Amazon is expected to “acquire a major British supermarket chain” in the coming months as its first physical UK grocery store gives it a strong foothold in the market.
Amazon opened its first physical Fresh grocery store outside of the US last week in Ealing, London, giving UK shoppers access to its futuristic “just walk out shopping” technology for the first time.
Though shoppers are still getting familiar with the store’s innovative shopping system, which uses cameras and sensors to detect any items a shopper picks up and charges them automatically when they leave, analysts believe this is just the start of Amazon’s disruption of the UK grocery sector.
According to Shore Capital’s retail analyst Clive Black, Amazon’s new Fresh store could mark a “seminal moment in the history of the UK grocery market”.
“We don’t think Amazon is engaging in all this guff because it wants to be a marginal player in UK grocery,” he added.
“We expect Amazon to be the key cog in the industry’s organisational change in the next five to 10 years. And we would be very surprised if it didn’t acquire a major British supermarket chain.”
Black added that the UK’s largest supermarkets will be well aware of the threat Amazon poses to their current dominance.
Retail analyst Richard Hyman said that Amazon will become a key player in the UK’s grocery space “purely because of its scale” and that it could significantly disrupt the ‘big four’ who are already facing major challenges from German discounters Aldi and Lidl.
Amazon is understood to have signed a deal to open 10 Fresh stores across the UK, with a further 20 physical stores coming soon after.
Despite this, Hyman believes Amazon needs to improve its product offering before it will be able to expand significantly in the UK.
“Being able to go into a store and walk out without paying is really convenient, but when the dust settles, on its own it’s not enough.”