Amazon is set to overtake supermarket giant Tesco to become the UK’s largest retailer in the next four years.
According to new research from Edge Retail Insight, Amazon’s gross sales are forecast to top £77 billion by 2025, outpacing the UK’s current largest retailer Tesco’s predicted £76.1 billion.
This would represent a dramatic rate of growth for the online giant, seeing total retail sales increase from £36.3 billion in 2020 compared to Tesco’s £64 billion.
In the five years to 2025 Amazon is expected to see a compound annual growth rate (CAGR) of 16.3 per cent, compared to Tesco’s 3.5 per cent, driven by a rapid rise in grocery sales.
While Amazon currently represents a relatively meagre portion of the UK’s edible grocery sales despite seeing 17.6 per cent growth last year, it is predicted to overtake Shell, McColls, BP and Wilko by 2025 to become the UK’s 15th largest seller of edible products.
The data report also predicts that a third of all UK chain retail sales will occur online by 2025, up from 26 per cent in 2020, helping ecommerce sales significantly outperform their physical counterpart.
Ecommerce sales are predicted to account for more than 57.4 per cent of added sales over the five-year period, which will see the UK retail market grow by £123.6 billion to hit £500 billion.
“Our data shows that ecommerce 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,” Edge by Ascential’s chief executive Deren Baker said.
“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.
“This is next-generation retail – Retail 5.0 – marketplaces mastering personalisation at scale. Consumer packaged goods (CPG) brands must focus investment on winning market share through the online platforms most relevant to them.”