‘We’ll clean up with £2-a-week washing machines’
JOHN ROBERTS is not a man short of self-belief – or opinions. The founder of the electrical goods delivery group AO World shifts from evangelising about his business – now approaching £1billion a year in sales – to trigger-happy putdowns faster than it takes for one of his kettles to boil.
Waitrose was ‘stupid’ to lose its £300million-a-year Ocado delivery contract to Marks & Spencer, the Government overseeing the Brexit crisis ‘couldn’t run a bath’, while he saves his most scathing assessment for his own school record: ‘I f***ed it up.’
Complex issues seem far simpler in the presence of the 45year-old Bolton businessman. This undoubtedly helps when explaining to investors why the company is still loss-making after five years on the market.
His firm sold mostly white goods when he took it to the London Stock Exchange in 2014 – netting him a cool £86million – later branching out into televisions, cameras, laptops and even smart speakers. Turnover has trebled since then but
the share price has not, prompting him to get back in the driving seat as chief executive in January.
‘Go and ask someone ten years ago what they thought about Amazon’s share price. Go and ask someone five years ago what they thought about Ocado’s share price,’ says the former private schoolboy who skipped university and went to work for a kitchens business.
To emphasise the comparison with other online pioneers who struggled to turn a profit early on, he adds: ‘There is no other AO World globally – it doesn’t exist – and we are building this from scratch.’
I point out that AO’s shares hit their lowest point ever in recent days – 98p – compared with the float price of £2.85. ‘We sell 20-odd categories of goods. We are generally regarded as having the best two-man delivery network in the country. We are a pioneer. But all anyone wants to talk about is, “Yeah but you lost £5million last year.”’
As he rightly suggests, few of the internet entrepreneurs with whom he regularly rubs shoulders have had an easy ride.
AO has taken ‘longer than we thought’ to make its German division profitable, he says. Now he talks about redoubling his commitment to reverse the decline – even if the City ‘has no metric to value culture and mindset’.
He has undoubtedly survived adversity. Currys owner Dixons was ‘obsessed with killing us’ under previous boss Seb James. But now most of his other rivals selling big and bulky white goods have perished, he says. ‘The reason the graveyard for this sector is full is because it is hard. Tesco, Sainsbury’s, Asda, Co-op, Boots have all pulled out. Amazon are not in this space – they don’t do big and bulky. This is an amazing UK e-commerce entrepreneurial success story. We have done this all through Northern grit and determination and we beat the odds against a host of entrenched competition.’ He says when Germany comes around AO will ‘make £50million a year’. The UK and northern European electricals market is worth £100billion a year. He hints that his aim is nothing short of a 20 per cent share.
He’s also been exploring a rockbottom £2-a-week washing machine with both ‘Generation Rent’ millennials in mind as well as millions relying on high-cost credit.
Roberts says a trial of his five-year contract will go into thousands of homes ‘within weeks’. His network allows them to savagely undercut the much maligned rent-to-buy firm Brighthouse where comparable prices would be as much as £10 a week, he says. ‘We can pick it up because we’ve got a van driving past every day and we have a clearance centre, recycling facility – all of which Brighthouse don’t have. So all that makes the cost far more affordable than them and vastly cheaper than going to the laundrette.’
He allows himself an uncharacteristic pause when asked about the willingness of shoppers to spend. There’s a hesitation in the consumer economy, he says, which is ‘displaying recessionary behaviour at a time when it should be flying’.
Conditions are even harder on the high street. Shops were ‘asleep, steeped in arrogance’ when the internet arrived, he says.
He says he was shocked that Waitrose lost its contract to supply £1.6billion-a-year online grocer Ocado – run by his friend Tim Steiner – to M&S. Some say Waitrose simply couldn’t make the numbers work and were not as desperate as M&S. But Roberts says: ‘Who would be that arrogant? Who would be that stupid? It suggests they think they can deliver to the extent that Ocado can.’
Not everyone will agree with all of Roberts’ opinions. Waitrose, after all, is owned by his rival John Lewis, and Roberts describes himself as a Tory voter who, bemoaning the destruction of the centre ground in politics, would vote for former Labour Minister David Miliband ‘in a heartbeat’ if he were to become Leader of the Opposition.
But he tends to follow his ideas through to a logical conclusion. Not least a project he is working on to ‘save the NHS and the criminal justice system a fortune’.
Onside Youth Zones, a charity of which he is chairman, has built 11 giant youth centres designed to be more than just ‘some sh***y old building for kids to knock about in’. Each has 40 activities on offer and caters for about 200 children a night, providing sports halls, a performing arts studio, design area, and music and cooking lessons.
Roberts, who says he gives most of his million-or-so annual salary to charity, is fervently supportive.
‘Every time we build one, antisocial behaviour crimes drop by 50 per cent within four weeks of opening,’ he says. ‘We break down barriers across gangs and it becomes a mecca for other charities.’
The charity has already raised £140 million, wants to build at least 200 giant multi-storey sites across the country and raise a £1billion endowment – something that will be possible if the Government matches funding pound for pound.
‘If I’m being fair, it’s very hard nationally to solve the problem that manifests itself in knife crime, rising prison populations, kids in care. But central Government is still phenomenally dysfunctional.
‘When you bounce your grandchildren on your knee when you’re 70, you point to things you’re proud of – for me, AO and Onside – and I can say, “We helped do that”. The world is a better place for the fact I was in it.’
We have done this all through Northern grit and determination