Ajaz Ahmed founded the industry-changing Freeserve and is currently running Legal365. He also likes to tell it like it is as you will see over a short series of columns:
A little while back a business story appeared on BBC Breakfast about Argos announcing that its profits had collapsed and that they had hired consultants.
At no doubt considerable expense they had concluded the business should reposition itself to be more of an internet business and scale back on its catalogue operation.
The chief executive of Home Retail Group, Terry Duddy appeared on the TV and explained how the internet had changed their customers shopping habits and that more of their customers were now using devices like tablet computers to do their shopping.
After the review they have decided that they needed to be more of an internet business. To confirm this fact, the day before Apple had announced that they had sold their 100 millionth iPad.
All this brought a smile to my face because Terry Duddy used to be the managing director of PC World. I had worked for PC World and in February 1996 I went to see him to tell him about an idea I had. I told him that the internet was going to change everything, that in the future people would access the internet from devices other than the PC, that every time we sold a PC we sold a Trojan horse that allowed other people to make money from our customers.
I told him we needed to become an Internet Service Provider because we could get to the customer first and unlike all our competitors we would not have to spend a fortune to acquire the customer because they were stood in front of us and we had just sold them the means to get on the internet. All of this seemed so obvious to me.
He said he would think about it and I sent him a memo to remind him of our conversation. I still have a copy of the memo if he ever wants to see it. A few weeks later he came to visit my store and I asked him if he had a chance to think about my idea, he said that he had, he put his arm around me and said: “Don’t worry, we’re working on something even better”, which basically meant, I don’t get it so you just get on with your day job.
Very shortly he left to become the MD of Argos and I persevered with my idea and Freeserve was launched on the 22nd September 1998 and it was a huge success.
Massively successful ISP
The internet has gone on to change all our lives but why is it that companies like Argos are still coming to terms with the internet, this is now 2012 and I told Terry in 1996 how big the internet was going to be, why didn’t he listen? Was it because I was an uneducated shop manager?
Argos is principally a retailer, it has hundreds of shops that customers visit, but the quality of the stores is appalling. I don’t visit Argos that often but I decided to visit my local store to see for myself what the standards are like, I found it all very depressing.
Compared to some of our great retailers the stores look tired, the colours, the layout, the POS, the merchandising and the layout looked very last century. I wanted to buy some replacement heads for my Phillips electric toothbrush. In the catalogue they are priced at £19.99, I normally buy them from Amazon for a lot less than that.
Out of curiosity I decided to punch the code into the screen to check the price and found that the current price was actually £13.99, how difficult would it be to put something around the catalogues that encouraged people to check the latest price? I wonder how many people simply walk out after just looking in the catalogue.
I’ve got two questions:
To the people the work in the retail division of Argos, do you not walk around other stores and then compare them to your own stores? And then ask yourself the question, why have we allowed ourselves to fall so far behind?
The people that work in the internet part of Argos, do you ever shop on other internet sites yourself? Do you close your eyes to what’s going on?
If nothing else, your shareholders deserve an answer. Argos advertises heavily in the newspapers but the problem is that when the customers have to go into the stores to buy those advertised products and it’s not a great experience. It’s a similar disappointment on the website.
This isn’t rocket science, you don’t have to hire expensive consultants, it’s about basic retailing and don’t be taken in by nerds who don’t actually know much about the internet.