The Wiki Man

What makes Argos worth £1.4 billion? I reckon I know

Every trend has a counter-trend. And Argos might just be the counter-trend to Amazon

9 April 2016

9:00 AM

9 April 2016

9:00 AM

When I was at school in the 1970s, some of the richer kids would come back from their summer holidays with jaw-dropping tales about the wondrous places they had visited. Chief among them, as I remember, was Schiphol airport. ‘It was amazing,’ they would say. ‘There were shops and restaurants and stuff,’ and you could buy a Walkman for some insanely low price.

A few others vainly tried to trump the Schiphol crowd by fancifully claiming to have been to Frankfurt airport and seen an actual sex shop there — an assertion widely disbelieved, certainly by me, until I used the airport 15 years later and discovered it was perfectly true. (At the time the shop was called Dr Müller’s — Germans being the kind of people who like to buy sex toys from someone with suitable qualifications.)

Later on, the mantle for ‘amazing airports I have visited’ passed from Schiphol to Dubai and then Singapore. But, bit by bit, all major airports became like shopping centres. And more shopping centres sprang up, which became a bit like airports. The novelty of looking at £200 belts before catching a plane diminished. Instead people started saying things like ‘London City Airport is brilliant. You can just turn up 30 minutes before take-off, and you don’t have to traverse Bluewater before boarding the plane.’ I suspect an unspoken part of Ryanair’s appeal is the childish joy of using those tiny French rural airports where all you can buy is a coffee and a bag of Haribo but you don’t have to spend three hours in a Ballardian dystopia before a one-hour flight. Yet without the experience of large airports, we would think these small airports were rubbish.

The interesting thing here is that we don’t have actual preferences. We only discover what we want by contrasting them with other things. Forty years or so ago, someone started charging more for cheese by cutting off the rind and selling it as ‘rindless cheddar’. Today you charge more by leaving the rind on and selling it as artisan cheese. Food shops were once clinically clean and shiny. Now you want them to look like a farmers’ market, the prices written in chalk.

The idea that people have stable, cardinal preferences is economic nonsense. Big supermarkets seemed amazing when all we had was small shops; small shops suddenly seemed magically convenient once we got used to big shops. Even vinyl records are cool again. For every trend, a counter-trend is waiting in the wings.

Recently, perhaps partly as a joke, someone at work recommended to a Brazilian colleague who had recently arrived in London that she should buy materials for her new flat at Argos. The woman returned scandalised, refusing to believe such a crazy retail concept could exist. Someone claimed to have seen her in the shop, gesticulating wildly, and pleading with the man behind the counter: ‘Please, meester, where is all ze stuff?’

Argos is a bizarre thing: the tuatara or duck-billed platypus of the retail world. It arose almost by accident as a chain of outlets for people to redeem their Green Shield Stamps. Only later, when he was on holiday in Greece (hence the name) did its boss have the idea of turning it into a chain of miniature department stores.

Now Sainsbury’s has bought the chain for £1.4 billion. Given my counter-trend theory, I think this is shrewd. Soon, I suspect, online shoppers will notice that the supposed convenience of having stuff delivered to your home is not very convenient at all, and the click-and-collect model accidentally pioneered by Argos will become the new normal. I rather hope so. Someone has to compete with Amazon, after all.

Got something to add? Join the discussion and comment below.

Rory Sutherland is vice-chairman of Ogilvy Group UK.

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Show comments
  • davidshort10

    I like both Argos and Amazon. Last year, I needed a folding bed quickly for an unexpected guest. Argos is good for big things like that. A bus ride down the road to Putney and a taxi ride back and I had a fold out single bed with mattress and springs for just £50 and all done in an hour. As for Amazon, they have introduced a very convenient system of lockers dotted around the place so you don’t have to wait in for a delivery. Better still, if it was an impulse buy that you later regret, you simply don’t pick it up and it’s sent back after a few days with no effort from yourself.

    • #toryscum

      I’m a big convert to the lockers, 10 points to the genius who dreamt that up!

      • rorysutherland

        I think Sainsbury’s idea is to install small Argos branches in stores, but also to have lockers. Essentially Sainsbury’s biggest asset may be owning a lot of huge car parks, where it is easy to drive up, collect something, and drive off……

        • #toryscum

          I’ve requested Amazon install a locker in my neighbors’ front garden.

    • davidshort10

      In addiiton, you can buy cheap bed linen at Argos, so cheap that once your guest has gone, you can just throw it away. Buying it is less than the cost of laundering it.

    • rorysutherland

      I have done that, I admit.

      • davidshort10

        I think many of us have. It is guilt-free. The guy is coming anyway with the latest purchases.

