Analyzing Argos: Retail Trends, PESTEL, and Strategic Recommendations

This report examines the current trends in the retail industry and their impact on Argos, a technology-led retail company operating under Sainsbury. It discusses key trends such as sustainable supply chains, safety and security, sustainability, technology adoption, the shift to online channels, direct consumer connections, and business model updates. The report includes a PESTEL analysis of Argos, evaluating political, economic, social, technological, environmental, and legal factors influencing the company. Based on the analysis, the report recommends prioritizing personalization in marketing, cost maximization, leveraging modern technology, enhancing customer service, and building a sustainable supply chain to improve business performance and maintain a competitive edge. The conclusion emphasizes the importance of adapting to changing trends to ensure sales and profitability in the retail sector.

INQUIRY PROJECT

Table of Contents
INTRODUCTION....................................................................................................................3
MAIN BODY............................................................................................................................3
Trends in retail industry.........................................................................................................3
Analysis of organization........................................................................................................5
Recommendations..................................................................................................................6
CONCLUSION.........................................................................................................................7
REFERENCES.........................................................................................................................8

INTRODUCTION
Trends and consumer buying behavior are the uncertain concepts of market which
creates an impact on the revenues and profitability of an organization. Therefore, consumer
trends are also responsible for creating the customer base and also creates an impact on the
brand image of business which can be positive as well as negative (Howard, A and et.al.,
2015). This project report will discuss regarding the current trends which are followed within
the industry. The company which has been selected for the report is Argos. Argos is one of
the retail companies which is operating under the parent company Sainsbury. Argos was
established by Richard Tompkins in 1972. The company offers general merchandise which is
have wide variety of product range which are offered through online and offline mediums.
The company is technology led retail company which makes use of technology in effective
manner. This report will define the current trends in retail industry and how these trends are
followed by an organization.
MAIN BODY
Trends in retail industry
Trends in retail industry has been dynamic and this it can create an influence in the
business operations. The dynamic trends in the retail industry are explained below:
 Sustainable supply chain- The COVID-19 virus has had a substantial impact on the
UK retail industry's supply chain. Small and large businesses and sectors alike
struggle to maintain a stable supply chain and as a result, many are affected by supply
chain problems that can result in financial losses. Retailers are increasingly worried
about building a supply chain that can survive disruption. New methodologies are
being applied, as well as updated technology (Jao, L. and McDougall, D., 2015). The
usage of blockchain in supply chain management has increased in recent years.
Businesses may utilize blockchain technology to track commodity flow and improve
supply chain efficiency. To boost the competitiveness of their supply chains, retailers
are increasingly turning to innovative technology and strategies.
 Safety and security- Customers and workers in the United Kingdom are increasingly
concerned about their safety and well-being which has an influence on businesses. In
the United Kingdom, customers and staff appreciate business efforts to enhance their
health. Such objectives are also linked to CSR. Customers are valued according to
how much a store's CSR efforts benefit society. It also has something to do with the

concept of purchasing something for a larger price. When a firm takes greater
attempts to engage in CSR, customers are more ready to spend more. Retailers are
taking efforts to enhance the wellness of both consumers and staff now that they are
aware of the problem. In the UK retail industry, the efforts of retailer is to improve the
well-being of consumers and staff have become a trend.
 Sustainability- The importance of sustainability in the UK retail industry's
development has grown. Customers outside the retail business are showing more
efforts of firms towards the environment in the community for the long run, as
sustainability is now inclined and more focused on customers. Companies that focus
on solid, long-term projects can attract a larger number of customers (Kim, S. U. and
Todd, R. J., 2021). Customers are becoming more conscious of firms who provide
more sustainable products in order to attract a larger number of customers.
 Technology- In the retail industry, the use of technology in business tasks has risen.
In the UK retail business, there has been a substantial expansion in the use of
technology in firm operations. Technology is quickly affecting every aspect of the
business process, from sourcing to marketing and delivery. Retailers are now
implementing current data analytic tools and strategies to improve their online
presence, which might give data and insights for a better consumer experience. The
emphasis on technology in the UK retail business has become a prominent trend as
more stores use it to gain a competitive edge.
 Channel shift to online- In the year 2020, the share of online sales was 28 %, with
the pace increasing over the previous five years. The global pandemic has resulted in
the shutdown of hospitality services, diverting client focus to online shopping outlets.
Around 46% of consumers make purchases online, and this movement is the current
trend in the retail business, which has resulted in a significant transformation in the
industry.
 Companies connecting with consumers- Due to the internet's capacity to enable
businesses to develop customer-facing channels, customers are becoming increasingly
comfortable making purchases directly from businesses. Furthermore, companies may
have a better knowledge of their customers, which they can use to enhance the
customer experience and differentiate their products (Lee, C. W. Y and et.al., 2016).
Retailers and brands will need to modify their business strategies and gain new skills
in order to fully exploit new prospects. Rents are falling, making it simpler to build
own-brand businesses that will benefit from the halo effect, boosting their online

