Morrisons takes fight to its rivals
Link- up with Amazon puts big three on back foot
AMAZON PRIME shoppers will be able to get fresh food such as meat, fish, fruit and vegetables delivered to their door under a new deal with Morrisons.
The US online giant has chosen the Bradford- based grocer as its partner in an attempt to take on the UK’s three biggest supermarkets, Tesco, Sainsbury’s and Asda.
Until now Amazon has offered a very limited fresh food offering in cities like London and Manchester, but it hopes the Morrisons deal will help it steal customers from the big supermarkets.
Morrisons’ chief executive David Potts said “This is a lowrisk and capital- light wholesale supply arrangement that demonstrates the opportunity we have to become a broader business.”
Analyst Clive Black at Shore Capital said: “We see the tie- up with Amazon as being potentially quite inspired by David Potts, as it is highly complementary to the business in its current form.
“We have heard it said by some that Mr Potts may be more of a re- tailer than a strategist – such folk may need to think again.”
The deal will allow Morrisons to infiltrate the important London market where it currently only operates in the north of the capital.
It will also introduce Morrisons products to wealthier customers. Amazon Prime members pay an annual fee of £ 79.
Analyst Bruno Monteyne at Bernstein said: “This deal fills an important hole for Amazon’s Prime Now service as the key component missing from that is fresh food.”
Other analysts said the deal will put pressure on Morrisons’ big three rivals.
John Ibbotson at Retail Vision said that Morrisons’ competitors “suddenly don’t look so big after all”.
“Tesco could soon be about to find out what it’s like to be David rather than Goliath,” he said.
“The only winner is the consumer. The big four are fighting back with click- and- collect, but who will want that if Amazon delivers to your door in one hour?”
The tie- up boosted shares in Morrisons which rose six per cent to close up 11p at 199p.
Retail analysts have long spec- ulated that Amazon was gearing up to launch Amazon Fresh in Britain after it previously tested a small range of chilled and frozen items in the country.
Morrisons, which has a smaller footprint in the more affluent areas of London and the south east of England than Tesco and Sainsbury’s, will have less to lose from Amazon’s entry into the market.
Amazon launched delivery of fresh food in Seattle in 2007 and has moved to a handful of other US cities since then. Its expansion into food in the rest of the world has focused so far just on packaged goods due to the complexity of delivering fresh and frozen products.
Mr Monteyne at Bernstein said the deal means Amazon can now target every part of the retail sector – from the big weekly shop to the short trip to the local store to buy bread, milk and vegetables.
“Morrisons may feel that Amazon isn’t really a threat for its smaller stores in the North of England,” he said.
“This would be a convenient divide and conquer outcome where Amazon and Morrisons specialise where they are best and support each other mutually.”
DEAL: Jeff Bezos, the chief executive and founder of Amazon, has seen the group take a big step into the fresh food market, putting pressure on other grocers.