Tuesday, April 29, 2008

Case Study of a Distribution Industry - Argos Distribution Centre, Stafford

What needs to be considered in the location of a distribution centre?

The operating costs and customer service will be very important in influencing the location of a new distribution centre and the new location must be considered in relation to its suppliers (transport networks) and promixity to its customers location (this will determine response time)

(photo credit: D Bagshaw - www.geograph.org.uk/photo/83754 -CCL)

Therefore things to consider will be:

  • Access to Motorways
  • Adequacy of surrounding infrastructure for the transport of goods in and out
  • Transport costs
  • Availability of workers and labour costs
CASE STUDY: ARGOS DISTRIBUTION CENTRE Acton Gate, Stafford (Staffordshire, E Midlands)

Argos, the pioneer of catalogue retailing is one of the UK's leading retailers with a total of 474 stores in the UK / Republic Ireland and with annual sales of over £3 billion, serving over 41 million customers per year.

As well as outlet shops based on their catalogue, there is Argos Direct, the home shopping service (based on both telephone and web based orders).

For a company like Argos, the location of its distribution warehouses is essential. Argos has a number of distribution centres, but its Home Delivery service (Argos Direct) has its national operations centre at the Acton Gate Distribution warehouse, Stafford which was opened in 1998.

The map opposite shows the location of the distribution centre. Why then did Argos choose to locate at this site?
  • - Easy access to the motorway and main access roads (J13 of the M6 crossed by the A449) for the transport of goods and access for workers
  • - The central location of the site in the Midlands means that drivers can have easy access to Argos's regional bases and drive through the night without exceeding their permitted number of work hours.
  • - Large, flat greenfield site (the warehouse itself is 600,000ft2), providing plenty of room for storage (essential for a distribution industry dealing with large volumes of stock), as well as transport and office facilities
  • - A plentiful labour supply from nearby Stafford.
There were however some problems with the location:
The site itself, although having excellent accessibility was not ideal for expansion opportunities due to be constrained by the surrounding transport networks (A440, M6 and railway - see map)

Since the opening of the Acton Gate centre a new centre has now opened at Milton Keynes (Marsh Leys) and a third and largest centre opened in Darlington in 2005, further helping to reduce delivery distances.

Exam Practice - a typical question based on this case study might be:
Name and locate an example of a distribution industry which you have studied in the UK. Explain why the distribution industry is located there. (6 marks)

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