Sainsbury’s has agreed terms to buy Home Retail Group, the owner of Argos, in a £1.3bn deal which will create the UK’s largest food and non-food retailer, ahead of John Lewis and Marks & Spencer. The takeover will enable Sainsbury’s to own over 2,000 stores and sell over 100,000 products combined. It plans to incorporate Argos outlets in Sainsbury’s large stores as well as sell its items online.
Mike Coupe, Sainsbury’s Chief Executive, stated that the takeover will provide customers with more choice and for that choice to be faster than ever, driven by the rise of mobile phone use and digital technology.
The advancement of technology has changed the way consumers shop with more people shopping online instead of visiting supermarkets for their weekly shop, thus threatening large stores due to a lack of customer presence. The rapid growth of discounters, Aldi and Lidl has also created a price war, slashing supermarket profits. Sainsbury’s argues that buying Argos will allow it to offer a broader range of goods at its stores and provide a wider delivery service, both to homes and click and collect points in stores. In doing so, it expects to generate costs and revenue gains of at least £120 million.