presence. When it comes to purchasing directly from companies, more than half of
customers believe price is the most essential factor to consider.
 Update in business model- To remain sustainable in the face of continual change,
new, more durable company models will be needed. Changes in the environment will
need businesses to continuously monitor, analyze and adapt. Consumer behavior is
changing and it will be important to address it, especially when long-term changes
grow and spread. Physical stores will play a larger role in the future. Greater
investment in IT, acquisitions and experience will be necessary in general as frequent
strategy adjustments are required to address continual obstacles.
Analysis of organization
The analysis of Argos in relation to the changing and current trends of the retail
industry, evaluated with the help of PESTEL analysis is addressed below:
Political factors- Political issues play a significant effect in influencing Argos'
operations. Government laws, taxation methods, and employment restrictions are all political
variables that are very adaptable for company (Reavy, K., 2016). The firm benefits from
favorable economic conditions in a variety of ways, which aids in the expansion of the
market niche. In context of Argos, the company can gain various advantages with the help of
stable government regulations and taxation methods through which they can sustain their
competitive position within the retail industry.
Economic factors- Since the firm relies on road-based transportation, product pricing
may grow as a result of the company's costs for gasoline and diesel. New supermarket chains
have always had a significant economic influence on Argos in the United Kingdom. Old
rivals like as Asda and Tesco are still there, but newcomers such as Lidl and Aldi are proving
to be a source of further competition in the current market.
Social factors- The sale of fast-food items at the brand's outlets contributed a
significant portion of the company's income. The population of the UK is progressively
transitioning toward a health-conscious diet that excludes fast food. The brand will have to
develop in order to be relevant in today's socio-cultural climate (Spires, H. A and et.al.,
2019). This is a global trend with a substantial presence in the United Kingdom, and this shift
in consumer behaviour affects every major fast-food establishment. The fair-trade movement
is another shifting customer behaviour that Argos should address. This entails a raise in the

price of grains, vegetables, and other agricultural products, but only to help farmers rather
than to boost profits. Customers' behaviour is influenced by fair-trade commodities like
chocolate and coffee, and businesses must guarantee that they are satisfying those requests.
Technological factors- Since of technical advancements in analytics, such as the
usage of Big Data and Artificial Intelligence principles, businesses all over the world are
learning more about their operations. Supermarkets like Argos might leverage analytics
innovations to build extremely reliable models that forecast how much of a particular product
would sell (to reduce waste) and at what price (maximizing profits). The creation and
implementation of these methods will undoubtedly help Argos (Trajkovski, S and et.al.,
2016). Customers now, more than ever, prefer to shop from the comfort of their own homes.
Because the usage of eCommerce in the food industry is still in its infancy, it will be
fascinating to see how supermarkets utilize this quickly growing technology.
Environmental factors- Argos has a large carbon footprint that is unsustainable in
the current climate. Given the burgeoning climate change movement in the UK, the company
must show that it is actively reducing its environmental impact. This includes dealing with
the massive quantity of plastic waste it produces, fossil-fuel-based transportation methods,
and the enormous environmental cost of running a business of this magnitude. The
corporation is under a lot of pressure to respond quickly to current environmental concerns
because it is the market leader.
Legal factors- Any delays in regulatory approval might result in market share losses
and competitors providing a superior customer experience. The legal consequences of the
post-Brexit economy are another significant factor for which the brand should be prepared.
Many of its policies may need to be changed while operating via channels that are no longer
within the economic and political jurisdiction of the United Kingdom.
Recommendations
Some of the strategies which can be suggested in order to enhance business
performance and will be helpful for Argos are outlined below:
 Marketing- Personalization should be prioritized in marketing campaigns.
Consumers enjoy personalization, according to a pattern analysis, which can help
satisfy client requests (Vaughn, E. and Obenchain, K., 2015). As a result, in order to
boost client retention, marketing efforts should be tailored to the person.

 Cost maximization- As a result of its financial difficulties, Argo's expenditures must
be cut. It must thoroughly study the business processes and cost sectors in this respect.
Decisions should be made based on what offers clients with the least amount of value.
Reduced employment can also be used as a cost-cutting technique (Wall, T., Russell,
J. and Moore, N., 2017). Due to the number of customers and their spending has
decreased, the firm no longer requires the same number of employees. Employees
with the least credentials and experience in this field may be fired.
 Use of modern technology- Argos should concentrate on the usage of new
technology in company operations since it produces favorable results. In this case, the
lean manufacturing philosophy, which focuses on waste reduction and value
generation, may be applied. According to this viewpoint, technology should be
leveraged to create value while reducing consumer waste.
 Customer service- There is no other way to continuously enhance customer service
quality but to do so. Even if customers make fewer purchases, they should be happy.
A company's ability to retain customers has never been more vital. As a result, it
should take precedence.
 Sustainable supply chain management- The present condition of the supply chain
should not be used to make transactions. If the impact of COVID-19 on the supply
chain is important to learn from, it must be noted that the supply chain is not long-
term and susceptible to disruption (Whalen, M., Baptiste, D. L. and Maliszewski, B.,
2020). It's also crucial to make supply-chain decisions to guarantee that it can
withstand challenges.
CONCLUSION
According to the aforementioned data, changes in trends are responsible for affecting
the sales and profitability of firms in the retail industry. Because the present developments
have an impact, this impact may be both beneficial and harmful for businesses. It can be
observed that a variety of factors may influence industry trends and have an impact on a
company's profitability and performance. It can be understood that recent trends create a
significant impact in the business operating in the retail industry. The changing trends and
patterns are due to the change in customer preference and demands which can be helpful in
meeting the customer demands in timely manner and help an organization in boosting their
competitive position within the industry.

REFERENCES
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