In the news these days, it may seem like it is all doom and gloom for Britain's high street retailers, with a number of big names folding in the past few years. With familiar chains like HMV, Comet, Clinton Cards, Allders and many more going into administration in the last two years, it is clear that many stores are struggling, either because of the general economic climate in the UK, or because, in the case of entertainment chains like Blockbuster and HMV, demand for their offerings has fallen due to changes in how people get their media.
It is not all bad news, however, as back in October Argos announced that they have seen profits rise dramatically, with first half profits for 2013 reported at 27.4 million. This trend is likely to continue as we go into the Christmas period, given Argos and their Christmas Gift Guide are essentially a Christmas tradition in the UK, and much of the stock they sell is well suited to being given as presents.
So what is Argos doing right?

Unique Business Model Well Suited To The Modern Age

Argos has been around for decades, and has always operated in much the same way in its physical stores. Rather than displaying products in the shop, people choose them from a catalogue either in the store or at home before going to the store. The products are, if in stock, kept in a warehouse at the back of the store, and returned to the customer to take home with them. Of course, with the rise of online shopping there are various variations on this theme, for example you can order catalogue items online and arrange to pick them up in the store, you can check whether things are in stock at your local branch before heading out there, or you can simply order them for delivery as with any other online shop, but the basic model is still the same.
This offers Argos a number of benefits. They can keep the cost of running their branches down as they don't need to worry about displaying things and having enough shelf space for all of their ranges. This means they can sell a large number of items from a comparatively small shop front. They can carry as many products as a department store with a shop front the size of the average shoe shop.
This model is not only great for keeping operating costs down and allowing more competitive pricing, it is also very in tune with modern shopping habits. Back in the 80's and 90's people were often wary about shopping at Argos (though the low prices often won them over), because they were used to being able to see and touch a product before committing to buying it. These days, of course, people shop online all the time and have no real misgivings about buying something based on pictures, specs and reviews, so customers are perfectly comfortable with the way Argos works. It also offers a benefit over online shopping in that you can get the item you want right now, rather than waiting a few days for it to arrive from an online retailer.

A Good Transformation Strategy

Perhaps in many ways because of the way Argos works, they have been able to transition to using the latest web technologies very easily. For example, it is surely easier for a company who has been producing catalogues of their entire product range for decades to produce a catalogue app for their customers, and Argos have done just that as part of what their parent company Home Retail Group calls the Argos Transformation Plan. They have also made the annual Christmas Gift Guide available in digital format, and now allow for mobile shopping direct from their apps.

Diverse Products Suited To A Poor Economy

Argos have never been known for selling the most upmarket products, and many people have, in the past, mocked them for their downmarket jewellery range and their wide selection of footspas and other items people notoriously buy and only use once. However, the business model Argos has means they have one of the most diverse ranges of products of any store, and while conventional department stores like Debenhams and House of Fraser focus on luxury items and big fashion brands, Argos is the only place on the typical British high street where you can buy Bob the Builder toys for your kids, a new watch, a set of screwdrivers and an electric razor, and this makes it one of the most convenient places to visit, especially for things like your Christmas shopping. A shopper who is on a budget and doesn't like the idea of wandering around ten different stores in the run up to Christmas could easily do all of their shopping in one hit at Argos. This means it effectively fills the kind of gap in the market that places like Target fill in the USA – department store convenience with budget products.

Could Other Stores Learn From Argos' Strategy?

While no other stores really operate in the same way as Argos, the plan of increasing digital sales with an innovative approach to using apps and other modern media is one many companies are likely to be looking at with interest.
Home Retail Group, who also own Homebase, are confident in their strategies for keeping both of these stores moving upwards in terms of profit through Christmas and into 2014, however it should be noted that all of the new infrastructure for the Argos Transformation Plan requires a serious investment from the company. While this has been done strategically to yield profits, it is not something that any struggling UK stores would be in a position to emulate. As has always been the case in business, you have to speculate to accumulate. This means the companies who can and do invest in innovation, such as Argos, Boots and Tesco, are usually the ones who don't really need saving!