Amazon To Overtake Tesco To Become UK's Largest Retailer By 2025: Study
Amazon's UK arm is poised to overtake Tesco and become the country's largest retailer by 2025, with gross sales of £77.1 billion (€89.9 billion), new research by Edge Retail Insight has found.
In 2020, Amazon UK's total sales stood at £36.3 billion (€42.3 billion), while Tesco reported sales of almost double that, at £64 billion (€74.6 billion), however Edge predicts that Amazon is set to see a CAGR of 16.3% in the five years between 2020-2025, ultimately overtaking its rival.
The e-commerce giant is expected to account for 15% of all UK chain retail sales by 2025, up from 9.1% last year, Edge added.
Amazon is also expected to become the 15th biggest seller of edible grocery products by the mid part of the decade, overtaking Shell, McColls, BP and Wilko. Amazon UK's edible grocery sales grew 17.6% in 2020, ranking it 19th in terms of the overall grocery landscape.
“The UK is one of the largest retail markets in Europe, and a key market for many brands around the world," commented Deren Baker, CEO at Edge by Ascential, the parent company of Edge Retail Insight. "Our data shows that e-commerce is expected to grow in the UK over the next few years, and this will be driven by digital marketplace giants like Amazon, and omnichannel marketplace giants like Tesco.
“Over the past year, Amazon has grown its online retail footprint in the UK and expanded into the high street, with the launch of three Amazon Fresh shops in London and a high-tech hair salon, where it can trial technology and product innovation and increase brand presence in the fast-growing beauty sector."
Also on the move over the coming years will be Aldi Süd, which Edge believes will overtake Morrisons by 2025, reporting sales growth of £11.1 billion (to £10.8 billion at Morrisons) and pushing the discounter into the 'Big Four' for the first time.
Sainsbury's will hold on to its position as the UK’s third largest retailer, with CAGR sales growth of 4.5% to reach £42.2 billion by 2025, it added. Asda, under new owners EG Group, looks set to grow 2.4% to £26.7 billion by 2025.
The blurring of the lines between physical and online grocery retail is also likely to accelerate in the coming years, with retailers striking partnerships with last-mile delivery specialists such as Deliveroo and Uber Eats or developing their own rapid delivery platforms.
“Physical stores will remain an important channel but consumer packaged goods (CPG) brands must prioritise their online strategies to capture growth opportunities, particularly in mature digital markets, like the UK," Baker added.
“That means understanding how to convert shoppers online through digital touchpoints, such as marketplaces like Amazon, where many now begin their purchase journeys. The next five years will be defined by the ability of CPG firms to leverage the might and skill of marketplaces to acquire customers. This is next-generation retail - Retail 5.0 - marketplaces mastering personalisation at scale. CPG brands must focus investment on winning market share through the online platforms most relevant to them.”