1. Executive summary
The main purpose of this report is to research and analyse the role that the utilisation of information and communication technology plays in the business affairs of Argos Ltd (Britain’s biggest retailer of home-goods).
This report provides the reader with information on such aspects as:
• the way that Argos conducts its business
• the role that ICT plays in the everyday business affairs of Argos
• background information about Argos, its allies and competitors
• facts and figures on Argos`s sales, revenues and customers` buying habits
After understanding the background and position on the market of Argos, the report evaluates the description of the organisation`s arrangement of operations, by adopting a customer perspective using the `customer perspective framework` while highlighting the role that technology plays within it.
The last part of this report is dedicated to the competitive analysis of the organisation, in means of its relative success, by applying the framework of SWOT analysis and Porter`s 5 Forces model. Comparison of the organisation is also carried out by using the examples that are widely used in the sphere of ICT.
Suggestions for improvement were given where relevant.
Various credible informational resources were used it this report, including academic textbooks and journal articles, research reports and statistical data and numerous online sources. To assess and understand the current trends and developments in the home retail industry sector Porter`s 5 Forces model and SWOT analyses were used.
CONTENTS PAGE NUMBERS
1. Executive summary ....................................................................................1
2. Introduction.................................................................................................3
2.1 Objectives ..................................................................................................3
3. Methodology ..............................................................................................4
3.1. Assumptions..............................................................................................4
3.2. Limitations .................................................................................................4
4. The Research..................................................................................................5
5. Organisation of Operations...........................................................................6
6. Comparison and Suggestions........................................................................8
7. APPENDICES .................................................................................................10
8. REFERENCES ..................................................................................................12
2. Introduction
Initially the Company was founded by Richard Tompkins who had established Green Shield Stamps in the UK. While on holiday in the Greek city of Argos he came up with the idea that people could purchase goods from his Green Shield Gift House with cash rather than savings stamps. He rebranded the original Green Shield Stamps catalogue shops as Argos beginning in July 1973, the first purpose-built store was opened in, Canterbury in late 1973.Argos launched with 1000 members of staff, taking £1,000,000 during a week in November. In 1979 Argos war purchased by BAT industries, The Company was demerged from BAT industries and listed on the London Stock Exchange in 1990: it was then acquired by GUS plc in 1998. It subsequently became part of Home Retail Group which was demerged from its parent company, GUS plc; with effect from 10 October 2006.Home retail group currently owns Argos, Home base (general goods), Alba (electronics), Bush (electronics) and Chad Valley (toys)
According to the statistics, 18.3 million households in the UK (70 percent) had Internet access in 2009. This is an increase of just under 2 million households (11 percent) over the last year and 4 million households (28 percent) since 2006.
` The e-commerce sector has exploded (largely a result of the Internet shopping subsector), the general mail-order sector has experienced a sharp decline and the other two market sectors (direct marketing and direct selling) are growing, but at a sluggish pace.` Internet sales in the UK are currently showing a great tendency to grow as in between 2004 and 2005, the sales have risen from £66.2bn to £103.3bn, in 2006, the value of on-line sales, and the proportion of businesses selling on-line, rose to £125.2bn,in 2007 Internet sales by UK businesses rose to £163bn.In 2008 the sales rose by 19.6 percent or rougly to £195bn.
These figures clearly show the tendency of the British buyers to spend more and more money online, thus making a successful adoption of ICT by any business essential to flourishing and staying afloat. Argos has been in the online business since 1998 and the internet sales by Argos have risen to 18 percent since then.
2.1 The main objectives of this report are:
• To assess and analyse how Argos conducts its business in overall
• To show the role of ICT in the everyday business affairs of Argos
• To give appropriate recommendation to Argos, based on the report`s findings
3. Methodology
Information used in this report was collected mainly using secondary research method and is based on various academic sources such as and Business Technology textbooks and marketing journal publications; research reports and statistical data of respected private and government agencies such as National Statistics and Keynote. Some online resources, such as websites, news articles from most respected national newspapers and online journals were also used. To assess and understand the current trends and developments in the home retail industry sector in general, the Porter’s 5 Forces Model and SWOT analyses were used.
This report is not giving a broad overview on general-goods retail market in the UK due to its limitations, but can be used as a helpful tool in understanding the trends & developments of the industry.
All sources of information used are stated in the References section of the report.
3.1. Assumptions:
• Some statistical information can be slightly outdated but assumed to be ‘present’.
• Some conclusions and estimations are made by the author based on available information and are assumed to be right and appropriate
• Author may lack knowledge on certain areas but is assumed to be an ‘expert’ and able to give relevant recommendations to company 3.2 Limitations:
• Report is limited by the size and therefore cannot comprise all relevant information.
• It is difficult to find information on certain areas because of limited access.
• Not all secondary resources can provide correct data and information.
