‘End of shopping’ as Amazon starts food sales
A new deal will see Amazon sell Morrisons groceries in the UK later this year. As big supermarkets and retailers come under pressure, should we welcome the decline of traditional shopping?
Electronics. Books. Games. Clothes. Beauty products. Car accessories.
Amazon has built an empire by selling all these consumer goods and more. The online giant already turns over more than $100bn per year. Now its influence is set to expand, as Amazon Prime Now and Amazon Pantry customers get the opportunity to buy fresh, frozen and non-perishable food.
Yesterday, Amazon completed a deal with British supermarket chain Morrisons, who will begin supplying the groceries later this year. It was the first time Amazon had made a supply deal with one of the UK’s big four supermarkets and Morrisons’ share price rose yesterday. Their chief executive, David Potts, said: ‘We look forward to working with Amazon to develop and grow this partnership’.
Their competitors are likely to be more concerned, particularly as major supermarkets faced significant setbacks in 2015. Tesco announced the worst results in their history while Sainsbury’s and Morrisons joined them in closing stores and abandoning plans to build new ones.
When Sainsbury’s posted its first annual loss for a decade, chief executive Mike Coupe said: ‘The UK marketplace is changing faster than at any time in the past 30 years’. Relatively new stores such as Aldi and Lidl have undercut their rivals’ prices, while industry consultancy IGD now says sales from convenience stores, discounters and the internet will overtake those from superstores and hypermarkets for the first time by April 2019.
The retail sector as a whole faces similar pressures. Yesterday, trade body the British Retail Consortium warned that 74,000 of the UK’s 270,000 shops could close by 2025, costing 900,000 jobs. ‘People are not realising just how significantly the workplace is changing and I think that is dangerous,’ said chairman Sir Charlie Mayfield. Technological advances, such as Amazon’s use of drones to deliver goods, may also help to make traditional forms of shopping obsolete.
Online shopping is popular because it is better than using the High Street, say some. It is more convenient — we can buy what we want at the click of a button. Sitting on a sofa in front of a computer is less stressful than going to a supermarket or shopping centre. And companies can reduce prices to customers by passing on savings on premises and staff.
We will lose a valuable experience, say others. It is more satisfying to browse in person, where we can see and touch products that interest us. We know what we are buying in a shop: in a supermarket, for example, we can choose fresh, appetising food for ourselves. And if we want some advice, a human being will be on hand to give us some personal insight.
- Would you buy groceries online?
- Should we welcome the decline of shopping in person?
- Draw two adverts: one promoting Amazon’s new service, and one for a shop which is competing with Amazon. What advantages would you like to emphasise in each one?
- Write a one-page letter to the head of a major supermarket, explaining three things that could be done to deal with the current pressures on their business.
Some People Say...
“Convenience is a curse.”
What do you think?
Q & A
- Won’t there be benefits if we all start shopping online?
- Mainly convenience of searching different online outlets at any time for what we want, finding the best prices. And more time for those who don’t enjoy shopping trips to do what they really enjoy.
- Isn’t going to shops quite a minor part of our lives?
- On its own this may seem like a fairly minor issue. But it does have important social and economic consequences. If we buy everything from home, it will mean the end of shops as we know them and less interaction with each other. The resulting unemployment would also mean fewer opportunities for people to work in retail — for example as shop assistants, cashiers, managers or cleaners. With economic implications of its own this would have a knock-on impact on employment in other areas too.
- Amazon’s net sales in 2015 totalled $107bn, a 20% increase on its comparable figure for 2014.
- This service currently costs UK customers £79 per year.
- Big four
- Tesco, Sainsbury’s, Asda and Morrisons.
- Commentators speculate that Amazon may wish to launch a UK version of Amazon Fresh. This service offers 20,000 chilled, frozen and perishable products and items from local shops in the US.
- Marc de Speville, of consultancy Strategic Food Retail, in response to supermarkets’ trading results, articulated concerns about the way people shop: ‘It is not yet clear whether cutting costs, prices and stores will be sufficient to address the structural changes affecting the supermarket industry’.
- The report suggested the closures and job cuts would be sped up by the government’s new ‘National Living Wage’ and the new apprenticeship levy, which will increase supermarkets’ costs.
- The report warned that nearly 30% of the closures would be in Wales and the north of England.
- Sir Charlie Mayfield
- Mayfield is also the head of the John Lewis Partnership.