Argos. The ritual was the product.
Sainsbury's paid 1.4 billion for Argos ten years ago and has just sold it for 120 million. The thing you love is the first thing they'll fix.
THE GIST ON ARGOS: "The ritual was the product"
What did Sainsbury's buy?
Ten years ago Sainsbury's was getting hammered by Aldi and Lidl on grocery margins and needed a second wind. So it bought Home Retail Group, which owned Argos, for £1.4 billion.
Everyone loves Argos. It had a huge store footprint and a great delivery network, and Sainsbury's had cash and scale. A general merchandise powerhouse, in theory.
How did they 'improve' it?
They killed the physical catalogue, closed 640 standalone stores, and banged the rest in the back of their supermarkets. The entire Argos experience was compressed into a customer service desk by the checkouts. You probably walked past it 100 times and had no idea it was there.
Every one of those decisions is what an MBA would have told you was right.
What was Argos really worth?
Argos's value wasn't efficiency. It was cultural appeal. The catalogue, the blue biro, the tiny paper slip, the wait at the counter were all theatre, and those rituals are what we associated with the brand.
Sainsbury's rationalised the ritual away and then wondered why people stopped buying.
What is the bomber problem?
Generals in the war looked at planes coming back full of bullet holes and decided to reinforce where the damage was, until someone pointed out that planes shot anywhere else never made it back.
Every improvement moved Argos a step closer to becoming Amazon, and Amazon is already Amazon. This week it was sold for £120 million, a 91% loss.
Argos catalogue: do you miss it?
Your take. One tap, then see how everyone else voted.
Quick answers
What did Sainsbury's pay for Argos?
£1.4 billion for Home Retail Group, which owned Argos, ten years ago. It sold Argos this week for £120 million, a 91% loss.
What did Sainsbury's change?
It killed the catalogue, closed 640 standalone stores and moved the rest into supermarkets.
What was Argos's real value?
Its cultural appeal: the catalogue, the little pen, the paper slip and the wait at the counter.
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