AO chief executive and founder John Roberts told Retail Week that small consumer electricals have been the worst affected by supply chain issues in the lead up to the festive season.

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The electricals retailer, which today slashed its profit expectations for the year, said the business is facing a number of challenges that mean the ordinarily lucrative Black Friday and Christmas season will be dampened.

Roberts said that Black Friday is now spread out across the whole of November, with early indicators that customers will be shopping less, while industry-wide issues such as a chip shortage have also impacted stock levels.

“I could sell 20,000 Xboxes and PlayStations this week, but I can’t because I can’t get them anywhere,” he said.

“Every category has been affected – an American fridge-freezer, for example, costs $300 more to ship from the Far East than it did before. That inherently creates real disruption.

“If you move across consumer electrics into gaming and phones, the chip shortages are creating issues and then there is an increase in global demand simultaneously in a way there never has been before – manufacturers don’t have the capacity, let alone the raw materials.”

Roberts also attributes the issues to AO’s relative lack of experience in the consumer electricals market.

“We’re a lot younger in the consumer electricals categories – where we’ve got 20% market share in MDA [major domestic appliances], we’ve got around 2% in gaming,” he added.

“We are younger in those categories, both in our relationships with customers and being known for them, as well as being younger in our relationships with manufacturers.

“On an extremely specific product like an iPhone 13 or an iPad, there are fewer substitution options. If you want a PlayStation 5 and can’t get it, your option is to buy a PlayStation 4, whereas if you want an oven or a washing machine, you can definitely get it – even if it wasn’t the one you originally wanted. The substitution profiles across categories are very different.”

Nevertheless, Roberts remains confident that AO can weather the storm.

He concluded: “On a macro basis, we’re really comfortable that all the fundamentals of the business are in place.

“Obviously, we’re working hard to fix the issues that the whole industry is facing. We’ve fixed the driver issue but there’s still a ton of short-term challenges, but they are exactly that – short-term.”

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