    • rorysutherland

      One reason I think Amazon has blundered a little is that they make it disproportionately hard to request that items be delivered by the postman, in their drive to set up their own delivery network. Part of me feels that, if I am paying for delivery, I should have some say over who delivers. For all RM’s fault’s, my postman 1) knows where I live and 2) knows what to do if I am out. And 3) he is passing my door every day in any case. I don’t want some van rumbling up to my house every time I need to buy a USB cable.

  • Can’t fault Argos..bought two little Android phones there when Phones4U were folding and Everything Everywhere were closed (on Sundays)…They have a bigger choice than Vodafone, 02 & Carphone put together.

  • Andrew Cole

    Counter to amazon eh? Nothing to do with Argos and ebay’s link up? Sainsbury’s now has a mass purchasing model akin to amazon and with a delivery model already in place for ebayers that want to collect rather than pay the Royal Mail.

    Shrewd investment for who? Sainsbury’s? or will ebay end up buying Sainsbury’s eventually?

    • davidshort10

      I couldn’t give a stuff about eBay. They banned me for life despite my 100pc rating because I argued with an old bag who monitors and answers their q and a for no pay all day, every day.

      • rorysutherland

        I think that to ban people for this kind of thing is outrageous. I suppose you could rejoin under a different name, but the fact that they in effect own your past reputation seems dubious to me.

        • davidshort10

          I suppose it was my first encounter with the facelessness of such an organisation. I had no one to whom I could make an appeal. I was not even given a decision. It was perhaps eight years ago now. The old bag in question was always rude to me but I expect she is still there. She is ‘topcat’ something on the advice forum. To be banned from trading for making comments is very odd. I could rejoin but then would have to have a different phone number and a different bank account, but that would make me fraudulent. I don’t think this should be the conduct of a very large company.

          • #toryscum

            i suspect there is rather more to this story than you are letting on!

    • davidshort10

      Others have been trying the eBay collect for years and it has not worked. Companies like Sainsbury are on the decline, old old companies run by old old people. Too many supermarkets and they are too big and they are stressful for customers and they employ too many people. Every successful business model will copy the latest ones, and they are any initiative that does not involve paying people a salary.

  • AdrianM

    It’s worth £1.4 billion because of this…

  • Badger

    It’s worth that much because it’s amazingly convenient to order online and pick it all up at your leisure. It’s revolutionised Christmas.

    • Father Todd Unctious

      Plus it is where Pirates love to shop. AAArgos. There favourite subject at school being AAArt.

      • The_Common_Potato

        AAAAAAAAAAARrrrrrrrggggg(os)hhhhhhhh! Have a + for being extremely silly.

        • Father Todd Unctious

          They buy their phones at CAAAR phone warehouse.

  • buchanan17

    Yup – took a Swede in to Argos recently and he too was bamboozled by the concept. It’s not a bad concept, but has Amazon trumped it?

    • rorysutherland

      I think the issue is that once you buy more than one or two things online in a week, home delivery becomes increasingly irksome: better to have the five things arrive in a week at one place, get a text to tell you they have arrived, and then go and pick them up in one go.

      Most people leave the house to go to a town or shopping centre several times a week as it is, so building package collection into an existing journey is easier than risking failed deliveries. Unless you have a concierge, but most people don’t.

      • It also has a potential benefit in that you can be confident you haven’t missed a hidden postage charge, particularly for larger items (I mainly work from a small and cheap Argos desk which has lasted ages and doesn’t have the space for me to clutter with stuff I don’t actually use for work).

        Even as an Amazon Prime addict, there’s also the added bonus that paying in cash in Argos means I don’t end up having my purchase tracked and reminders of it appearing on every website I then visit. For instance, the depressing purchase of mail grooming products to remove middle-aged unwanted hair growth (Obviously completely hypothetical)

    • Father Todd Unctious

      Took a Swede to see a turnip. Mangelled was he?

  • the knight

    Was given a voucher(receipt not attached as it was a gift). Went into Argos a few months later to buy a gift only to be told the voucher was”out of date” and was no longer valid, plus the item I wanted to buy had gone up in price! What is the point of selling gift vouchers which have to be spent within a month or two? How much money has Argos made out of this scam? I for one will not buy gift vouchers from this company or any other that puts such a short life on the gift voucher.

    • #toryscum

      ”What is the point of selling gift vouchers which have to be spent within a month or two?”

      So that you spend them within a month or two

      • Father Todd Unctious

        They also do “vouchers” which are only valid with the original receipt. Knowing full well many are given as gifts but few think to add the receipt for surety.

        • #toryscum

          Maybe that’s why they’re worth £1,400,000,000. Shrewd business sense, and a ready supply of cheap gold jewelry.

  • WTF

    Shopping malls between security and the gates is the biggest bain of my life when I was a frequent business flier to the point many times I almost wanted to ‘trip’ and bring down some expensive perfume display that had been deliberately placed between me and the gate. Some departure lounges are so bad its hard to even find signs for the gates.