Sainsbury's takeover could lead to large number of Argos stores closing

"Sell everything!" The head of credit at RBS is convinced we are on the brink of another financial crisis but there's no sign of cataclysm in Sainsbury's Christmas results.

Like for like sales slipped slightly over the festive period but the supermarket was the only big grocer to grow market share.

"Some people think the tide may have gone out as far as it's going" Mike Coupe told journalists.

He's clearly one of them.

Consumers may be feeling a little better off, the threat posed by Aldi and Lidl may have diminished but Mike Coupe has other preoccupations - this morning setting out the logic that underpins his interest in buying Home Retail Group.

The problems of Argos and Homebase are well-documented.

On the face of it Sainsbury's needs this deal like a hole in the head but Mike Coupe sees the tie-up as a key part of his plan to equip Sainsbury's to thrive going forward.

Coupe's view is that the digital shopping revolution is accelerating.

As it stands only 20% of Sainsbury's sales are online but "virtually any transaction today starts with an online investigation".

Coupe's 74 year-old mum apparently still shops in store but his daughter uses her mobile phone "like a shopping remote control".

Coupe's pitch is that by combining Argos and Sainsbury's (note absence of interest in Homebase) you create a group that is greater than the sums of its parts.

A business with greater buying power, selling 100,000 products in more categories in more locations and with a delivery service to rival Amazon at precisely the time the American titan moves into the British groceries market.

The direction of travel seems clear.

The smartphone is only seven years old but Ofcom says two thirds of adults in Britain own one, and half of households have a tablet computer.

These devices have transformed the way we live and there's clearly some way to go but the retail question is; Where will the high street/online sales balance settle?

The chief executive of AO World believes we are reaching a "tipping point" where traditional retailers will suddenly find themselves with large numbers of stores they simply don't need.

John Roberts believes he can build a business to rival Currys without opening a single shop.

That's his bet, we'll see.

AO's shareprice suggests there are sceptics. As Mike Coupe puts it "the landscape is unpredictable".

Sainsbury's already has more space than it needs.

If the takeover goes ahead vast numbers of Argos existing 800 stores will close as concessions open in supermarkets.

Coupe's expectation that in five years time the combined business will employ more people than it does today won't necessarily be that reassuring for anyone currently working in Argos.

Homebase staff have even more reason to be worried.

Sainsbury's believes the financial case for a takeover is "compelling" but Coupe refuses to say at what price.

Shareholders will wait to see how much Coupe is prepared to pay for Home Retail Group before forming their judgement.

Some sort of bid looks inevitable; it may not succeed.