One of the biggest news items in the UK retail sector recently is the £1.4 billion acquisition in September 2016 of Home Retail Group, the parent company of Argos, by Sainsbury’s, one of the leading British supermarkets. Unsurprisingly, the highlights of this business decision are the huge sum involved and the associated risk in the complex marketing environment. Why is this considered a good decision, especially after the British referendum in favor of leaving the European Union and the uncertainty in the business environment that follows?

The key answers to these questions are not hard to find.

The deal makers can see the gold in the track record of the organization.

Argos was established in July 1973 as the United Kingdom’s first catalog retailer with only 17 stores; it now has over 750 stores throughout the United Kingdom and Republic of Ireland, serving over 130 million customers annually.

Approximately one-third of the UK population shop in an Argos store annually, buying one thing or another. Even before the agreement on the takeover deal, 10 Argos outlets that opened in Sainsbury’s stores already had a record 30 percent sales increase, and the takeover is expected to result in annual savings of £160 million.

As part of its attempts to create value for its customers, Argos has undergone remarkable changes in the 21st century.

The design makeover has turned the tatty faux wooden floorboards and display cabinets into tiled floors and LED display boards for easy shopping. It is thus not surprising that Argos is valued so highly by Sainsbury’s. Ultimately, the plan is to have an Argos center at every Sainsbury’s branch to ensure convenience in shopping for customers. While the in-stores catalogs are still in use at Argos stores, the centers have been radically transformed into hi-tech outlets and “digital” stores. The idea behind all these changes is that the customers of today are more informed and deserve the best. Argos’s approach is to ensure that value creation for customers permeates every phase of the organization’s activities................................

Questions 1. To what extent do you think the acquisition of Argos by Sainsbury’s resulted in delivering superior value to the customers?
2. How is the concept of share of customer illustrated in the case study?
3. To what extent would you agree with the claim that Argos’s marketing management orientation is a marketing concept?
Justify your standpoint with relevant points from the case study.
4. What are the key actions taken by Argos which show that the organization is following the changing marketing landscape?
5. In view of the stiff competition in the UK retail sector, suggest various ways by which Argos could continue to provide better value to its customers.