Yahoo Finance Amazon to overtake Tesco as Britain's biggest retailer by 2025
Amazon is poised to snatch Tesco’s crown as Britain's biggest retailer within four years in a watershed moment for the beleaguered high street.
The US e-commerce powerhouse is expected to knock Tesco off the top spot for the first time in decades as the retail landscape is transformed by the internet, according to a new study from data firm Edge by Ascential.
Amazon sales are predicted to hit £77bn in the next four years, Edge said - £1bn more than Tesco's. In 2020, the online company's total UK sales were £36.3bn while Tesco's total was almost double that at £64bn.
It will mark the culmination of a decades-long campaign by founder Jeff Bezos to dominate UK retail which began in 1998 when Amazon started selling books from a depot off the M1 between Bedford and Milton Keynes.
By contrast, Tesco has been engaged in a years-long fight to retain its position at the pinnacle of the high street after suffering years of turbulence following a 2014 accounting scandal, while German discounters Aldi and Lidl chipped away at its market share.
Amazon has been credited with changing the way customers shop online in Britain by offering same-day delivery, a vast range of products and a foray into food retail.
Last year it revealed it would offer free grocery delivery to millions of Prime customers and it has been expanding its tie-up with Morrisons to sell more fresh fruit, meat and vegetables over the internet. In March it opened its first physical grocery store in Britain.
The pandemic has further boosted the company's sales as consumer spending shifted online, and experts said it is well placed to capitalise on long-term demand for home delivery as the pandemic permanently alters shopping habits.
Natalie Berg, a retail analyst, said: "Amazon scooped up trade for all the obvious reasons. It is ubiquitous, it's easy to shop. They devoted decades to perfecting online shopping, so when stores were forced to shop it became the first port of call.
"They are hands down the undisputed winner of the pandemic. They are firing on all cylinders, they seem to be invincible. While the pandemic will have sounded the death knell for many retails, Amazon will come out stronger.
"Its business model may not have been intentionally built for the pandemic, but it has turned out to be highly relevant for this climate."
Despite the prediction that the supermarket will lose its crown to Amazon, Tesco has also outperformed many rivals during the Covid crisis.
The grocer won back market share from Aldi and Lidl as shoppers used its vast stores for their weekly stock-up during lockdown, and has more than doubled its online delivery slots to 1.5 million in response to the surge in digital shopping.
Data from Edge revealed that a third of all sales by UK retail chains are likely to be made online by 2025, up from 26pc last year.
All major supermarket chains were forced to bolster their online operations following strong sales last year and a boom in demand for home delivery.
Online retail sales are forecast to grow from £105bn in last year to £176bn by the middle of the decade. The expansion online is expected to account for the majority of an overall £123bn expansion of the retail market to £500bn.
Amazon increased its challenge to traditional retailers in 2017 by buying the US chain Whole Foods for £10.7bn, including its seven UK stores. It came a year after the company introduced its Fresh online food delivery business to Britain.
Deren Baker, of Edge, said: “The UK is one of the largest retail markets in Europe, and a key market for many brands around the world. 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.”
“Over the past year, Amazon has grown its online retail footprint in the UK and expanded into the high street with the launch of Amazon Fresh shops in London and a high-tech hair salon.”
The reshuffle is threatening Morrisons' position as the fourth-largest supermarket. Aldi is tipped to overtake Morrisons by 2025 with sales of £11.1bn compared to the latter’s £10.8bn.
Sainsbury's is set to be the UK’s third-largest retailer with sales of £42.2bn. Asda, which was recently bought by the Issa brothers from Walmart, is expected to notch up sales of £26.7bn.
The report includes Amazon’s retail sales from online and offline operations and the grocers’ total sales, including fuel and general merchandise.
