Sainsbury's explores Argos sale to Chinese Amazon rival

Sainsbury's and Argos store signage showing the retail partnership that could change with potential sale to Chinese e-commerce giant JD.com (Illustrative image) (Photo by Peter Dazeley/Getty Images) Getty Images

Sainsbury's has confirmed it is in discussions with Chinese e-commerce giant JD.com about potentially selling Argos. The supermarket chain said it was exploring the sale to accelerate Argos's transformation and enhance the customer experience.

The company stressed that no agreement has been reached and there is no certainty any transaction will proceed. Sainsbury's remains committed to delivering the strongest future for Argos customers and colleagues through its transformation strategy.

Deal background

Sainsbury's acquired Argos for £1.4 billion in 2016 in a bid to compete with Amazon, but the business has not been as profitable as hoped. Following the takeover, dozens of standalone Argos stores were closed in favour of outlets within Sainsbury's superstores.

Argos currently operates 1,100 collection stores across the country and ranks as the UK's second largest general merchandise retailer. The chain maintains the third most visited retail website in Britain.

JD.com expansion

JD.com, often dubbed the "Chinese Amazon", has been growing its UK footprint after acquiring a 23,000 square metre warehouse in Rugby this summer. The e-commerce giant currently operates 11 sites across Britain and serves more than 600 million customers worldwide.

The company generated $158.8 billion in revenue last year, making it one of the world's largest online retailers. JD.com was founded by entrepreneur Liu Qiangdong in 1998 as a store selling magneto optical drives before moving online in 2004.

Retail heritage

Liu Qiangdong is now one of China's wealthiest individuals with an estimated fortune of $5 billion. The company became the largest Chinese firm listed on the US Nasdaq in 2014.

Argos was founded by Richard Tompkins in 1978 and became synonymous with its signature catalogues. The chain discontinued these catalogues during the Covid pandemic as part of its digital transformation.

Existing business connections already link the companies through Argos franchised outlets operating in China. Any potential deal would accelerate this international relationship significantly.

Sources used: "Metro", "City A.M" Note: This article has been edited with the help of Artificial Intelligence.