Supermarket shares knocked by Amazon’s plans for Whole Foods

FRESH fears about Amazon’s assault on the grocery landscape knocked shares in Britain’s food retailers yesterday after the online giant announced that it would start slashing prices at Whole Foods as soon as next week.

Just two months ago Amazon announced its biggest ever takeover with a £10.7bn swoop on upmarket grocery chain Whole Foods, and the online giant is wasting no time in using the deal to propel its near decade-long push into groceries.

Whole Foods, which is known for its organic and fresh produce, has more than 460 shops, with the bulk of the stores in the US and Canada and several in the UK. Amazon has announced that upon closing its takeover on Monday it will start lowering prices of Whole Foods’ staple groceries. It will also introduce Whole Foods’ own-brands to its Amazon Fresh, Prime Pantry and Prime Now offers across London and the South East.

As a result, investors in British food retailers have taken fright that Amazon’s efforts could erode profits further at a time when they are only just recovering from a brutal price war.

Tesco was the heaviest faller yesterday, losing as much as 2.6pc before ending down 1.7pc, followed by Marks & Spencer, which fell 1.1pc. Morrisons, which has a deal to supply Amazon with fresh and frozen food in the UK, shed 0.9pc while Sainsbury’s lost 0.5pc. “The takeover by Amazon always meant change was inevitable at Whole Foods, however that change is coming much faster than anyone imagined,” said Neil Saunders, managing director at Globaldata Retail, yesterday.

He added that while Whole Foods remained niche, “rivals should be under no illusion that they are now dealing with a competitor that is not afraid to damage profits and margins if it creates long-term gains”. Separately yesterday, Roy Price, Amazon’s media head, hinted that its Prime Video could feature more live sport.

Amazon added Eurosport pay TV channels to its streaming service in May and Mr Price told an audience at the Edinburgh Television Festival yesterday that sport was “definitely an opportunity we’ll explore”.