Retailer interview: David Lawson, Managing Director, AO Retail
AO was recently named Most Innovative Pureplay at the 2020 RTIH Innovation Awards. We sat down with AO Retail MD, David Lawson, to discuss a remarkable 2020 for both the electricals specialist and the retail sector as a whole.
RTIH: As we approach the end of 2020, what are your key retail takeaways?
DL: 2020 has been a year like no other. For retail, the most notable development has been the shift to online shopping across all demographics.
We believe the coronavirus pandemic has driven structural market changes as online becomes even more popular with existing customers and customers who have never bought online have done so again and again.
Our peak trading period took place during national lockdown, which resulted in our busiest Black Friday to date. The fact that we saw no impact on trading when the high street reopened after the first lockdown really emphasises that we have continued to delight customers throughout this period.
In terms of trends, sales offridges, freezers and cookers, as well as air fryers and coffee machines, have risen substantially as customers have adapted their living space to function as both the home and the office.
RTIH: How has 2020 been for AO?
DL: It’s certainly been a huge year for the business. We’ve invested in both infrastructure and people, doubling our logistics capacity in a matter of months and adding 800 new roles to the business.
In terms of our logistics network, we now have 20 delivery depots and recently opened over 730,000 sq ft of warehousing space across the north west, meaning we can manage demand now and into the future while also ensuring that our colleagues can safely socially distance.
Another key development has been our headline sponsorship of the Manchester Arena, which has been officially renamed the ‘AO Arena.’ We’ve also opened our first ever in-store experience as part of a six-month trial partnership with Tesco.
RTIH: What are the biggest challenges facing the online retail sector right now?
DL: With so many customers turning to online to shop for their appliances during lockdown, we made swift decisions to invest in new infrastructure to manage demand while maintaining service levels for customers.
During the height of the first lockdown, we had to strike the right balance between continuing to offer our customers with fantastic customer service and ensuring that we fully complied with official guidance on health and safety.
As sales continue to increase, there has also been more demand for stock within the market and we believe this is one of the biggest challenges facing retailers.
As supply chains adapt to the pandemic, supply has posed an ongoing challenge for the business but withour strong supplier relationships, scale and expertise, we’ve been well placed to tackle this.
Investing in our long-term growth has meant we’ve been able to continue offering our customers the exceptional service and range of products they have come to expect.
RTIH: What are the biggest opportunities?
DL: We believe that the shift to online is the biggest opportunity for retailers.
We’ve spent the past 20 years working hard to show customers that the AO way of buying electricals, is the best way, so the next step is to continue to cement the change.
The pandemic has been an extremely difficult period for many, but we’ve taken the opportunity to strengthen our team with over 800 new roles created since March.
By growing our infrastructure now and taking decisive action at the beginning of the pandemic, we have a solid foundation to manage surges in customer demand in the future.
RTIH: Do you expect the online boom to continue into next year, or will things cool down as physical retailers begin to reopen?
DL: When the high street reopened between lockdowns, we saw no material impact on our trading and the pace of demand continued, even as our bricks and mortar competitors reopened their doors.
In fact, we’re currently fulfilling orders for our largest ever peak trading period. We believe the changes in customer behaviour will stick, and we expect online to play an even more important role in shopping behaviour moving forward.
We’ve always believed that once people find a better way of doing something, they rarely go back. During a time of uncertainty, AO has offered a lifeline to customers, helping them to adjust to staying inside for the long haul.
As a retailer, it’s up to us to keep up our high standards and continue impressing millions of new customers next year.
RTIH: What sort of holiday shopping season are we about to see?
DL: This Black Friday has been our busiest ever, but our investments have ensured that we’ve been able to meet the demand now and in the future.
We’ve fulfilled a record number of customer deliveries during November with big televisions, vacuum cleaners and washing machines proving to be popular purchases.
At AO Logistics, our weekly capacity for deliveries has increased by a huge 130% in the last eight months, which put us in the best-possible position to fulfil Black Friday orders. We delivered to over 20,000 customers’ homes in just one day.
As customers plan for Christmas, the momentum is expected to continue into the new year.
RTIH: What can we expect from AO in 2021?
DL: Everyone has seen the potential of online retail over the past year and we anticipate that 2021 will be another busy year.
The past few months have proven that our model can be scaled efficiently, so our operation will continue to grow in response to demand from customers.
Sustainability is also going to be a real focus for the business over the coming years, as we want to build on our solid foundations with the Telford recycling plant and continue to invest in operating as responsibly as possible.
