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Ecommerce Puts Squeeze on UK Supermarkets

AmazonFresh ups pressure on major grocery retailers

April 7, 2017 | Retail & Ecommerce

Discounters are reshaping the UK grocery business. According to Kantar Worldpanel data for the 12 weeks ended January 2017, Germany-based discounter Aldi had muscled its way into the top five in the UK rankings, by market share, for the first time. Fellow discounter Lidl also witnessed healthy growth.

But it’s not just pressure from these evermore visible stores that the UK’s longer-established grocery retailers need to worry about. Ecommerce behemoth Amazon entered the competitive grocery sector in 2016 with the launch of AmazonFresh, cranking up the price pressure on the sector’s players.

According to price comparison data from ecommerce analytics firm Profitero, AmazonFresh UK’s prices are well below the supermarket averages. Profitero gathered pricing information March 27 on individual products that were in stock at both AmazonFresh and the individual retailer sites examined. AmazonFresh’s prices were 14% lower than Asda and 28% lower than both Waitrose and [online-only grocer] Ocado.

AmazonFresh has seen limited rollout in the UK; it currently only operates in select London postal code areas. Speaking with the Financial Times in February and citing figures from Kantar Retail, Bernstein analyst Bruno Monteyne indicated that the company claimed only 0.7% of the online grocery market.

However, AmazonFresh vice president Ajay Kavan, also speaking with the FT, stated the company would be very methodical in how it rolls out further services, taking time to hone and improve the service based on lessons and feedback from customers.

With prices already low, any further moves will only serve to increase the pressure on major grocery retailers in the UK.

—Bill Fisher

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