LONDON Britain's No. 2 supermarket group Sainsbury (SBRY.L) plans to convert 60 Argos general merchandise stores to a digital format and open more in-store Habitat outlets over the next year, it said on Thursday.
Last September Sainsbury purchased Argos- and Habitat-owner Home Retail for 1.1 billion pounds, securing an avenue of growth in non-food while also enhancing its online logistics operations.
The acquisition has so far proved a success with Argos's underlying sales increasing 4.3 percent in Sainsbury's fiscal fourth quarter.
Sainsbury has already opened 50 Argos Digital stores, using tablet PCs instead of catalogues to select goods and place orders, in its supermarkets and has committed to opening 250 over three years.
The move to transform 60 stand-alone Argos stores to the digital format, which offers shoppers faster access to thousands of products, represents the next stage of Sainsbury's growth plans. It also said it plans to open another 10 mini Habitats in supermarkets in its 2017-18 year, bringing the total to 17.
Argos Chief Executive John Rogers noted an uplift of between 1 and 2 percent in sales from Argos customers shopping for food, general merchandise and clothing in Sainsbury stores.
He said Argos Digital stores located in Sainsbury supermarkets open for more than a year were delivering like-for-like sales growth of 20 to 30 percent.
However, some analysts caution that life could get tougher for Argos as 2017 progresses. They argue it will see higher import costs due to the weaker pound, while consumers are likely to see a decline in discretionary income as inflation bites.
(Editing by David Holmes)