Mor­risons takes fight to its ri­vals

Link- up with Ama­zon puts big three on back foot

Yorkshire Post - Business - - FRONT PAGE - ROS SNOW­DON CITY EDITOR Email: ros. snow­don@ ypn. co. uk Twit­ter: @RosSnow­donYPN

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.

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