Amazon gets grocery retailer status in UK: 3 supermarket stocks to buy

The multinational e-commerce marketplace, Amazon.com, Inc., which sells several products and grocery items through its online portal, could face tougher regulations in the UK after the company was put under the grocery retailer category by the Competition and Markets Authority (CMA), the department to overlook business competition and prevent anti-competitive activities.

The new classification will mean that Amazon must comply with rules set for other grocery chains like Tesco Plc (LON: TSCO), and J Sainsbury Plc (LON: SBRY). The rules will also mean that Amazon would have to treat its suppliers fairly and can’t terminate the supplier on short notice.

The company has an online marketplace and several physical stores in the UK. It has invested nearly £32 billion in the UK market since 2010. Amazon generates more than £1 billion in annual turnover from grocery sales in the country. As a result, the company has to comply with the code of practice as per the country’s law.

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The decision to designate Amazon as a grocery retailer will create a level playing field for other brick-and-mortar as well as online selling companies in the supermarket space. Let us look at some of the FTSE listed stocks that could be benefitted:

J Sainsbury Plc (LON: SBRY)

The company operates in the supermarket segment and has more than 600 supermarkets and 800 convenience stores across the United Kingdom.

Sainsbury reported a gain in market shares driven by the launch of over 600 new products and services for the 16 weeks to 8 January 2022. Its total retail sales were up by 1.4% during the period. The recent rule change by CMA will be beneficial for the company as there won’t be any unfair advantage to some companies.

J Sainsbury Plc’s last close was at GBX 277.40 on 09 February 2022, with a market cap of £6,471 million.

Tesco Plc (LON: TSCO)

FTSE100 listed supermarket chain operator has operations in the UK and other countries. It is one of the largest companies in the UK in terms of market share.

The company reported solid business performance in the 19 weeks ended 8 January 2022, including higher sales during the Christmas season. Overall the group sales were up by 2.6% during the period.

Tesco Plc’s last close was at GBX 293.70 on 09 February 2022, with a market cap of £22,454 million.

Ocado Group Plc (LON: OCDO)

The company provides its services through retail stores and an online grocery website.

For the 52 weeks ended 28 November 2021, Ocado’s reported revenue was up by 7.2% at £2.5 billion. All the business segments reported growth, with core retail sales growing by 4.6% to £2.3 billion. The solid retail sales growth is expected to continue with mid-teens revenue growth. 

Ocado Group Plc’s last close was at GBX 1,300 on 09 February 2022, with a market cap of £9,770 million.