Amazon Doubles Down On Grocery Market Amid Waitrose Talks

The biggest question about any possible tie-up between Amazon
AMZN

AMZN
and upscale supermarket chain Waitrose is who stands to gain most.

Waitrose has enjoyed a pretty miserable time of late, with its market share in the grocery industry slumping from 5.1% to 4.6% since the beginning of 2020, according to tracking from Kantar.

Meantime, Amazon has been unusually passive in its market penetration of Britain’s ultra-competitive grocery sector and despite a number of headline initiatives, its share of the basket will hardly be giving industry giants like Tesco, Sainsbury’s, Aldi and Lidl sleepless nights.

So could a partnership with Middle England’s favorite supermarket chain offer a lifeline for either or both?

Certainly if Waitrose was to sell its groceries via Amazon then it would undoubtedly claw back some of that lost market share simply through the power of the platform and widen its availability to the whole of the U.K., not just the well-heeled neighborhoods it tends to frequent.

On top of that, it could prove a welcome boost to its embattled parent John Lewis Partnership (JLP), where the incumbent chair Dame Sharon White recently announced that she would depart in February 2025 after a largely disastrous tenure at the helm of the U.K. retail bellwether.

Her legacy is in danger of being remembered for a highly questionable private rented residential drive at a time when the retailer’s once razor-sharp retail offer has become muddled and its famed red hot customer service tepid at best.

Amazon Targets Grocers

But surely the even bigger win could be for Amazon, which has failed to have the impact on the grocery sector that it has achieved across so many other categories, despite acquiring Whole Food Markets in the U.S.

The Sunday Telegraph reported at the weekend that Waitrose and Amazon were discussing a third-party deal, following fast on the heels of a deal struck between Amazon and value frozen food specialist Iceland recently.

Iceland launched on the Amazon website in the middle of last month, while Amazon has also previously agreed third-party deals with two more of the largest supermarket chains in the U.K., Co-op and Morrisons, offering their groceries on its website and delivering them via local branches.

For its part, Waitrose previously had a long term deal with the online grocer Ocado until September 2020, when Ocado switched allegiances and agreed a tie-up with rival Marks & Spencer. Ocado has fulfilment partnerships with a dozen grocery groups worldwide, including Kroger
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and Sobeys in the U.S.

Waitrose currently sells online through its own Waitrose.com and has partnerships with rapid delivery specialists Deliveroo and Uber Eats.

Amazon Store Roll-Out

As for Amazon, it first moved into the U.K .grocery sector in 2016 with the debut of its Amazon Fresh service and more recently launched urban convenience stores around London, with its most recent opening at Liverpool Street in London taking the total number of stores in the U.K. to 19.

However, that is a long way short of the 100 stores it set as its initial target and amid the opening of some new stores, it has also closed a number of its checkout-free outlets. Amazon claims that this is all part of a portfolio adjustment as its physical estate matures, but the roll-out has been distinctly lack lustre to date and despite Amazon’s protestations right now looks more like it is running out of steam.

If Waitrose and Amazon do agree a deal then it completes full circle after rumors that circulated around five years ago that Amazon had approached JLP to take over Waitrose, denied at the time by the employee-owned group, which also includes the John Lewis department store chain.