Amazon will be the undoing of UK supermarkets. Or so retail analysts keep saying. But is one UK supermarket now ‘doing an Amazon’? Comments about Tesco in recent days suggest it might be.

Wednesday’s full-year results from Britain’s biggest food retailer met with the usual competition caveats. While Tesco looks unlikely to come up against a merged Sainsbury/Asda, as regulators balk at that bricks and mortar combination, analysts still warned of a threat from the US ecommerce giant. Hargreaves Lansdown again stated the obvious (if not actually apparent): “Lurking in the periphery is Amazon, which bought the grocery chain Whole Foods in 2017 and is trialling a delivery service in the UK. If the tech giant decided to throw its full weight into the UK grocery market, that would be a nasty blow for the UK supermarkets.”

However, ahead of the results, The Sunday Times made a less obvious (but apparently accurate) statement: “Tesco is working on a new loyalty scheme in the mould of Amazon Prime, which would give its tens of millions of shoppers greater incentives to sign up to the company’s bank and mobile phone services”. If the supermarket achieved a critical mass from its estimated 17 million Clubcard loyalty scheme members, and fast-growing users of Tesco Pay+ app, that could be a nasty blow for Amazon’s ambitions.

So, did some of the post-results remarks from boss Dave Lewis sound more Seattle than Cheshunt? He said: “Digital apps for Clubcards . . . activity up 34 per cent . . . Big asset. Much, much more we can do from it”. Later, he promised “You’ll see much more from us in the area of loyalty . . . We think there’s an awful lot more to come.” He even nodded to the “Tesco Prime” reports: “We continue to think of ways of adding value and differentiation for our Clubcard.”

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Not quite a confirmation, but consider the numbers — as Mr Lewis almost certainly has. Clubcard app usage is more than a third since the scheme was simplified and points redemptions made faster. Tesco Pay+ app usage continues to grow, and now enables payment and Clubcard points functionality on a phone. Tesco Bank’s own app has been downloaded by more than 1.2 million users. Tesco Bank accounts are held by 5.6m shoppers. Lending rose 7.8 per cent to £12.4bn.

Combining all of this would bring several risks. More lending may add to bad debt and impairment levels that are already rising at Tesco Bank. Handling ever more customer data adds to security concerns exposed in 2016’s cyber attack. Being perceived as a loyalty service rather than a true challenger bank may restrict growth.

Still, with 150,000 new Tesco shoppers eligible for a Clubcard in the past year, Tesco is well ahead of Amazon’s estimated 15m Prime membership base. Comedian Dominic Holland used to joke that if he was listed in Who’s Who, he would cite “Tesco” as his club. Nowadays, though, as Amazon’s Jeff Bezos may find, it is the least exclusive club in Britain.

Indivior: pain spreads?

Indivior found it as hard to give up certain drugs as the addicts it sought to treat. That is the gist of one of the criminal charges now made by the US Department of Justice against the London-listed maker of opioid substitutes. Indivior stands accused of deceiving healthcare providers into believing its new film-based products were safer, but its old tablet products not safe enough, to deter the use of generic competitors — and illegally obtain revenues for itself.

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To investors — who had been led to expect a negotiated settlement with the DoJ which Indivior had already provisioned $438m for — it came as a toxic shock. Although the UK company said the allegations were wrong and could be successfully defended, demands for a minimum $3bn fine sent shares in the £774m-market capitalisation, $681m-net cash, group falling 71 per cent.

But some were still numbed to the seemingly unavoidable pain.

Analysts at Jefferies felt the DoJ could not be seen to bring down a company playing a “major role in treating the opioid crisis in the US” — so $3bn was possibly just a new “starting point for any further negotiations”. They also noted that the charges dated back to 2010 and suggested any penalties might therefore “be shared” with Indivior’s parent at that time, Reckitt Benckiser. Others argued the consequences might therefore be worse for Reckitt given its $43bn market cap and £12.6bn annual revenue could more easily bear the fine. Some investors agreed, selling Reckitt shares down 5 per cent.

They all failed to make out the wording of an old prescription, though. In the 2014 prospectus for the Indivior demerger from Reckitt, there is a reference to Indivior’s indemnification obligations — in essence, covering Reckitt for claims against the opioids business prior to the demerger. So, Reckitt should only become liable if it is indicted separately — and it has not been. Still, it continues to provision for $400m of its own litigation costs. Does it fear that the pain may yet spread?

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matthew.vincent@ft.com



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