The big guns are now being rolled into position in Amazon’s assault on the UK’s £190 billion food market. With spending on groceries and food accounting for half of all retail spending in the country, success will count as a major prize for the online retail and logistics giant and it is willing to commit huge investment to secure it. Last year, Amazon acquired the up-market groceries retailer Whole Foods for $13.7 billion (£10.64 billion).
The specialist in pricey high quality and artisanal groceries only has a small footprint in the UK but Amazon is looking towards expansion. If Asda and Sainsbury’s proposed merger leads to the competition watchdog ordering the sale of a block of supermarkets, Whole Foods hopes to snap them up. If not, commercial property agents have already been recruited and are scouring for suitable units.
However, it is not Whole Foods that the UK’s big supermarket chains such as Tesco, Morrisons, Sainsbury’s, Asda and even German budget invaders Aldi and Lidl have to worry about. Waitrose perhaps but the mass market incumbents, less so. Whole Foods’ pricing is not for everyone. Or at least not for the backbone of the wider general public’s weekly groceries shop. But news that Amazon’s other groceries business, the one that the acquisition of Whole Foods was made to build perishable goods supply chain know-how for, will have executives at the major supermarket chains starting to get nervous.
Amazon Go opened its first store in Seattle in January of this year. It is located on the ground floor of the company’s city HQ. There are now six operating Go stores, spread between Seattle, Chicago and, of course, San Francisco. Reports suggest that Amazon is targeting as many as 3000 Amazon Go locations operating by 2021. 3000 in a little over 3 years. Recent reports now suggest that the UK is being targeted for Amazon Go’s first big international footprint. The Times reports that property agents have been tasked with finding up to 200 suitable sites across the UK for Go stores.
Amazon Go convenience stores sell a range of products focused on high quality ready meals and lunch staples such as sandwiches, as well as ‘convenience groceries’ comparable to those sold by the smaller ‘express’ supermarket formats of rivals like Tesco. The difference is they are kitted out with the latest technology in the world, rumoured to have cost $1 million for the first Seattle location, eliminating the check-out process. Shoppers activate an app when they enter the store and their purchases are tracked by an array of sensors, computer vision and other tech. They then simply walk out of the store with the cost of the goods in their possession automatically deducted from their bank card linked to the app.
Amazon is the second most valuable company in the world after Apple, whose top dog position it is expected to take over in the near future. It has huge cash reserves and is intent on taking a major slice of the groceries market. It also has a revolutionary tech-based new business model that cuts its operating costs and is more convenient for shoppers. The UK’s current big supermarket and convenience store chains are right to be worried. Amazon Go is about to storm their island stronghold.