Our strategy

Home Retail Group’s strategy is to create long-term value by offering leadership in convenience and choice for customers in an emerging digital age.

The strategy uses Argos as a base with which to build contemporary, market-leading retail capabilities and a leading customer offer across the many ways customers shop, purchase and obtain goods – including digital (online and mobile), store formats and home delivery. These capabilities and multi-channel offer can be extended to Homebase, Habitat and potential partners to accelerate their competitiveness and achieve long-term growth for Home Retail Group.

The Group strategy is built around five elements of a competitively advantaged and differentiated customer proposition: product choice, digital, convenience, human and financial services.

Product choice

The scale and strength of our retail brands drives market leadership in general merchandise product categories. Home Retail Group offers over 90,000 products across Argos and Homebase, including a substantial element of exclusive and own-brand lines such as Habitat, and is continually expanding its offer to build credibility, choice and differentiation. We utilise our scale advantage to source products for our customers, enabling us to offer them a broad choice of products at competitive prices.

Digital

Retail has seen technology drive a fundamental and permanent shift in the way customers shop. Increasingly customers choose to shop online or on the move through mobile devices. The Group strives to develop digital customer experiences that are intuitive, inspiring and consistent across many devices, and provide information to customers that is helpful in their purchase decision such as an up-to-the-minute view of stocking levels for each product. Multi-channel experiences are core to what we do, and the reason we have an ongoing focus on developing our successful internet and mobile commerce channels.

Convenience

In a digital world convenience is being redefined to mean the ability for customers to obtain our products at the location and the time they desire. The presence of a local store remains critical for many customers, to meet traditional shopping needs and as locations from which to ‘click & collect’ items previously ordered online. Home delivery options are equally important to customers. Home Retail Group operates a nationwide distribution network across multiple distribution centres and over 1,000 stores. Our logistics network is based on a well-developed infrastructure that allows us to continue to focus on improving the speed at which products can be delivered to our customers, through whichever channel they choose to shop with us.

Human

Our 47,000 colleagues working in stores, home delivery, distribution and contact centres are fundamental to how our customers experience our brands. They are a key factor in building trust with customers, particularly in an increasingly technology-driven environment.

Financial services

Both Argos and Homebase are supported by an in-house financial services offer. Our Financial Services business offers a range of credit products which make it easy for our customers to buy the products they want, when they want.

Our retail brands

Each of our retail brands is pursuing comprehensive strategies to help deliver Home Retail Group’s ambition.

Argos Transformation Plan

In 2012 Argos announced its five-year Transformation Plan to reinvent itself as a ‘digital retail leader’. This Plan has four principal components:

  • Universal customer appeal
    •  Ensure competitive pricing and value
    •  Extend product ranges to build both authority and choice
    •  Strengthen both exclusive and own-brand offer through fewer, cross-category own brands
    •  Enhance product quality and design to meet the needs of new customer segments
    •  Reposition brand and customer experiences
    •  Expand customer reach and build loyalty
    •  Develop large-scale customer data collection, insight and personalisation capabilities
  • Reposition channels for a digital future
    •  Create market-leading digital customer experiences
    •  Invest in systems to drive online sales growth
    •  Innovation of the store experience, including fast-track collection and tablet browsers
    •  Shift the paper catalogue in Argos to a supporting role for the digital offer, and develop a market-leading digital catalogue
  • More choice available faster
    •  Provide high levels of availability to our customers
    •  Exploit the strategic advantage of having efficient distribution, and collection points in local markets across a variety of different formats
    •  Introduce market-leading fulfilment options to complement the immediacy of in-store collection
  • Maintain a lean and flexible cost base

Homebase Productivity Plan

In 2014 Homebase announced a three-year Productivity Plan with the aim of strengthening the foundation of Homebase store and digital capabilities, and improving its customer propositions. This Plan has three principal components:

  • Improve in-store effectiveness
    •  Down-size the store estate targeting a 25% reduction in stores
    •  Improve customer in-store experiences across stock availability, merchandising and customer service
    •  Argos and Habitat concessions within Homebase
  • Strengthen customer propositions
    •  Improve promotional effectiveness and selectively invest in pricing
    •  Further iterate refit trial stores, including product displays to help our customers with ideas and inspiration
    •  Strong offer of both exclusive and own brands
  • Accelerate digital capabilities
    •  Leverage Argos investments in multi-platform apps, features and functions
    •  Agile development via the Argos digital hub
    •  Improve product fulfilment including named or next-day delivery, and nationwide click & collect through Argos estate

Financial management

We have a strong track record of delivering significant organisational and infrastructure changes which improve the flexibility of our businesses and reduce costs, while maintaining or improving our operational standards. This means we will maintain a lean and flexible cost base through:

  • Ongoing cost-reduction programmes
  • Renegotiating improved store lease terms as existing leases expire
  • Continuing to re-shape the store estate, including the development of different format options in Argos, together with a store reduction programme in Homebase

The Group has strong operational cash flow characteristics and it has £309m of net cash as at 28 February 2015. In addition, we have a £250m committed borrowing facility which is undrawn and which expires in March 2019. This financial strength will enable us to deliver on the investment plans incorporated in both the Argos Transformation Plan and the Homebase Productivity Plan.

You can read more about our progress in all areas of the Argos and Homebase strategies in the Argos and Homebase business reviews. There are areas of risk and uncertainty associated with our strategy that you can read about in the principal risks and uncertainties section.

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