Asda runs test on 'Argos Style' offering

Asda, Britain’s second-biggest supermarket group by market share, is running trials for an “Argos style” in-store ordering service in three stores in the north of England.

Andy Clarke, chief executive, described the concept, called Asda Extra, as “an Argos-style offer”.

The trials, some of which have begun in the past few weeks, could revive speculation that Asda is interested in Home Retail Group, the owner of Argos, which has endured a torrid time during the recession.

In an interview with the Financial Times, Mr Clarke declined to comment on the speculation surrounding Home Retail, which has a market capitalisation of £1.8bn ($2.9bn), but he also did not rule out an interest in acquiring the group.

Insiders suggest that there are about 200 stores that could include the Asda Extra concept – which involves ordering goods from an in-store display or an online catalogue that are then dispatched from warehouse space – over the next five years.

“[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,” said Mr Clarke.

Tesco already has an Argos-style service in 140 of its larger stores.

Mr Clarke said early indications were that the trial was going well. “It is already showing us some positive signs and that is giving us confidence to keep the trial going and add a few more stores to it.”

The move is also potentially worrying for Argos, whose sales are under pressure. Terry Duddy, HRG chief executive, has in the past played down the threat from Asda beefing up its non-food business.

Source : Andrea Felsted - FT.com