's focus is on being a "working leading British supermarkets. Unsurprisingly, the highlights of this class" brand, implying that their customers are mainly less well-off. business decision are the huge sum involved and the associated However, former CEO John Walden disagrees with this customer risk in the complex marketing environment. So why was this con- stereotype and insists that while this may have been true five years sidered a good decision, especially after the British referendum hoven lot the earlier things have now changed at Argos; the company now tar- " in favor of leaving the European Union (EU) and the uncertainty in gets al demographics. Beyond the rhetoric of who their customers the business environment that follows? Setelah fied The key answers to these questions are not hard to find. The actually are is the issue of keeping those customers satisfied with seasoned products and excellent customer service. This has been deal makers can see the can see the gold in the track record of the the orga- strategically identified by John Rogers, the new CEO of Argos, as nization. Argos, the leading UK digital retailer, was established that the higos... the cornerstone of his approach in marketing after taking over the in July 1973 as the United Kingdom's first catalog retailer with job. The core objective is to ensure not only that the customers are ich There hiert oncurso only 17 stores; it now has over 750 stores throughout the United shoot e hut that the animatiested to stay encouraged to shop at Argos but that they are motivated to stay Kingdom and the Republic of Ireland, sen serving over 130 million loyal even when the competition tries to entice them. For example, customers annually. Approximately one-third of the UK population Tesco has a strong plan in place to price-match best-selling toys shops in an Argos store annually, buying one thing or another. by the end of this year. This is clearly in direct competition with Even before the agreement on the takeover deal, 10 Argos Argos. The retailer's mainstay is the continuous effort to clearly outlets that opened in Sainsbury's stores already had a record outperform competitors like Tesco and Amazon in meeting cus- 30 percent sales increase, and the takeover is expected to result tomers' needs and addressing their concerns. annu in annual savings of of Cu million million. As part of its attempts to create value for its customers, Argos Same-Day Delivery has undergone remarkable changes in the 21st century. The As the the retail environment in the United Kingdom becomes more design makeover has turned the tatty faux-wooden floorboards competitive, Argos also continues to explore various means of and display cabinets into tiled floors and LED display boards for maintaining and improving its market share. To this end, the easy shopping. It is thus not surprising that Argos was valued management has set a long-term goal of having 250 Argos col- so highly by Sainsbury's. Ultimately, the plan is to o have an Argos lection points that will be located within Sainsbury's to ensure center at at every Sainsbury's branch to ensure convenience in that customers get their ordered items more quickly than before for customers. While the in-stores catalogs are still in the acquisition of to Mike Coupe, the use at was meant to give customers more choice hi-tech outlets and "digital" stores. The idea behind all these in their purchasing decisions and make life life easier for them changes is that the customers of today are more informed and In 2015, Argos introduced a striking and daring of and daring policy-its deserve the best. Argos's approach is to ensure that value cre- " Delivery" service. As the name suggests, a ation for customers permeates every phase of the organization's could now order the desired products and and get them immediately activities. in the store or delivered at home on the on the same day thro day through a "fast tracked" option. This quickly became a very popular strategy and Catalog Retailing was considered a good gesture among the customers. It not only Although Argos is noted for a number of things in the British retail among the the organization's current clientele but sector, its core hallmark is its consistent focus on the satisfac- also wooed others keen on efficiency in in the marketplace. As the tion of the needs and wants of its target customers. This is not company experienced increase in in demand, it also realized that this only ensured through the thousands of products that it offers its would require a a commensurate increase in resources, hence the customers both online and across its various stores in the coun- recent increase in its delivery vans to about 800 and the 30,000 try, but also in all the phases that encapsulate the customers' people employed in different areas of the organization, including in experience in their transactions, from placing the order to receiv- customer service, packaging, and order delivery, across its 845 ing the items. Argos's focus on catalog retalling is based on its stores. In the run up to Christmas sales in 2016, Argos reportedly quest to satisfy customers through convenience. The idea is to hired several additional seasonal staff, adding to the current number make it easier for customers to meet their needs, especially as the company deals in a variety of products. The shopper checks Digital Retailing the catalog, places the order, and receives it shortly afterwards. Developments in the world of technology are transforming busi- So, its twice-yearly catalog and internet site aid the way the es- nesses in various sectors, and retailing is no exception. Based tablishment creates value for its customers. on data from the food and grocery research charity IGD, 5 per- cent of grocery sales