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Sainsbury's puts Argos on its shopping list

The supermarket chain wants to buy Home Retail Group, the owner of Argos, Homebase and Habitat.
Matt Brian, @m4tt
01.05.16 in Home

For big-name supermarkets and high-street stores, business has been tough as of late. Sainsbury's has seen its UK market share decline following the rise of discount grocery chains like Aldi and Lidl, while Argos has been squeezed by online competitors like Amazon. With profits falling, Sainsbury's has been seeking ways to reverse its fortunes, with Home Retail Group potentially offering one avenue of opportunity. The supermarket giant confirmed today that it tabled a £1 billion bid for the group -- which owns Argos, Homebase and Habitat -- back in November, but was subsequently turned down.

Sainsbury's says it is considering its next steps but believes Home Retail Group is a good fit based on both companies' reputation in their respective markets. "The combination is an opportunity to bring together two of the UK's leading retail businesses, with complementary product offers, focused on delivering quality products and services at fair prices, through an integrated, multi-channel proposition," it added in a statement.

Since May 2015, Argos has operated a number of smaller pick-up outlets inside Sainsbury's stores, offering customers up to 20,000 items for instant purchase or later collection. It was seen as a way to put pressure on Amazon and other online retailers that don't have a large physical presence in the UK.

With Amazon continually expanding its grocery delivery options, Sainsbury's must now ready itself to take on the world's biggest online retailer. By picking up Home Retail Group, it hopes to "create a food and non-food retailer of choice for customers" that has stores in all the right locations, a wide range of products and a speedy delivery network.

It makes a good case, but Home Retail Group has (so far) refused to budge. Sainsbury's now has until February 2nd to decide whether to make another offer or keep on going it alone.

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