Is Amazon Really Planning To Take Over Surplus Asda And Sainsbury’s Grocery Stores?

Amazon is the perfect stalking horse when it comes to taking over empty big-box retail properties.

It is growing rapidly and needs property close to cities to fulfil its promise to customers of ever-faster delivery of an ever-expanding range of products. So when retailers exit big-box properties, Amazon is an obvious choice as a potential new occupier.

In August it was named as a bidder to take over a tranche of stores Homebase was vacating through a company voluntary agreement process.

And this week stories emerged that Amazon was “eyeing” supermarkets that Asda and Sainsbury’s might be forced to give up if they are allowed to merge. The acquisitions would expand its own grocery business, Amazon Fresh, and the rumors were based on its submission to the Competition and Markets Authority’s investigation of the merger.

But reading through Amazon’s submission to the CMA, that analysis seems a bit of a stretch.

The closest it comes to saying it might look to take on surplus stores is a statement in the section labelled “Future evolution”.

“Amazon indicated that they always keep options under review in relation to investments and acquisitions in relation to both the groceries segment and other market segments in the U.K.,” the CMA said in its report of the conversation with Amazon.

That is the kind of noncommittal answer corporates always give to hedge their bets.

Less ambiguous would appear to be the following, which seems to imply Amazon would be less interested in taking the stores:

“Amazon indicated that their main focus is on the customers and the areas that they are currently serving. They would like to improve the customer experience that they are offering to their current customers and improve how they operationally run the business. To improve the consumer experience, they would like to improve their offering in terms of selection, availability and price.”

The focus appears to be far more on improving their current online grocery offering than extending its brick-and-mortar stores.

Amazon Fresh U.K. revenues grew by 56% in 2017 but are still small at £150M compared to Amazon’s overall U.K. revenue of £8.9B.

The fact that it bought Whole Foods is often used as an argument why Amazon would look to move into brick-and-mortar grocery retail in the U.K. But with an existing brand, management team and operational infrastructure, that was a very different proposition to taking on vacated Sainsbury’s or Asda stores and looking to build a business organically.