‘Unless Amazon wants to remain a bit-part player in UK grocery, an acquisition would be the likely route’

In 2021 when asked by this fine journal what we may be chatting about in UK grocery through the 2020s, I reflected and summarised that we should always keep the global behemoth, Amazon, now a $2.4trn firm by market capitalisation, in mind.

Well, halfway through the decade, was that good counsel? Hmmm. The honest answer is that if one had done so it would have been analogous to missing the woods for the trees.

For UK grocery, the 2020s have been first and foremost about dealing with externalities – notably the pandemic, malevolent Russia, and a British government that does not realise that if it stacks mandatory costs onto the grocery trade, then expect food price inflation.

That inflation caused the most notable and rapid shifts in the balance between proprietary brands and private label ever seen, the rebound of which remains. In channel terms, the UK online grocery market has rested at approximately 12% to 13% – below the 15% we forecast it would reach by 2025 in 2010, when Ocado Group floated.

“It is hard to suggest that Amazon’s grocery activity on the British scene is anything more than the proverbial pimple on the backside of an elephant”

At the fascia level, Asda has been the tale of woe, now maybe stabilising; Ocado Group has sustained its immense track record of 15 years of pre-tax losses, a stunning achievement; Aldi and Lidl have matured into limited assortment supermarkets, while Sainsburys and Tesco have commendably gained share through retail excellence, including the development of powerful proprietary loyalty schemes which have exceeded my expectations; while M&S Food has perhaps been the success story of the time, with its attraction of the trolley shopper.

So, among all this, what of Amazon?

Well, from Seattle, Washington, or even Shoreditch, London, perspectives, it is hard to suggest that Amazon’s grocery activity on the British scene is anything more than the proverbial pimple on the backside of an elephant.

Quite whether UK grocery sales ever flicker on the revenue spreadsheets of group board meetings, noting in 2024 Amazon amassed net sales approaching $640bn (International revenues, which include the UK, were about $143bn) is questionable. So it is not unreasonable to assert that for now Amazon, in our solar system terms, remains somewhere around Neptune whereas Tesco is Mercury.

At present Amazon has a small, and indeed, incredibly diverse, grocery platform in the UK – arguably bitty, comprising 19 Fresh stores, most recently closing its Richmond, southwest London, outlet; seven Whole Foods Market shops, most recently opening a shop on the Chelski turf of the capital’s, King’s Road; plus a now well bedded down relationship with Morrisons including free same-day delivery on the Bradford retailer’s offering for Prime members.

To build the Amazon grocery store business worldwide, the company recruited a very successful and likeable big hitter from the Tesco camp, Tony Hoggett, in early 2022, which sort of signalled an intent to leave Neptune which we felt may well involve acquisition.

That was because we at Shore could not see Amazon building a meaningful estate of new stores in the UK – the sites are not there. While perhaps harbouring Neanderthal tendencies, we also took a rather sceptical stance on Fresh from day one.

“For Amazon to move closer to the sun, acquisition remains the most likely route”

However, Mr H departed Amazon in a very interesting move to join small US delivery-focused restaurant chain, Wonder, which has strong Walmart genes. Despite market speculation about Amazon bids for Booths, JLP and Morrisons, nothing has emerged.

So, coming up to mid-summer 2025, it is fair to state that Amazon is a bit-part player in UK grocery, sub-scale in all channels, standing over a very much premium offering in London and a relevant slice of Morrisons online proposition, but that is it.

Amazon has rarely been open on its UK ambitions in food, usually saying it is committed to the UK market and grocery within it. Organically, it is harder than ever to see how Amazon can but remain a bit-part in a highly advanced market where, as outlined, the online channel participation has stalled, dominated by store-based fulfilment models.

So, here on, for Amazon to move closer to the sun, acquisition remains the most likely route – one imagines several UK grocery boards have prayer mats facing northwest.