Amazon expands into grocery stores

Amazon looks set to develop its grocery activities in the UK as well as the US

Amazon’s plans to acquire US organic retailer Whole Foods Market in a £10.8bn ($13.7bn) deal announced last month, has sent shockwaves through the grocery sector as it foreshadows further expansion of the online retailer into the UK multiples’ traditional ‘bricks and mortar’ area of business.

“This is the clearest indication that Amazon intends to be a serious player in grocery retail – and is a significant wake-up call for grocery retailers in North America and the UK,” said Harsha Wickremasinghe, a food and drink specialist with mergers and acquisitions firm Livingstone Partners.

“It also highlights that Amazon clearly believes that in order to achieve long-term success in the grocery category, it is essential to have a bricks-and-mortar presence.”

Wickremasinghe said Amazon was known to be scouting for prime central London locations as part of its move into grocery retail in the UK.

‘Nine supermarkets in the UK’

“Exactly 12 months since the launch of Amazon Fresh in the UK, and in one fell swoop, the online giant will now have nine supermarkets in the UK – seven of which are London-based,” he added.

“Whole Foods’s proposition also has an excellent fit with the typical London-based Amazon Prime Customer. The UK grocers have downplayed Amazon’s impact on their sector to date, but this latest move should have them genuinely looking over their shoulder.”

Jonathan Buxton, a partner and head of retail at Cavendish Corporate Finance, took a similar view.

The acquisition of Whole Foods is the online giant’s largest deal to date and demonstrates Amazon’s ongoing commitment to building a presence in the grocery market. The scale of the deal has already sent grocery stocks reeling and is likely to cause disruption in the wider retail industry,” he said.

“This deal is a signal of Amazon’s continued commitment to the grocery industry and follows the launch of the now established Amazon Fresh delivery service, and its recent supply deal with Morrisons. The acquisition of the organic grocer is Amazon’s second foray into bricks and mortar and follows reports from last October that Amazon was planning on building its own grocery stores.”

‘Chain of cashier-less fresh food stores’

E-commerce delivery specialist ParcelHero suggested the deal between Amazon and Whole Foods Market could lead to a chain of cashier-less fresh food stores.

“Amazon is certainly getting fresh about fresh produce,” said ParcelHero’s head of consumer research David Jinks. “It has done a deal with Morrisons to deliver online produce in the UK and is now very successfully delivering fruit and veg within the hour in a number of UK and US cities. The purchase of Whole Foods Market offers a huge new opportunity.”

Jinks added that Amazon was understood to be developing cashier-less stores in the US and trialling them in Seattle.

“A chain of automated Whole Foods stores, in the US and here in the UK, might prove attractive to busy younger shoppers,” he said.

Related News

Florette has acquired MyFresh's Wigan site

Salad firm buys processing site from MyFresh

Amazon’s acquisition of Whole Foods Market has been approved by the US competition regulator

Amazon’s takeover of Whole Foods approved

Amazon is to dedicate its Cambridge development centre to drone research

Amazon to devote site to drone research

Amazon has opened a 'queue-free' grocery store in the US

Amazon launches zero checkout store

Amazon plans to build a £1.2bn air cargo hub in the US

Amazon to build £1.2bn air cargo hub

Amazon completed its first drone delivery in the UK

Amazon runs UK drone delivery test

Amazon has already launched its fresh delivery service in the UK

Amazon could open drive-thru stores

Amazon is to create 1,200 jobs in Warrington

Amazon to create 1,200 permanent jobs

The Heineken Dash Button allows users to instantly order beer at the touch of a button

Heineken Dash Button launched by Amazon

Amazon acquires Whole Foods Market for £10.8bn

Amazon to acquire Whole Foods Market for £10.8bn

Morrisons’ new deal with Amazon will boost its role as a ‘food maker and shopkeeper’, said David Potts

Morrisons’ new Amazon deal will build its role as ‘food maker and shopkeeper’

Submit a comment

Your comment has been saved

Post a comment

Please note that any information that you supply is protected by our Privacy and Cookie Policy. Access to all documents and request for further information are available to all users at no costs, In order to provide you with this free service, William Reed Business Media SAS does share your information with companies that have content on this site. When you access a document or request further information from this site, your information maybe shared with the owners of that document or information.