Management / Amazon 'gearing up to enter UK grocery market'

Amazon 'gearing up to enter UK grocery market'

Online shopping giant Amazon is reportedly gearing up to enter the UK grocery market, pitting it against major players such as Tesco and Sainsbury's.

Woman receiving parcel

The Seattle-based firm, which employs more than 7,000 staff in the UK, has signed a 10-year lease on a former 300,000-plus ft Tesco warehouse in Surrey, according to Retail Week.

This has renewed speculation that the firm, which ranges from selling books to making TV programmes, will launch its Amazon Fresh food operation in the UK.

Amazon Fresh, launched in the US in 2007, would challenge the rest of the UK grocery market which is locked in a fierce supermarket war that has seen prices fall by around 1.6% over the last year.

Retail Week reports that Amazon has also secured the rent on two more warehouses in Leicestershire and Staffordshire, which are also suitable to handle fresh food.

Analysts have long expected a UK launch of the group fresh food service since it was first trialled in the US eight years ago.

It has been reported that Amazon Fresh would target 2% of the UK’s £149 billion grocery market, which is three times the market share of the country’s biggest online only grocer, Ocado.

Last month Amazon, which is celebrating its 20th anniversary, briefly became the world’s biggest retailer by market value by leapfrogging Asda owner Wal-Mart.

Amazon saw its market value jump to 265 billion US dollars (£171 billion), overatking Wal-Mart, after better-than-expected second quarter figures, before retreating over subsequent weeks.

The firm began life in the mid-1990s as an online bookstore run out of founder Jeff Bezos’s Seattle garage.

However, the business has long confounded investors by rarely turning a profit.

It prefers to invest heavily in expanding its operations and launching new services, such as video streaming, TV content production and its Kindle mobile devices.

Also, Amazon fuelled anger over its ongoing tax affairs in May when it emerged the group’s UK business paid just £11.9 million in tax last year, despite the group taking £5.3 billion in sales from British shoppers.

Amazon said it would not comment on speculation about the UK launch of a fresh food service.

But it added its Surrey warehouse would directly employ around 20 people and around 140 drivers, who would work for independent delivery firms.

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