Sainsbury’s boss Mike Coupe has long made clear that his real concern is the online giant, which is now the world’s second biggest company, valued at $740bn compared with Walmart’s $264bn. Coupe admitted that his 2016 acquisition of catalogue store Argos was intended partly as a way to fight off the increasing threat from Amazon.
Since that deal Amazon has turned its sights directly onto the grocery business. Last year it paid $13.7bn to take over U.S. grocer Whole Foods Market. More recently it has opened a “shop and go” food store called Amazon Go, where shoppers can pick their goods and walk out, paying online without passing through a check-out. Both of those moves hit the share prices of U.K. supermarket groups.
Amazon also has a deal with Morrisons to provide groceries to U.K. customers using its Pantry and Prime service. Morrisons and Sainsbury’s have both been touted as possible Amazon takeover targets, along with Ahold Delhaize in the Netherlands and France’s Carrefour.
Terry Hunter, managing director of digital commerce group Astound, described Amazon as the elephant in the room. The proposed Sainsbury-Asda merger, he said, “shows that the two chains feel they will be stronger together as they reposition themselves to combat the growing threat from the low-cost German supermarkets and Amazon.” The U.K.’s grocers, he added, know Amazon “will be able to outmanoeuvre them and undercut them every step of the way.”
Enjoy curated articles directly to your inbox.