With talks of an Ocado takeover, and Amazon Pantry having already planted its roots in the UK, the British retail grocery market is braced for the imminent arrival of eCommerce giant Amazon, with its fresh grocery arm Amazon Fresh, writes Retail Vision's Tobias Dean for ESM.
It comes at a time when the dominance of the “Big Four” - Tesco, Sainsbury’s, Asda and Morrisons - are facing a concerted challenge from the rise of discount stores like Aldi and Lidl; a time when the pressure is on for supermarkets to innovate and provide real value to customers, or risk losing them.
Slow or negative growth, store closures, and an unsustainable home delivery environment mean a slice of the UK retail grocery pie is there for the taking.
Amazon’s annual revenue for 2015 was £107 billion, up a huge 20 per cent up on 2014. They’re targeting 2 per cent of the UK’s £149 billion grocery market. Whilst the Big Four are struggling with growth, Aldi and Lidl are enjoying 13.3 per cent and 18.5 per cent growth respectively.
Amazon have invested £11.5 billion in Europe and increased their workforce to over 40,000. The average cost of delivering groceries (£20) currently far outweighs what customers pay (£3).
It’s a fiercely competitive marketplace, with many prices actually falling year-on-year at big chains – and there are many players involved already.
With successful ventures into publishing and video streaming behind them, and having spent heavily over the last few years on both operations and personnel in Europe, Amazon are certainly betting on this one.
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