Amazon Could Overtake Tesco By 2025, Targets Rapid Store Growth

Could an Amazon corner store be coming to a street like yours? Well if you live in the U.K., the chance is becoming a lot more likely if leaked internal communications are correct.

Because the online giant means business on the main streets of Britain and Europe.

Hundreds of just-walk-out grocery stores are being plotted by Amazon across the U.K. in the next three years, with the retailer having debuted its first Amazon Fresh store in London earlier this year.

While Amazon currently only has a handful of Amazon Fresh stores , plus a fledgling Amazon 4-Star operation, it wants to have established more than 260 Amazon-owned and run supermarkets across the country before the end of 2024, with 60 slated to open in 2022, and another 100 per annum in both 2023 and 2024.

According to a Business Insider report, citing internal documents, all of the proposed Amazon grocery stores will be cashier-free and the ambitious growth rate is aimed at starting to catch up with grocery industry giants Tesco and Sainsbury’s, plus Co-op.

Amazon is also understood to be interested in opening a number of grocery c-stores in Germany, Spain and Italy next year, although the retailer has found that meeting its ambitious plans has been harder to execute than it anticipated. Currently, only six of the 26 stores slated before the end of this year have opened their doors.

Amazon Aims Big, Of Course

It is little surprise that Amazon is aiming big, what else does it ever do? There would have been little economic point opening a handful of Amazon Fresh stores in the U.K. were it not for wider designs on a sector that it has failed to meaningfully impact in the same way as many other product categories.

As a sign of its intentions, in July of this year Amazon enticed former Tesco executive Tony Hoggett to run its physical stores and he is due to start with the business in January 2022, moving to Seattle and taking up the role of SVP of physical stores. He will report to Dave Clark, chief executive of Amazon’s worldwide consumer business.

Hoggett is a 30+ year veteran of Tesco and has held a number of top roles in both the U.K. and Asia. He became group chief operating officer in 2018 before, in April this year, he was appointed to a new role as chief strategy and innovation officer.

His defection is, therefore, a major coup for Amazon.

Last year, Amazon U.K.’s total sales were $48.6 billion, lagging far behind Tesco’s sales of $85.7 billion. However, research by Edge Retail Insight predicts that although Tesco sales will rise to $101.9 billion by 2025, Amazon’s will soar ahead to $103.1 billion, making it the U.K.’s #1 retailer.

The same data predicts that Sainsbury’s will maintain its position as the U.K.’s third largest retailer, with sales of $56.5 billion by 2025, and that formerly Walmart-owned Asda, now part of EG Group, will have sales of $35.8 billion by 2025.

Online And Convenience

Not only is Amazon looking to take a much bigger slice of the grocery pie, it is also hoping to leverage its unparalleled online expertise. Consumers became far more comfortable buying their groceries online during the pandemic lockdowns and while sales have settled since stores reopened, COVID undoubtedly helped shift demand towards online.

More growth is expected, while Tesco and Sainsbury’s especially have enjoyed huge success from their growing estates of convenience stores, typically located on high footfall urban streets or gas stations. These not only serve immediate needs but are also a powerful platform for click-and-collect services.

It’s all kind of sounding like familiar territory for Amazon.

The latest rumors about Amazon’s U.K. expansion plans follow recent reports that the company is now running a number of bus lines across London, providing pick-up and drop-off services for staff.

According to local reports, the e-commerce giant has four routes connecting London zip codes to the city’s outskirts, where its warehouses are located, with the routes and timetables based around shifts and serving the Dartford, Tilbury and Hemel Hempstead Fulfilment Centers.