Sainsbury’s has confirmed it is in discussions to sell iconic British retailer Argos to Chinese e-commerce giant JD.com, marking a potential end to nearly a decade of ownership and raising questions about foreign investment in struggling UK retail.
The supermarket group, which purchased Argos for £1.4 billion in 2016, said on Saturday that a deal with JD.com would “accelerate Argos’ transformation” and bring “world-class retail, technology and logistics expertise” to the struggling general merchandise chain. However, the company stressed that “no agreement has been reached and there is no certainty at this stage that any transaction will proceed”.
The potential sale comes as British retailers face an unprecedented crisis, with industry leaders warning that 400 of the country’s biggest shops are at risk of closure if the Government proceeds with proposed business rates tax increases. The British Retail Consortium (BRC) estimates that up to 100,000 jobs could be lost if large stores are forced into a new higher tax band.
JD.com, ranked 44th on the Fortune Global 500 and China’s largest retailer by revenue, reported revenues of $158.8 billion (£128.5 billion) in the financial year ended December 31, 2024. The Beijing-based company, which is listed on both NASDAQ and the Hong Kong Stock Exchange, employs approximately 900,000 people and serves 600 million annual active customers.
For the Chinese giant, acquiring Argos would represent a major foothold in the UK market after its failed attempt to purchase electrical retailer Currys last year. The company has been actively building its European presence, opening a large automated warehouse in Poland and recruiting senior executives from leading British retailers including Tesco, Ocado, and Amazon.
Argos remains the UK’s second-largest general merchandise retailer and operates the third most visited retail website in the country, with over 1,100 collection points, many housed within Sainsbury’s stores. However, the chain has struggled amid declining consumer confidence and reduced spending on household goods, with its valuation reportedly dropping from £1.4 billion to approximately £344 million.
In its statement, Sainsbury’s emphasised: “The terms of any possible transaction would include commitments from JD.com in relation to Argos for the benefit of customers, colleagues and partners.” This suggests efforts to secure guarantees about jobs and the brand’s future operation in the UK market.
The timing of the potential sale is particularly significant given the broader retail crisis gripping Britain. Helen Dickinson, chief executive of the BRC, painted a stark picture of the sector’s challenges this week, warning that the Government’s proposed business rates changes could devastate high streets across the country.
“Britain’s largest shops are magnets, pulling people into high streets, shopping centres and retail parks, supporting thousands of surrounding cafes, restaurants and smaller and independent shops,” Dickinson explained. “After years of rising costs, far too many stores have disappeared – leaving behind empty shells that once thrived at the heart of our communities.”
The BRC’s analysis reveals that approximately 4,000 large-format retail stores in the UK have a rateable value exceeding £500,000. If these shops are included in the Government’s new business rates surtax, around 400 face potential closure. The retail industry, whilst accounting for just 5% of the economy, already pays over 20% of all business rates, with large stores contributing a third of that total.
“Four hundred more large stores could disappear if the Government forces them into its new higher tax band,” Dickinson warned. “This would mean up to 100,000 jobs lost, emptier high streets, and less revenue for the Exchequer.”
The potential impact extends beyond direct job losses. The BRC estimates that if all 400 at-risk stores closed, local councils’ business rates receipts from retail would fall by well over £100 million annually, creating a further financial burden on already stretched local authorities.
Sainsbury’s chief executive Simon Roberts has acknowledged the challenging environment, citing “tough, competitive market conditions” affecting Argos. Since taking the helm in 2020, Roberts has increasingly focused the group on its core food business, where it sees greater growth opportunities. The company’s current “More Argos, more often” transformation strategy is reportedly delivering “solid progress”, though the potential sale suggests a strategic shift.
The supermarket giant’s decision to explore a sale comes despite initial optimism when it acquired Argos nine years ago. At the time, Sainsbury’s argued the deal would deliver cost savings, expand its product range, and improve delivery times. The integration saw many Argos outlets relocated within Sainsbury’s stores, creating convenient collection points for customers.
Reports suggest the two companies have been in discussions for months, with Sainsbury’s establishing a dedicated team to explore the deal. The supermarket has also restructured parts of its management to carve out Argos operations, potentially easing any transfer of ownership. Recent changes include Argos’s transformation team reporting directly to its managing director, Graham Biggart.
For JD.com, the acquisition would align with its aggressive international expansion strategy. The company’s previous attempt to enter the UK market through Currys was abandoned after facing competition from private equity firm Elliott Advisors. It has also trialled its own UK-focused online brand, Joybuy, which recently updated its website with a design similar to Argos.
The Chinese company is currently awaiting regulatory approval for its €2.2 billion takeover of German electricals retailer Ceconomy, demonstrating its appetite for major European acquisitions.
The BRC is urging Chancellor Rachel Reeves to exclude large shops from the new higher business rates tax band in her autumn Budget, arguing this could be achieved without cost to the public purse by slightly increasing rates for other large properties such as office blocks and commercial buildings.
“The Chancellor can back families, jobs and high streets this Autumn,” Dickinson stated. “This would not cost the Exchequer a penny, yet would help secure the future of 400 retail stores, and the communities they support, right across the country. But failure to act risks shuttering hundreds more stores, costing jobs, communities and the economy far more in the long run.”
As of Friday’s close, Sainsbury’s market capitalisation stood at approximately £7 billion ($9.5 billion), whilst JD.com is valued at $48 billion. Sainsbury’s remains the UK’s second-largest supermarket group, trailing only Tesco.
The potential sale of Argos to foreign ownership raises broader questions about the future of British retail and the government’s approach to supporting struggling high streets. With business rates reforms due to be detailed in the November 26 Budget statement, the sector faces a critical juncture.
If successful, the acquisition would end nearly a decade of Sainsbury’s ownership of Argos and position JD.com as a significant new player on the British high street, marking another chapter in the ongoing transformation of UK retail amid economic pressures and changing consumer habits.
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Image Credit:
Argos Extra, Llanelli — photo by Pohon Hardy, CC BY-SA 2.0
