Amazon to become UK's largest retailer by 2025

According to new research from Edge Retail Insight, Amazon’s total sales are expected to exceed £77 billion by 2025, surpassing the £76.1 billion forecast for Tesco, the UK’s current largest retailer.

This represents a staggering rate of growth for the online giant, with total retail sales set to rise from £36.3bn in 2020 to £64bn.

In the five years to 2025, Amazon is expected to grow at a compound annual growth rate (CAGR) of 16.3%, driven by rapid growth in grocery sales, compared with Tesco's CAGR of 3.5%.

Amazon currently accounts for a relatively small share of UK grocery sales, despite growing 17.6% last year, but is expected to become the UK's 15th largest food retailer by 2025, surpassing Shell, McCols, BP and Wilko .

The data report also predicts that by 2025, a third of all chain retail in the UK will take place online, up from 26% in 2020, helping e-commerce sales to significantly outperform physical retail. E-commerce sales are expected to account for more than 57.4% of new sales within five years, when the UK retail market will grow by £123.6 billion to £500 billion.

Deren Baker, Ascential chief executive, said: “Our data shows that e-commerce is expected to grow in the UK over the next few years, driven by digital marketplace giants such as Amazon and omnichannel marketplace giants such as Tesco.

“Over the past year, Amazon has expanded its online retail presence in the UK and expanded onto the high street, opening three Amazon Fresh stores 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 industry.

“This is the next generation of retail – Retail 5.0 – where personalisation is mastered at scale. Consumer packaged goods (CPG) brands must focus their investments on winning market share through the online platforms that are most relevant to them.”

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