Argos sails into top league

When the catalogue retailer Argos was launched, its most successful products were a fibre-optic light (pounds 7.95), a carpet-sweeper, (pounds 3.20), a shopping trolley (pounds 3.35) and a spice-wheel (pounds 4.70). The image of a slightly naff, a bit downmarket but phenomenally successful business was set.

Twenty-three years on from its birth, Argos has opened more than 390 stores and is seen as an institution in the high street similar to old favourites like Boots. The group announced yesterday that itsturnover was up 18.2 per cent to pounds 561m and profit before tax had increased by 45 per cent.

Their sales method effected a retailing revolution in Britain. Purchased goods do not come off the shelves but are ordered via computer from massive unseen storerooms. The customer fills in a form, takes it to the terminal to pay, receives a receipt and picks up his or her item from the collections desk.

In 1994, Argos also became the first UK chain to use touch-screen technology, which enables customers to process their own purchase and order it from the storerooms.

The idea behind Argos came from America and caught the eye of Richard Tompkins, who had introduced Green Shield stamps in Britain in the early Seventies. He launched the first 17 Argos stores from a London hotel, with much razzmatazz (18 dancers and specially written songs) on 17 July 1973. Sales totalled pounds 6.5m in the first financial year.

Argos's most successful areas are now branded electrical appliances, jewellery and electronics and any suggestion that the Argos name is synonymous with lower-income groups or the less trendy is greeted with fury by the group. "The Argos shoppers have exactly the same demographic profile as the UK," said Janet Hildreth, group public relations manager. "We have shoppers from every single social group."

"Argos is a company with quite a long history," said George Wallace, chief executive of Management Horizons, specialists in retail consultancy. "I think initially it may have been seen as a little bit downmarket. But my view is that it is one of those institutions in retailing which goes across the social and income groups. I think it has really come of age."

For Richard Perks, senior retail analyst at Verdict, the success of Argos in recent years reflects the 1990s zeitgeist. And, despite the feelgood factor returning, there is as yet no rush back to the conspicuous consumerism of the Eighties.

"Even though we are going through a consumer upturn, people still respond carefully to the combination of value for money, quality and guaranteed brand names," he said. "At the end of the day, it comes down to the right products at the right price."