in the United Kingdom are done online. Market Offerings This small figure is due to a variety of challenges associated The assortment of products offered by Argos to its various cus- with this transaction mode, but this is very likely to improve over tomers across the country illustrates the core value that it offers time. As a key organization in the retail sector in the digital age, its target market. The organization is noted for offering a wide Argos is also working toward transforming itself into a "click and range of products that are categorized on its websites to make collect" business. Toward the end of 2012, Argos announced shopping easy for its online visitors. For example, customers who its mission to rediscover itself as a digital retail leader. John are interested in products such as TVs, telephones, or computers Coombe, the chairman of Home Retail, Argos's parent orga- would simply need to click on the "Technology" link to be ushered nization, remarked that Argos is not only an icon of the British into the world of these gadgets. Similarly, there are categories high street but also a leading player in the digital transformation CEO of of Sainsbury's, was a customer Same Day santorced loyalty amon
percent Questions for Discussion 1-18 To what extent do you think the acquisition of Argos by Sainsbury's resulted in delivering superior value to customers? 1-19 How is the concept of share of customer illustrated in the case study? 1-20 To what extent would you agree with the claim that Argos's marketing management orientation is a mar- keting concept? Justify your standpoint with relevant points from the case study 1-21 What are the key actions taken by Argos that show that the organization is following the changing marketing landscape? 1-22 in view of the stiff competition in the UK retail sector, suggest various ways by which Argos could continue to provide better value to its customers. of UK retailing business. In June 2016, a report indicated that Argos's Internet sales had gone up by 16 percent, the strongest record in three years. Around the time Argos was being sold to Sainsbury's, John Walden debunked the view that being digital would be like operating a traditional retailing outfit with just one store. According to him, it would still involve hiring people, bring- ing stock in, expanding, and upgrading. Around 60 Argos's sales are now done as online transactions, which is also closely linked to the fact that the organization is the first retailer in the United Kingdom to make over £1 billion through mobile payments. Its hefty catalogs are being replaced by iPad-style ter- minals to facilitate order processing. All of this has helped Argos make seamless entry into the digital world in retail business. Special Offers Argos' commitment to delighting its customers is not only evident in the increasing range of products it offers its customers and the sleek distribution system, but also in the various promotional programs it offers. Some of these are offered to existing loyal customers through the Argos loyalty card scheme while others are to attract new customers. Periodically, it sends its custom- ers various promotional offers, money-off vouchers, and other financing offers. When Black Friday hit the UK high street and its public awareness grew, Argos was quick to explore the opportu- nity through various special price-cut offers that also attracted a response from many new and existing customers. About 12 mil- lion customers reportedly visited the company's website on the 2015 Black Friday, resulting in 18 purchases in a second. The expectation for 2016 that around percent more sales than what was recorded for the previous year will have been made. John Rogers also estimates that at least 70 percent of its orders will be taken online on Black Friday while normal trading will ac- count for 50 percent. The Argos gift voucher promotions, which are managed by the company's affiliates, offer its customers something to fall back on during their various subsequent pur- fall back on chases. The periodic product-specific special offers on certain products like furniture, computers, and TVs also constitute part of the package that keeps Argos' stores busy over the years, and with this, it generates customer value profitably. Argos and Society It is tempting to conclude that Argos's focus on maximizing cus- tomer value is predominantly driven by profit. However, evidence suggests that the company does believe in taking responsibility for the environment, improving the local communities, and purs- ing a number of initiatives that revolve around long-run benefits for tramare and en ein customers and society. Argos is focused on reducing the amount th of resources used in its operations and the CO2 (carbon dioxide) emisionit ! emissions it produces. It clearly communicates its cue tials s catalog, which is 100 percent recyclable, it sources the paper it uses from sustainably managed forests and encourages customers to recycle old catalogs in their possession as these have proven useful to newspaper print manu- facturers. According to the firm, it has already been able to recycle 91 percent of waste from the business, had a 9 percent reduction in its carbon footprint, ensured a 35 percent reduction in the waste sent to landfill, and has established a goal to reduce its CO2 emis- in sion per square foot by 40 percent by the year pacts in the local community are also notable: it supports various charities and other related organizations, and it specifically chose Macmillan Cancer Support as its charity of the year from 2015 to 2017. Argos has shown that it is quite possible to create value for customers and still build relationships with stakeholders. 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