Tesco to Tackle Amazon with Free Home Delivery for Premium Cardholders | Business

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Tesco to introduce free home delivery to members of its premium loyalty program, bringing it face to face with Amazon as the US tech company seeks a larger share of the UK food and drink retail market of nearly £ 200 billion.The UK’s largest supermarket charges £ 4.50 base for a delivery slot, but its managing director, Dave Lewis, is hoping to remove the charges for the millions of shoppers who have signed up for Clubcard Plus.

Earlier this month, Amazon revealed plans to expand its Amazon Fresh online grocery service – offering fruits and vegetables, cheese and bakery – with free and faster shipping to the 15 million. subscribers to its Prime membership program.

In an interview with the Sunday Telegraph, Lewis said: “I understand the movement [from Amazon]. The idea of ​​Prime is very similar to where we are in Clubcard Plus, in terms of bundling a whole bunch of benefits. An opportunity for us in the future is therefore to think about how we put delivery in Clubcard Plus. This has always been the direction of travel. ”

Last November, Tesco launched Clubcard Plus, a leading loyalty program alongside the long-established card, which then had around 19 million members. For a monthly subscription of £ 7.99, members are rewarded with a 10% discount on two stores up to £ 200 each.

There are plenty of other perks – fuel purchases from Tesco being an exception – and the program has been compared to Amazon Prime, for which members pay £ 79 per year for extras like faster delivery and streaming services. .

Amazon has already won over millions of Britons with its fast delivery of books, toys and household items to their front door, and the coronavirus lockdown has made it a lifeline for some.

The lockdown is now easing, but the rapid growth in the size of the online grocery market, from 7.4% of total grocery sales in March to 13% now, according to the market analyst Kantar, is unlikely to be significantly reversed. Online specialist Ocado says it has a million customers waiting to sign up, in addition to the 800,000 already on board.

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Still, Fresh has a long way to go. Amazon has just 3% of the UK online grocery market, compared to 14% of Ocado and 30% more of Tesco, according to the Mintel market research.

Tesco declined to give further details on the expansion of Clubcard Plus benefits. But retail expert Richard Hyman said: “It’s interesting to see Tesco these days following Amazon on deliveries and Aldi on prices. I think Tesco must invest in its own strengths, define its own agenda and not be seduced by theirs.

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