Will Amazon overtake Tesco in the UK grocery market?

tesco

In an attempt to keep Amazon at bay from taking more of the UK grocery market, Tesco has announced plans to scrap delivery fees to members of its Clubcard Plus loyalty scheme.

Although the supermarket normally charges customers a standard £4.50 for a delivery slot, the group hopes to introduce free delivery for premium members.

The news comes one month after it was revealed that Amazon plans to offer free delivery of its Amazon Fresh scheme to 15m Amazon Prime members.

The Amazon fresh service offers cheese and bakery, fruit, and vegetable items to customers.

To try and keep Amazon from stealing a huge portion of the grocery market, Tesco last month introduced Clubcard Plus. The scheme costs £7.99 a month and includes perks such as 10% off two shops per month.

Dave Lewis, Tesco’s chief executive, said in an interview with the Sunday Times: “I understand the move [from Amazon]. The idea of Prime is very similar to where we are in Clubcard Plus, in terms of bringing a whole bunch of benefits together. So an opportunity into the future for us is to think about how we put delivery into Clubcard Plus. That’s always been the direction of travel.”

Is Amazon likely to overtake Tesco?

Currently, no. According to data from market researcher Mintel, Tesco has 30% of the UK grocery market whilst Amazon has just 3%.

Amazon’s share is likely to grow, however, as the retail-giant has boomed throughout lockdown. The online grocery market is also expanding, as lockdown saw shopping habits change.

“It is interesting to see Tesco these days following Amazon on deliveries and Aldi on price,” said retail expert Richard Hyman. “I think Tesco needs to invest in its own strengths, set its own agenda, and not be seduced into following theirs,” he added.