Amazon Is Starting to Price Match Tesco in Aggressive UK Grocery Push
Amazon.com Inc.'s UK grocery business will match prices on hundreds of everyday items to those offered by rival Tesco Plc in an aggressive move against Britain's largest supermarket chain.
Produce, meat and fish are among the categories that Seattle-based Amazon will match and lock to the prices offered by Tesco's Clubcard loyalty initiative, according to a statement on Monday.
The e-commerce giant is expanding its business selling groceries in the UK under its Amazon Fresh banner, and now has 19 stores, including one outside London in the town of Sevenoaks. Along with price matching, Amazon also has deals such as its private label range, and offers same-day delivery on grocery orders in some areas.
Britain's grocers are battling to keep prices low for shoppers while coping with soaring inflation. In addition to Amazon, they face intense competition from German discounters Aldi and Lidl. Both Tesco and J Sainsbury Plc, the country's second-largest grocer, match hundreds of products to Aldi.
Earlier this month, Sainsbury said it will invest more than £500 million ($592 million) over two years to keep product prices low as “customers are watching every penny and every pound.”
Amazon Fresh launched in the UK in 2016 but it has still has only a sliver of the market and is a minnow in groceries compared to Tesco, which controls just over 27% of the market, according to data from Kantar. Overall, the Big Four grocers - Tesco, Sainsbury, Morrisons and Asda Group Ltd., between them control about two-thirds of the market.
Amazon Fresh also faces competition from online grocer Ocado Group Plc and is having to operate in a market considered to be one of the most competitive in the world.
UK supermarket shoppers are shifting their behavior and increasingly opting for own-brand labels in a bid to save pennies amid rising prices. Last month, Tesco Chief Executive Officer Ken Murphy said that consumers were “terrified” of the cost-of-living crisis.
Earlier this year, Amazon was designated as a grocery retailer by Britain's antitrust regulator. To be governed by the rules, grocers must have annual sales of more than 1 billion pounds.