Sainsbury’s has reported that sales of general merchandise have improved strongly, helped by the reopening of Argos stores.
Argos reports rising sales, up 10.7%, helped by a 78% rise in home deliveries and demand for garden toys, home office items and baking equipment during the lockdown period. Argos continued to trade at 300 outlets within Sainsbury’s supermarkets while high street stores were closed, and just over half of sales were picked up in stores.
Sainsbury’s has benefited from a shift in consumer behaviour in favour of online sales, where the group already had a strong established presence. Argos essentially became an online-only retailer for the duration of the lockdown period, and made a strong contribution to the overall company business, being able to fulfil orders via both delivery and the click and collect presence within Sainsbury’s stores where there is either an Argos outlet or a collection point.
Sainsbury’s chief executive Simon Roberts commented: “Our business has changed fundamentally from four months ago. Argos sales were strong while operating as an online-only business for almost 12 weeks.” The retail group said its performance during the coronavirus-impacted period highlighted the “strength and flexibility of the digital and technology platforms we have built”.
Despite the recent surge in sales, Simon Roberts predicted there would be no growth in profits this year, as trading in the winter and spring was expected to be challenging. One-off benefits, including the long spell of good weather, were not likely to be repeated, while a potential recession could dampen demand for non-food items sold by Argos. He added: “The situation ahead is very unpredictable. We have made sure the business is ready to handle that.”
Analysts have suggested that Sainsbury’s is well-placed to benefit from a sustained change in consumer behaviour. The company’s digital capabilities and the likelihood that shoppers may increasingly prefer click and collect options means that the group is in a better position than many of its competitors; effectively ahead of the game in being able to maximise online opportunities that others are only just developing.