There are some stories that take on a much broader significance than the column inches they comprise.

Tony Hoggett

Last week, Retail Week revealed details of a powerfully symbolic move – Amazon had poached Tesco lifer Tony Hoggett to become its new senior vice president of physical stores.

Hoggett’s appointment embodies the shifting balance of power within grocery retail. One of Tesco’s most loyal and crucial servants has been wooed by the etail titan that Britain’s biggest food retailer has been watching so closely – and battling to keep pace with – for so long.

Tesco’s partnership with tech firm Trigo on cashless stores, its creation of the Clubcard Plus subscription proposition and its trial of the Whoosh rapid delivery service, to name but a few initiatives, would arguably not exist today were it not for the seismic shifts that Amazon has inflicted on global retail. Amazon might remain a small player in the UK grocery market, but it has ambitions to grow, and grow quickly, to shake up the established order.

“A knife in the back”

One person with knowledge of the move suggested Hoggett’s departure after 31 years – and his destination – would therefore serve as “a knife in the back” of Tesco and his former colleagues.

Strong that may be, but his exit will certainly be a dagger to the heart of new boss Ken Murphy. The former Walgreens executive had identified Hoggett as a key cog in his Tesco machine, promoting him to the newly created role of chief strategy and innovation officer just three months ago.

Tesco’s loss is Amazon’s gain

It was just a fortnight ago that I caught up with Hoggett. He spoke at length and with his usual enthusiasm about Tesco, his new role at the business and the areas in which it planned to double down in a bid to secure post-covid growth.

Tesco store

Those opportunities – particularly in the convenience, online and on-demand channels, and in further enhancing its Clubcard loyalty programme – still exist, of course. But taking full advantage of them will be a tougher task without Hoggett’s nous and vast experience to draw upon. Tesco’s loss is very much Amazon’s gain.

Having been embedded inside the Tesco business, its culture and values for more than three decades, getting loyal Amazonians onside and making a positive impact on its stores could prove a tough task for Hoggett, however.

Amazon has to be open to his ideas. After all, he has a level of experience in physical retail that few others inside Amazon can boast.

The etailer has found the going tough since acquiring Whole Foods in a blockbuster $13.7bn (£10.7bn) deal back in the summer of 2017 and must do something to reinvigorate those shops and turn the tide.

Whole Foods losing ground

Despite Amazon’s rapid growth during the Covid-19 pandemic as spend shifted online, its Whole Foods stores have not benefited from the same uptick in sales that many of its bricks-and-mortar competitors have enjoyed.

Sales made through its physical shops have fallen in each of the last two years, slipping 5.6% year-on-year to $16.23bn (£11.7bn) in 2020. And in the first quarter of 2021, that decline accelerated, with store sales dropping 16% compared to the prior year.

Thousands of Whole Foods shoppers will, of course, have shifted to home deliveries during the pandemic, and Amazon’s investments in price are also likely to have had an impact on store revenues. But competitors in all four corners of the globe, including Tesco, have also sold more through good old-fashioned tills during the past 18 months.

And that performance, incidentally, may well have pricked Amazon’s ears.

Many observers, including me, are surprised that Amazon has not entered the bidding war for Tesco’s big four rival Morrisons. The duo already has close ties – Morrisons supplies thousands of products to Amazon to sell online and in its Amazon Fresh stores, and the etailer admires the grocer’s vertically integrated model.

Amazon Woodland Hills store

Amazon harbours serious ambitions in the grocery space – and the £7bn it would take to outbid front-runners Fortress is pocket change to founder and executive chair Jeff Bezos.

But perhaps it has eyes on a much bigger catch. Why buy the fourth biggest player in the market when you could afford to snap up number one?

After an uptick in its share price last week, Tesco’s market cap stands at £18.3bn at the time of writing – more than affordable for a business that turned over an eye-watering $108.5bn (£78.3bn) in its first quarter alone.

And who better to oversee such a mammoth acquisition and integration project than Hoggett – a man who has lived and breathed the Tesco business since before Amazon was even founded? Maybe, just maybe, Hoggett’s arrival is a precursor to a much bigger play.

One thing is for sure, Amazon is serious about physical stores. If we didn’t know that before, its appointment of Hoggett underscores that fact.

It is a significant and symbolic move – and it might not be its last swoop on Tesco.