Having successfully entered the grocery market in its home country, Amazon’s expansion into the UK now looks like a certainty.

Having successfully entered the grocery market in its home country, Amazon’s expansion into the UK now looks like a certainty.

A huge brand name, an existing relationship with millions of UK consumers, one-click online purchasing, impressive fulfilment and logistics operations – the list of advantages is long and adds up to major disruption in the UK grocery market.

As UK grocers focus on price promotions or argue that online sales represent such a small proportion of their revenues, they’re ignoring tech innovation.

Will the game have been lost by the time they wake up to Amazon’s smart use of technology?

So what will Amazon Fresh offer? The combination of groceries with general merchandise to ease the supply chain? Or delivery within one hour of order to really turn the heat up?

Convenience shopping

In British cities, people are buying food for the next meal via the convenience store on the way home.

If Amazon Fresh delivers within an hour of ordering it would enable it to target the young urban consumer deciding what to have for dinner that night.

“The space is ripe for UK grocers to reinvent themselves”

Scott Weavers-Wright, Haatch

It is a model that already has traction in Amazon’s own back yard. For example, services such as Fresh Direct in New York delivers fresh food prepared to order and Foodieshares in Los Angeles allows consumers to order directly from local chefs. 

The big question is, how will UK companies respond? The good news is they can mitigate this latest threat because there is a new breed of ‘software as a service’ platforms giving them the tools to differentiate and compete.

With no significant update to digital retail in the past five years the space is ripe for UK grocers to reinvent themselves and offer consumers services they not only value but cannot get from anywhere else.

Connect with start-ups

UK grocers need to learn from Amazon’s success and understand how it has used tech to deliver speed and advantage to secure its future.

In the new retail landscape, tech will play a big part and likely be a significant source of advantage for UK grocers. The association with digital tech start-ups and innovation labs should be high on the boardroom agenda.

“The price wars will have to stop and grocers will need to move more to convenience and distinction”

Scott Weavers-Wright, Haatch

The standard operating model of today will not be enough to be truly different (ie offering the same goods, with a similar delivery option, at a competitive price).

The price wars will have to stop and grocers will need to move more to convenience and distinction.

The winner of the next grocery war won’t be the retailer with the cheapest tin of beans, it will be the retailer that works out how to get that tin of beans in your hands before dinner time.

So the big question is, when will the UK market embrace these changes and start to make the most of the vibrant digital start-up scene? What or who will be the game-changer?

While the arrival of Amazon Fresh is going to make many UK grocers uncomfortable, it will likely be a good thing for stimulating tech-driven innovations that create new growth opportunities.

  • Scott Weavers-Wright, founder, Haatch. Follow him on Twitter: @scottww