viewWM Morrison Supermarkets PLC

Tesco cuts delivery charge to counter Amazon threat

Tesco has a 30% share of the UK grocery market compared with Amazon’s 3%

WM Morrison Supermarkets PLC -
Clubcard Plus customers will get free deliveries

Tesco PLC (LON:TSCO) shares eased lower as chief executive Dave Lewis revealed it is a launching a free delivery service for its premium customers to tackle the threat of Amazon's entry into groceries.

At present Tesco charges £4.50 for deliveries, but in an interview with the Telegraph, Lewis said this will be dropped for customers who have signed up for its Clubcard Plus scheme.

Earlier this month, online mega-giant Amazon said it was expanding its UK online grocery service Fresh to include free deliveries of groceries such as bread, vegetables and fruit to premium service Prime members.

Lewis said in the interview: “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.”

Tesco has a 30% share of the UK grocery market compared with Amazon’s 3%.

Elsewhere, Wm Morrison PLC (LON:MRW) has announced it intends to introduce a trial of paper bags across eight stores as an alternative to bags-for-life made from plastic.

Morrisons said that if the trial is successful it would be rolled out across all of its stores.

David Potts, Morrisons chief executive,  said: "We believe customers are ready to stop using plastic carrier bags as they want to reduce the amount of plastic they have in their lives and keep it out of the environment.”

Replacing bags for life would save 3,150 tonnes of plastic a year, he added.

Tesco stopped using plastic bags for deliveries last year while Sainsbury’s no longer uses them for loose fruit, veg and bakery.

Morrisons shares were unchanged at 195.4p.

Quick facts: WM Morrison Supermarkets PLC

Price: 181.1 GBX

Market: LSE
Market Cap: £4.36 billion

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