Supermarket price wars: Amazon to price match Tesco

Amazon has pledged that shoppers will pay the same as Tesco Clubcard holders on range of essentials, while Iceland has announced discount food bundles to ease soaring food bills.

When you are deciding where to do your weekly big shop, Amazon probably isn’t a name that most of us consider.

That may be changing however, with the online giant not only moving into groceries through its Amazon Fresh brand, but also with the launch of a new price match scheme with Tesco.

The programme means that the prices shoppers pay online with Amazon Fresh for items like meat, fish, fruit and vegetables will be matched against the costs charged in Tesco.

Importantly, these are the prices offered to Clubcard members, who enjoy lower prices on regular items.

Deals included in the price match programme include the likes of Warburtons bread, BirdsEye chicken dippers, Andrex toilet roll and PG Tips teabags.

Importantly, the programme only works for online shoppers, so you won’t benefit from these deals if you head into one of the physical Amazon Fresh stores.

How do I get Amazon Fresh?

Of course, many shoppers won’t have much experience with Amazon Fresh ‒ it’s not exactly the same as popping into your local supermarket, after all.

Amazon Fresh is exclusively available to Amazon Prime members.

That works out at £7.99 per month, or £79 if you go for the annual fee. As well as access to Amazon Fresh, you get a range of additional benefits like Amazon Music, the Amazon Prime streaming service, and better deals on deliveries.

Even if you’re a Prime member, that doesn’t necessarily mean you can take advantage, either.

Amazon Fresh is currently only available in certain areas: London, parts of the South East, Leeds, Sheffield, Portsmouth, Liverpool, Glasgow, Birmingham, Manchester and Newcastle.

A big selling point is the speed though ‒ not only can you get the items the same day (generally, so long as you order before 9pm) but delivery is also free, should you spend more than £40.

That’s a further saving compared to the cost of delivery from regular supermarkets.

How does Amazon compare?

So it’s worth taking a moment to review how Amazon lines up against regular supermarkets when it comes to food shopping.

With excellent timing, last week it was the guest retailer included in the weekly Grocer 33 study by industry bible The Grocer.

This is where a basket of goods is picked out at all of the participating stores, and the prices are then compared.

Amazon came out cheapest with its basket coming to £73.60, 78p less than Tesco in second place. What’s more, it charged the cheapest price for 17 items in the basket.

The Grocer also tracks price inflation, and this was another factor in Amazon’s favour, with its prices only having grown by 3.7% over the last year, compared with inflation rates of up to an incredible 15.2% at Asda.

There are important caveats to bear in mind here. The prices were based on Tesco’s regular prices ‒ if you have a Clubcard, and therefore qualify for its Clubcard prices, then Tesco would have been cheaper.

What’s more, this particular study didn’t include the likes of Lidl and Aldi ‒ the deep discounters, like Amazon, are treated as ‘guest’ retailers and so only included periodically.

Nonetheless, it’s clear that for some shoppers Amazon represents a potentially-cheaper option when it comes to groceries.

The battle on price

As the cost of living crisis has become more evident, most of the big food retailers have announced some sort of price cuts or money-saving programmes, aimed at helping shoppers get a bit more for their money, which we have covered here on loveMONEY.

These include price match schemes with Home Bargains and deep discounters, new loyalty schemes, and reduced prices on essential items.

Alongside the Amazon Fresh price match move, Iceland has unveiled a range of ‘discounted bundles’ of food items, which cover things like essential food items and cleaning supplies to child-friendly items which can help keep youngsters entertained and occupied once the schools break up in the next couple of weeks.

For example, there is a ‘mega food online exclusive bundle’ which includes things like lean beef steak mince, chopped tomatoes, chicken breast fillets, baked beans, strawberries and plum tomatoes.

The bundle costs £60, which works out at £11.49 less than if you bought each item individually.

It’s telling that, as part of its announcement for these budgets, Iceland also highlighted the first cost of living payments which are being dished out currently.

As budgets become more stretched, supermarkets will have to continue to find ways to offer shoppers better value if they want to retain their business, so don’t be surprised to see yet more price promotions unveiled in the weeks and months ahead.