Role Of Technology In The Operations Of Argos Marketing Essay

The organisation, ‘Argos’ was founded in 1973 and is part of Home Retail Group (Parent Company). It is a generalized store, which sells a vast number of household products such as: household appliances, toys and games, DIY, sports and leisure, etc. According to the Times:

Argos has a formidable grasp in most of the aforementioned markets. This establishment’s business model is based on a simple initiative: combine the comfort and the convenience of home selection (catalogues, internet, and phone) with the nearness of its high street stores.

Since it first started out, Argos has always been noticed for its innovative use of technology similar to the way other organisations like Walmart, Amazon or Tesco utilize this type of technology. Computer systems have always had a huge impact on the way Argos functions as a retailer. Argos uses ICT to monitor stock levels, to recognise market developments earlier, to avoid stock shortage situations and to eliminate product theft.

Tesco has a very similar business structure/model. Argos is convenient because of its integration with its virtual online business and its retail stores, just like the way Tesco operates; using its stores as its main core of operations. Argos also publishes two catalogues a year, the spring/summer edition at the start of January and the autumn/winter catalogue around mid-July.

Finance and Accounting

Argos is one of the UK’s major non-fare retail groups. In 1998, after poor financial results, it was taken over by GUS (Great Universal Stores) plc. The then new appointed managing director Terry Duddy then set out to improve its performance. Part of Terry’s job was to change the values and beliefs (the culture) shared at Argos. As stated in the Times 100 case study:

“The culture he (Terry) developed is one that values: customer service, teamwork, encouraging managers to take their own decisions, respect for each other and wanting to be competitive and improve.”

The Times then goes on to say that “these values were clearly communicated to the employees; so that they felt more a part of the business.”

This clearly shows how Argos consulted with its staff to build a sound team, with team values such as:

Welcoming change

Being impatient to win

Having lots of opportunities

Working in teams

Argos has built these values into its culture. To support this change, they also provided good introductory training, promotional opportunities and performance goals. As well as changing the culture at Argos, managers changed the marketing fusion. This consisted of the traditional ‘Four P’s’ along with other issues which Argos thought important.

Product. Market studies showed that the Argos brand was seen as dull and old-fashioned. Argos then modernised the brand with a new logo and new slogan: ‘Brighter Shopping’. It also extended its product range.

Promotion. Argos advertises to separate market sectors. It divides its market by traditional ways but also uses ‘brand awareness’. As quoted from the Times:

“The ‘get it’ group – who know and understand the brand – are used to help bring on board the ‘don’t get it’ group.”

Price. Argos continually keeps its prices as low as possible.

Place (distribution). Argos continues to expand its retail market by opening new shops. Its catalogue is a key part of its distribution system and is “found in 70% of British homes. [2] “

People – Argos provides good training for its staff as part of its culture change.

Process – Alongside traditional shopping methods, Argos introduced ‘Quick Pay’ and ‘Text and Take Home’. (Customers’ text to see if an item is in stock, and then reserve it to collect later) ‘Quick Pay’ cuts down on queues by allowing customers to check availability, order and pay using credit or debit cards.

Physical environment. Argos invested in improvements to make shops more appealing to consumers.

As a result of these implemented changes to Argos’s culture and the employment of technology. Argos now out-performs the market as a whole:

“Between the periods (2002-2003) sales grew by 13% and profits by 17%. [3] “

Sales & Marketing

For advertising, it (Argos) uses a variety of different media to promote its retail market, such as: television, radio, newspapers, catalogues, magazines, posters and the internet. Depending on which is the most beneficial and efficient at the time. This method of utilizing technology is very effective relating to attracting new and old customers namely by proposing:

Value for money

Convenience.

Marketing managers at Argos are continually concerned with addressing questions such as:

Who are our consumers? (Argos wants to discover as much information as possible on its customers in order to meet their requirements.)

Are we proposing enough variety of products, appeal and convenience?

How can we gain advantages over competition? (How is Argos different from the opposition?)

How can we defend what trade we already have and how can we expand?

How do we successfully interact with our customers?

According to the website, ‘computerworlduk’, this year Argos’s internet “website accounted for 32% of the organisations total sales, 22% of which used the online click and reserve service”. This shows how much of a positive impact the technology of the internet has had on this retail giant. However, compared to last year’s same interim sales review this year was 11% down, but despite the 11% fall in profits, online sales had significant growth.

