Home Retail This article is more than 8 years oldThe Argos story: from Green Shield Stamps via Tesco and now Sainsbury's?
This article is more than 8 years oldThe catalogue giant has reinvented itself over the years, with new names, new owners, new business models. Now in the online shopping age Argos faces its toughest test
If Sainsbury’s launches a successful bid for Home Retail Group and takes control of Argos then it would prove ironic – the origins of the catalogue retailer lie with Tesco, Sainsbury’s great rival.
Sir Jack Cohen, the founder of Tesco, signed his grocery chain up to the Green Shield Stamps scheme in the 1960s. This promotional scheme awarded stamps to Tesco customers when they spent money at the supermarket. Shoppers could then use the stamps to buy products at Green Shield Stamps catalogue stores across the country.
The tie-up was a roaring success, helping to make Tesco one of the biggest retailers in the country.
The growth of Green Shield Stamps gave its founder, Richard Tompkins, an idea: what if customers could use cash to buy products from its catalogue as well as stamps.
So, in 1973, he started rebranding Green Shield Stamps as Argos, named after the Greek city where Tompkins had been inspired and because it would feature high up in alphabetical listings.
Just as the Argos brand was being rolled out, Tesco was starting to struggle. In an echo of the problems facing Tesco today, the chain was battling against rising costs and the rise of discount retailing, at this stage led by Kwik Save.
Over the weekend of the Queen’s silver jubilee in 1977, Tesco’s boss, Ian – now Lord – MacLaurin, made a decision that would change the retailer forever. He scrapped the Green Shield Stamps scheme and used the money saved to lower prices across the chain. Tesco kept its shops closed for an extra day over the bank holiday weekend so it could update its prices.
With the loss of Tesco as a client, Tompkins was free to convert the entire Green Shield Stamps business to Argos and cash purchases.
Argos was acquired in 1979 by the sprawling conglomerate BAT Industries, now just British American Tobacco, and soon afterwards stopped issuing stamps entirely.
Eleven years later, Argos was demerged and floated on the stock market. By this time, it was one of the most recognisable brands on the high street; its catalogue a mainstay of coffee tables across Britain, particularly at Christmas. At its peak in 2010, 20m versions of the catalogue were printed.
The retailer was snapped up by the retail conglomerate GUS in 1998. GUS became Home Retail Group, which still owns Argos and Homebase today, after breaking off Burberry, Experian, and the Great Universal Stores catalogue from which the group took its name.
However, in the 21st century, Argos, which currently has 840 branches, has struggled amid the online shopping revolution and the rise of Amazon. Home Retail Group is expected to post profits of less than £115m this year, down from a peak of £433m in 2008. In the digital age, Argos’s quirky catalogue showrooms look like they hail from another era.
Argos has responded to the changes in shopping habits by switching its laminate catalogues for computer tablets within stores, opening smaller sites for customers to collect online orders, and offering same-day delivery to customers.
However, the answer to Argos’s problems could be a return to its roots – with a supermarket chain.
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