4. Research
4.1 Introduction to Argos
Currently, Argos sells over 18,000 general merchandise products for the
Home, in catalogues, which are comprised of roughly 1800 pages and are produced in 40 million copies twice a year. In addition to the items listed in the catalogue 7000 items more are listed online only. 18 million households admit having an Argos catalogue at home. According to various sources, Argos.co.uk is a very popular site, which ranks from 2nd to 5th place in popularity on the British Internet. In the last financial year Argos served roughly 130 million customers a, shipped almost 12 million items, a quarter of which were ordered via their online catalogue (which comes up to roughly 3 million items), or by phone. Due to Argos having little or none of their stock exhibited in their shops they need to spend less on their property and the service staff, thus being able to provide more competitive prices, unlike the shops, that need both rooms for exhibiting their wares and storage space to hold the stock. Argos won two awards at the 2009 Retail Week Awards – Online Retailer of the Year and Retail Technology Initiative of the Year.
These facts show that:
1. Argos has secured a substantial role in the UK`s general goods market.
2. Argos is keeping up with the time, adopting new technologies in order to commence a successful business.
3. Due to less staff needed to serve the customers, Argos can make better prices on its wares.
There are currently about 700 stores in the UK and Ireland, Argos is planning on opening 20 more in the coming year.
There are three kinds of Argos stores:
1. The original Argos stores, that hold the most popular items, but the Argos Extra line products can be delivered to these stores for pickup( most Argos Extra line products are not in stock in these shops)
2. The Argos Extra stores that include a wider variety of items plus a wider variety of items of the Argos Extra line
3. The Argos Call-and-Collect stores, which do not have any stock, and that are especially designed to only issue the pre-ordered items that are shipped directly to these stores.
5. Organisation of Operations (from a customer`s perspective)
5.1 Locating the desired item.
There are three main ways how Argos enables its customers to browse through their inventory.
Via Catalogue
The first and only way until 1998 was with the help of an Argos catalogue, which was comprised of roughly 1600-1800 pages on which people could acquaint themselves with the latest and newest stock of Argos ltd. Not only do most retail catalogues persuade the potential customers into buying something more effectively, but also provide the customers with the opportunity to browse through the wares anytime and anywhere, without any means of transportation or communication( as long as the catalogue is accessible).
Via the website
The second way of browsing through the wares and goods of Argos is their widely renowned website www.argos.co.uk, which is considered to be one of UK`s most popular retail website. The site enables potential customers to browse through the full range of products, has a search system that enables the buyers to browse through the inventory in a more specific matter, makes suggestions on side-purchases (for example advises the customer to buy insurance for the newly bought item, or advises a matching item, like a matching reading lamp for a newly purchased couch).The website also enables the buyers to comprise a wish-list in order to `not get unwanted presents ever again’. The site also enables the buyers to get short-term loans, choose the required shipment methods for the purchased items and leave feedback on the purchased items.
Via audio catalogue
The Argos audio catalogue has been especially design for people with disabilities, it can be ordered online, buy phone or downloaded straight from Argos` site. The audio catalogue is divided into sections, about specific products or services.
Checking the availability of the desired item, reserving the item.
Argos enables its customers to check the availability of stock by using the internet database that is accessible from their website, via phone, and via sms. Argos claims that it is the first high street retailer that has adopted this kind of service (in 2003).The sms messaging service is also used for `back in stock` alerts.
Items can be reserved by phone, sms or internet. The reservation insures the customer from the desired item being unobtainable due to shortage of stock.
Making a Decision
Argos, like many retailer sites nowadays has included a compare button, that only leaves the desired items on screen, however unlike many other retailers Argos has also included a `how to choose guide` that gives general and helpful information about the range of products, without actually suggesting the product, leaving the final choice to the buyer, unlike some sites just trying to persuade the customer into buying the old stock as if it were a `great combination of price and value`. This issue is often encountered in the electronics sections.
5.2 Purchasing the desired item.
The process of purchasing the item itself is self-explanatory; it is possible to pay online or to pay at an Argos store directly. The internet purchasing way is very straightforward and intuitive, but disregarding that Argos has also included a F.A.Q. section with a step-by-step purchasing guide for the technologically challenged.
A large variety of payment methods is accepted. `Pay Pal` is the latest addition to the payment methods. PayPal is a payment intermediary service that facilitates worldwide e-commerce and provides extra security.
5.2 Receiving the order
There are two options to receive the order: the first is to collect the item from a shop, the second one is having the item delivered.
Such internet resources like blogs or open forums describe the order receiving process at an Argos shop frustrating and time-consuming due to a long time of queuing and waiting. The process is described as:
• Queuing to get a reservation number (this can be avoided through online reservation)
• Queuing to pay for the purchased item (this can be avoided by online payment)
• Waiting for the item to be sent from the warehouse after receiving a receipt
• Waiting to collect the arrived item
All these nuisances can be avoided by ordering the item to be delivered directly to the purchaser. Argos has a charge of £ 5.80 for any item delivered. Special services like Saturday delivery or express delivery cost extra.
Argos leaves the choice of time and date of the arranged delivery to the customer, so presents can be sent, and large items can arrive in the appropriate time.
If the ordered item requires some assembly or plugging in, the customer may pre order a special installation service. Old or unwanted items of the same type and size can be collected by the deliverers.
