Amazon could buy Morrisons in a bid to mount a serious challenge in the UK groceries market, analysts have suggested.
Amazon already has a deal with Morrisons to provide food deliveries to UK customers using its Pantry and Prime services.
Following a trading update from Morrisons on Thursday morning, Bryan Roberts, global insight director at marketing firm TCC Global, hailed the supermarket’s solid performance but said mergers in the groceries sector could spur a tie-up with Amazon.
“Investors will be nervous about the growing threat from consolidation in the grocery market following the recent slew of mega mergers, with the planned deal between Sainsbury’s and Asda announced last week and Tesco and Booker earlier in the year.
“But Morrisons’s own strategy is bearing fruit, with its wholesale business on track to reach £700m in sales this year.
“Looking ahead, a takeover bid from Amazon is not beyond the realms of possibility, as the ecommerce behemoth looks to grow its footprint in UK retail – something that became clear after rumours surfaced that it made moves to buy Waitrose in 2017.”
Observers have previously touted both Morrisons and Sainsbury’s as possible Amazon takeover targets. Amazon has only made tentative steps into the sector so far and, with Asda and Sainsbury’s now on track for a sensational £13bn merger, Morrisons is attracting more attention as its most likely partner.
On Thursday, Morrisons reported like-for-like sales, excluding fuel, were up 3.6 per cent in the 13 weeks to 6 May.
The company is now a wholesaler as well as a retailer after an exclusive deal to supply 1,000 McColl’s convenience stores agreed last year. Morrisons said on Thursday that because it is a “food maker as well as shopkeeper”, it is able to deal directly with farmers and growers.
This has helped the supermarket launch its new ‘Wonky’ brand of low-priced, unconventionally shaped fruit and vegetables that minimises waste, Morrisons said.
