In pictures: A look inside AO’s first ever physical retail format with Tesco

As Retail Week revealed last week, the pureplay electronics retailer has partnered with Tesco and opened the first of five shop-in-shops at Tesco Extra in Middleton, Greater Manchester. 

The 2,000 sq ft store will allow customers to order larger electricals such as washing machines, fridges and TVs for home delivery, while smaller items will be available to purchase off the shelf. 

Each product available at the shop-in-shop will have a QR code associated with it. Customers will be able to scan the code corresponding to the product they wish to purchase, which will then take them to the AO website. 

The space includes digital signage broadcasting multimedia content on different screens.

AO chief executive John Roberts says the six-month pilot with Tesco is focused on tapping into growing consumer demand for convenience across all categories, including electricals and white goods.

“We were looking at this a few years ago and saying, on a five, 10, 15-year view, what does the landscape look like? My philosophical view was that the majority of the market would move online, but not all of it. So, for the element of the market that doesn’t move online, what does that look like?

“Our view is that it will be much more convenience-based. Not everybody wants to buy everything online, so this is about taking AO, from a convenience point of view, to where customers already are.

“Conceptually, we knew that’s what we wanted to do, so then we said who would be the best partner to work with? The most obvious partner to work with is one that has the space to be able to do it with, and the largest amount of footfall, so Tesco is a standout partner.”

Asked whether there were plans to roll the pilot out across more than five Tesco stores in future, Roberts said: “Neither of us have done this just to do five stores. But the output of what happens in these five stores will inform the best next steps for us both.

“It would be premature for us to judge what that looks like, but clearly Tesco has got a lot of stores and we are hugely ambitious.” 

AO’s chief operating officer Danny Emmett said: “This is a way for us to introduce new customers to the brand. We very much see ourselves as an ecommerce retailer, but we aspire to be the destination for electricals so it is about meeting new customers. The physicality of the store presence will help us do that.” 

“This is something we have been working on for well over a year and has been a developing opportunity. We have been speaking to Tesco for a long time as a partner to make sure we get it right – we haven’t just raced into doing this; we’ve put a lot of thought and effort into it to make sure the execution represents the brand.

“Covid has obviously accelerated the migration to online. However, footfall into supermarkets has remained and even grown in a lot of cases, so this is a real opportunity.”