Amazon has inked a deal with U.K. supermarket Morrisons amid upheaval in supermarket shopping in the country.
AmazonFresh will offer packaged and fresh and frozen goods through Morrisons and deliver them to customers in as little as an hour. The deal boosts Amazon’s operations in the U.K. and promises to lift Morrisons e-commerce sales, which have lagged behind other U.K. grocery e-commerce.
The British Retail Consortium Monday released a report saying that nearly a third of retail jobs in the U.K., some 900,000, would be lost by 2020 due to higher costs of wages and increased e-commerce.
Amazon is muscling into the dynamic and competitive U.K. supermarket space with this deal. It also provides Amazon with yet more outposts to help delivery of non-grocery packages to Prime members.
The announcement unsettled markets in the U.K., with shares of online grocer Ocado falling 9.3% on the news, according to Reuters, as it reduces the chances that Amazon might buy it in the future. Shares of grocery giant Tesco fell 3% because of the increased competition.
"The advance of Amazon as a participant in UK grocery is a potential challenge to the whole trade, in time," Shore Capital retail analyst Clive Black said on Monday, according to Reuters. "Any new entrant is, but particularly the American behemoth."
The deal greatly expands Amazon’s grocery offerings in the U.K., but in such a tumultuous market it’s still not clear how the logistics will pan out. Amazon continues to experiment with grocery delivery in the U.S., for example, but only recently instituted its $299 per year membership fee for the AmazonFresh services.
With competitive pricing such a major part of the U.K. upheaval in the space, it remains a question whether grocery delivery is a sustainable offering for many U.K. shoppers in the long term.
Morrisons downplayed the costs of the deal in a statement. Notably, the U.K. grocer also said that it’s working with Ocado to beef up its online systems.