Argos sales (£M): 2006 = 3,859, 2007 = 4,164, 2008 = 4,321, 2009 = 4,282, 2010 = 4,347Description: % Sales across more than one channel: Totals: 2006: 32 2007: 35 2008: 37 2009: 40 2010: 43 2010: Home delivery Store – 7.7 Phone – 1.6 Internet – 9.5 Check & Reserve Phone – 9.5 Internet – 22.5

Sales (£M) (Picture on left)

Definition: Sales in the 52 weeks to 27 February 2010 increased by 1.5% in total. There was further strong growth in televisions and personal computers, offsetting weakness in the video gaming market. Toy sales grew strongly. Challenging market conditions continued in home-related areas such as furniture, but the rate of decline moderated over the year. Source: audited financial statements.

Sales across more than one channel (%) (Picture on right)

Multi-channel sales grew to £1.9bn or 43% of Argos’ sales. The internet represented 32% of Argos’s sales; over two-thirds of this or 22% of Argos’ total sales were customers using online Check & Reserve for store collection, with this channel growing by 36% for a second year in a row. Definition: Percentage of sales across more than one channel. There are three ordering channels: the internet, phone or store and two fulfillment channels, store or home delivery. Source: Measured internally.

Argos has a multitude of unique marketing and sales strategies in retail. Argos’s stated mission statement is:

“We provide our customers with the best value for money through the most convenient shopping experience”.

This statement clearly sets out the main areas which differentiate Argos from its rivals, namely by offering its customers. As stated in 2002 by managing director of Argos, Kate Swann. Customers can:

Pick up a catalogue

Choose at home (internet)

Use a store to collect or order

Use a store for collection point

Order at home (telephone)

Use home delivery

She also specified that Argos’s drivers for growth were:

Small kitchen appliances (which it was in top position in 2001 for both value and volume)

Beds and mattresses

Watches

Jewellery

Portable audio

Toys

Retail Structure

Tesco was the first to use such a structure; by combining its online website(s) with its supermarkets. Argos most likely adopted this similar strategy based on Tesco’s overwhelming success.

However, Argos retail stores have minimal staff (unlike Tesco), and exploit technology to its full potential (like Tesco and Amazon). On an independent case study by Databank Consulting, they stated that:

“Argos’s business model is a multi-channel approach: customers are offered different types of outlets for shopping. Prior to the introduction of the new e-channels, the customers could only browse the offer in the catalogue or directly at the store [4] “

They also suggested that Argos’s success as a retailer has been based on its influential decision to adopt a technological based approach, by stating:

“The Argos website was launched in 1995…Nearly 10 years later, Argos can be called a pioneer and leader in e-commerce. With www.Argos.co.uk, the company became UK’s number two “Clicks and Bricks” retailer, combining both store based and online sales. [5] “

Before its decision to introduce a system called ‘Nominated Carrier Scheme’, the problem of receiving and delivering products was problematic and complicated, because every supplier has its own form of transportation, its specific method of documenting and specific time schedules. The decision was therefore to adopt a single system to bring together all the produce from suppliers and have them offered as only one delivery. This stock chain solution by UPS receives, validates and handles shipments from several hundred Argos suppliers. UPS then checks that the order is accurate, merges it with other orders and then sends it to Argos’s own warehouses for the final delivery.

Possible Improvements

Argos could implement an improved stock ordering and restocking system. Argos stated that it would “continue to roll out a ‘voice put away’ process across all stores over the next two years”. They then went on to say:

“This technology (‘voice put away’) helps to automatically guide stock room assistants to the correct location [6] “

The key benefits of this technology would be; quicker processing and enhanced stock accuracy, thereby improving availability of stock and the level of customer satisfaction.

Another possible improvement could be directed towards their gaming sector; as this is one of the areas they do not perform well in. They could do this by adopting a similar strategy to gaming stores like; ‘Gamestation’ or ‘Granger games’. Which will include a trade in system for games and the value of the trade in(s) would be deducted from their chosen purchase from the Argos stores. Argos could then go on to sell the traded in games.

The key benefits of this adopted strategy would be; increased sales at Argos as many people who buy games would be more inclined to shop there, increased revenue and a larger share of the gaming market.

Conclusion

Overall, this organisation effectively utilizes technology for growth, stability and convenience for both Argos and its customers. Argos has gained competitive advantage over competitors by distinguishing itself on the “basis of providing the best value for money for customers through the most convenient shopping experience [7] “. Tesco was one of the first organisation giants to integrate its already existing chain of supermarkets with a virtual online one, Argos uses the similar strategy but with a difference; convenience of reserving products online and collecting at the customers nearest retail store (there Click and Reserve service). The dominance and success of Argos (and other organisations like Tesco and Amazon) are a result of each of them applying “their own unique shopping experience [8] “. Argos is popular and successful because it is focused around meeting the customer’s needs. By incorporating new technologies, Argos continues to provide the methods that are most appropriate to the modern-day retailing experience.