6. Comparison and suggestions.
The key features of the Argos website are its simplicity and accessibility. It is designed to be attractive and helpful, aiming to provide the less technologically educated audiences with possible solutions to most potential questions. The framework of the site is logically divided into thematic sections. The interface is simple and the key buttons are straightforward and accessible. The `my trolley` bar helps keep track of the amount of money required to successfully make a purchase. An adequate search engine is also provided. In terms of `website stickiness` Argos simply serves its purpose of being a retail site and doesn`t require any extra attention from the visitors.
If the main intent of any organisation to use technology is:
• To extend markets
• To improve efficiency
• Collect information on customer behavior
• To reduce personnel costs
• To adopt new markets
Argos has fulfilled all of these: it has extended its markets to even the remotest places of UK, it has improved efficiency by adopting technology and making the processing of the ordered goods and payment processes more reliable and less time consuming, according to polls the consumers find the prices attractive (which is because less personnel is needed to serve a customer and less exhibition space is required to show the wares) and the way of shopping convenient. Recently Argos has adopted a new market of clothing and issued a catalogue of clothing especially.
In overall Argos is a thriving and prosperous organisation that has managed to keep up with the time for more than 3 decades and adopt modern ways of commencing business efficiently.
Possible areas for improvement:
• Argos should consider a fully or partially automated system for issuing the ordered items to the busiest of their establishments in order to lower the customers` waiting and queuing time and increase productivity.
Or
• Provide the queuing customers with some sort of entertainment in order to make the waiting experience as less `painful` as possible.
7. Appendices
Swot Analysis of Argos Ltd .
Strengths Weaknesses
A well established organisation with over 3 decades of success.
Practically a household name in the UK.
Constantly adopting new markets and marketing or retailing technologies.
Broad variety of goods in most general sectors.
Considered to have a great `value for money` ratio and a convenient way to shop.
Broad range of services, from delivery to short-term loans.
Website is self-explanatory and user-friendly.
Goods delivered all over UK, at any time, on time. The imperfect system of handing out the ordered items.
The impossibility for customers to physically interact with a desired item prior to it being handed out to them after purchasing.
Industry is highly dependable of a country`s economic
Conditions.
A great number of competitors with different customer service strategies.
Opportunities Threats
To adopt new markets in order to be able to offer the buyers a broader variety of goods or services.
A lot of items are bought for replacing the older versions, thus making the system cyclical.
Number of households is predicted to rise in the upcoming years.
New powerful competitors with same marketing and retailing strategies entering the non-foods scene (Tesco)
The overall economic downturn and the financial instability in the given time
The overall increase in the tendency to do all-purpose shopping online combined with a growing number of other online retailers could result in drastic customer losses for Argos.
Porter`s 5 Forces Model
8. References
Laudon & Laudon (2007): Management Information Systems, Managing the Digital Firm
E. Oz (2006) Management Information Systems, fifth edition
The website of Argos` parent company- the Home Retail Group http://www.homeretailgroup.com/home/about/ourbusinesses/ The www.argos.co.uk retail website with some information sources provided http://www.argos.co.uk/static/StaticDisplay/includeName/Reserving.htm#online http://www.argos.co.uk/static/StaticDisplay/includeName/OrderingForHomeDelivery.htm http://www.argos.co.uk/static/FSCard.htm The Home Retail Group`s media centre and general corporate news http://www.homeretailgroup.com/home/investors/rrp/presentations/ http://www.homeretailgroup.com/home/media/hrg/corpnews/2009/2009-04-29/
An investor presentation, providing general facts and figures on the industry http://www.investis.com/home-retail/pdfs/Investor_Pack_October_2009_FULL.pdf A report on British home shopping of 2008 http://www.keynote.co.uk/market-intelligence/view/product/2082/home-shopping A report on the E-commerce of the United Kingdom in 2009 http://www.keynote.co.uk/market-intelligence/view/product/2193/chapter/15 National Statistics: Earnings (2009) http://www.statistics.gov.uk/cci/nugget.asp?id=285
National Statistics: GDP Growth (2009) http://www.statistics.gov.uk/cci/nugget.asp?id=192
National Statistics: Inflation (2008-2009) http://www.statistics.gov.uk/CCI/nugget.asp?ID=19
National Statistics: Reports on E-Commerce from (2004 to 2008) http://www.statistics.gov.uk/downloads/theme_economy/ecommerce_report_2006.pdf http://www.statistics.gov.uk/pdfdir/ecom1108.pdf http://www.statistics.gov.uk/pdfdir/ecom1108.pdf http://www.statistics.gov.uk/pdfdir/irs0109.pdf
National Statistics: Businesses with a website http://www.statistics.gov.uk/CCI/nugget.asp?ID=1713&Pos=4&ColRank=2&Rank=1000 National Statistics: Internet Access (2009) http://www.statistics.gov.uk/CCI/nugget.asp?ID=8&Pos=6&ColRank=2&Rank=224 Argos` use of SMS http://www.marketingweek.co.uk/home/argoss-sms-service-receives-nearly-1m-text-messages/2017412.article http://mobilenews.net-genie.co.uk/archive/46100/vodafone_and_argos_step_up_sms_retailing.html 