Online retail giant Amazon and the supermarket Morrisons have announced that they will expand their same-day delivery service to five new cities. Residents in Glasgow, Newcastle, Sheffield, Liverpool and Portsmouth will now be able to order food and have it delivered on the same day, providing they meet the cut off times.
The partnership between the two companies began in 2016, with Morrisons agreeing to supply groceries to fulfil Amazon orders. However, the partnership has expanded since then and there are plans to add more cities in the near future. The grocery store fulfils Amazon pantry services and Amazon Prime Now services; neither of these initially offered fresh produce upon inception, but Amazon quickly saw the opportunity to capitalise on the trend for online ordering.
Currently, shoppers in London, Manchester, Leeds and Birmingham can all receive same-day deliveries, with some households being able to receive their delivery within the hour.
While there are many competitors within the online grocery businesses, none can yet match the speed of Amazon and Morrisons.
However, there has been some push back to this move, with Waitrose and their partners announcing that they will expand their two-hour delivery service from the centre of London out to Bath and Hove.
The encroachment of Amazon within the grocery business represents a growing trend of supermarket giants within the UK losing their market dominance. Sainsbury’s, Morrisons, Asda and Tesco have all reported a drop in overall market share. However, the four still account for over 65% of all grocery spending in the UK.
Two of their main competitors have been Aldi and Lidl, both of whom market themselves as discount stores. The smaller product range and lower costs have forced the bigger supermarkets to cut their prices to remain competitive, while also forcing more expensive stores like Waitrose to promote their quality and exclusivity.
In June 2019, Lidl announced that it would be opening an additional 40 stores in the South East of England, which will only add to the pressure that the larger stores are feeling. Morrisons will be able to counter some of this with their Amazon partnership, but this is unlikely to counter all the lost revenue from the rise of the discount stores.
Earlier this year, Sainsbury’s and Asda attempted a merger, with plans to increase profits from improved economies of scale. This was swiftly blocked by the UK Competition and Markets Authority. As such, it seems that diversifying is the best way for these larger supermarkets to ensure they survive in the changing world of retailers.