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Asda trials Argos-style offer

Published: 29 October 2010
In-store ordering service 'Asda Extra' to be trialled in three Asda outlets in the north of England.
In an interview with the Financial Times, Asda ceo Andy Clarke described the new concept as "an Argos-style offer" and confirmed that some of the trials have begun in recent weeks, 'showing some positive signs'. With encouraging signs this early on, Asda plans to "keep the trial going and add more stores to it", said Mr Clarke.

The move looks set to revive speculation that the Walmart-owned supermarket chain is interested in Argos parent Home Retail Group. Talking to the FT, Mr Clarke declined to comment on the speculation but did not rule out an interest in acquiring the group.

The launch could also be a cause for concern for Argos, whose sales are under pressure. The catalogue retailer's operating profit fell 32% to £54.4m for the first half of the year, while its gross margin rate dropped by approximately 150 basis points.

Sales fell by 6.5% on a like-for-like (lfl) basis at Argos due to "particularly challenging conditions for its core customers", according to Home Retail Group's statement of results.

Insiders have suggested that there are about 200 stores that could incorporate the Asda Extra concept over the next five years. The format involves ordering goods from an in-store display or an online catalogue for dispatch from a warehouse space.

Mr Clarke added: "[Some stores] can't trade the full general merchandise offer and in some stores they have warehouse space that is not being used, that we can turn over to this way of operating."

Rival supermarket chain Tesco already operates an Argos-style service in 140 of its larger outlets.


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