UK supermarkets prepare for a new challenge as Amazon trial grocery delivery in Britain. As Julian Satterthwaite reports the industry may be in for a shake up next year.
Just what British supermarkets don't need: competition from Amazon. Growing talk that the online store is about to enter the UK grocery market. It's already trialling fresh food delivery in Birmingham and parts of London. Amazon won't comment on talk of a nationwide launch next year. But supermarket chiefs are already braced for a battle: (SOUNDBITE) (English) SAINSBURY'S, CHIEF EXECUTIVE OFFICER, MIKE COUPE, SAYING: "On the basis that they've made the investment they've made, I can't see them going away any time soon. Their track record of trying things, working them, getting better is pretty strong over many, many different examples, so once they're in the market I would expect them to establish a foothold and continue to develop." Reward points and own-label products two weapons in the supermarket arsenal. Innovation is another. Amazon's lack of high-street stores means it has low costs. Formidable logistics will allow it to offer rapid delivery. But analysts say that is less of an advantage in groceries: (SOUNDBITE) (English) HENDERSON GLOBAL, HEAD OF GLOBAL EQUITIES, MATTHEW BEESLEY, SAYING: "So for Amazon to really innovate here you'd suspect that other than speed, it needs to be on price. And certainly recent surveys of Amazon's limited range of groceries in the UK relative to other providers suggest they do have some element of price advantage." That won't be welcomed by the big supermarkets. They're already facing price competition from discount rivals Aldi and Lidl. But if Amazon makes food shopping even cheaper... consumers are unlikely to complain.