Tesco to bring AO electricals concessions to its stores

Nick Gladding
Senior Retail Analyst
@RetailAnalysis

Date : 15 October 2020

Tesco has launched a trial partnership with online electricals specialist AO to open its first physical stores at Tesco stores.

Five stores to open

The first AO concession, will open at Tesco Extra Middleton, later this month and four others will follow. Shoppers will be able to browse and purchase from all AO's product range, excluding mobile phones.  This includes larger electricals such as washing machines, fridges, and TVs that can be ordered for home delivery as well a range of smaller products such as kettles and toasters that can be purchased off the shelf.  The 2,088 square ft unit will also feature facilities such as a dedicated open kitchen area with breakfast bar where customers can ask for help and advice from AO staff, digital displays, TV wall and an‘AO-To-Go’ section.

Tony Hoggett, Tesco’s Chief Operating Officer, commented: “We’re excited about this new partnership with AO which will give customers access to a broader range of products and AO’s technical expertise on electrical goods. Our Middleton Extra store is the first of five stores to benefit from an AO concession and we’re looking forward to seeing how customers respond to this trial.”

Boosting footfall to larger stores

The move could herald a new drive by Tesco to boost footfall to its larger stores at a time when competitors are working with more third party retailers and developing new in-house concepts. Asda has been particularly active in recent weeks announcing new ventures with B&Q, The Entertainer and music Magpie while Sainsbury's continues to relocate Argos high street stores to its supermarkets. Partnering with external brands could help Tesco strengthen its non-food offer following the closure of Tesco Direct in 2018 and the scaling back of its own electricals offer. Tesco has previously partnered with Currys PC World which operated concessions at its Milton Keynes and Weston Favell Extra stores.

Who are AO?

As established electricals specialists have struggled over recent years, AO has been one of the few in the sector to successfully compete against Amazon, through a strong focus on customer service. It has also benefited from increased demand during the pandemic. In a trading update released today, H1 UK sales were reported to be up 54%. In the year ending March 2020, group revenue was £1.05bn, over 10% of which is generated in Germany.

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