Study: Amazon to overtake Walmart as largest U.S. retailer by 2025; Kroger #3 

Marianne Wilson
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Amazon is on track to become the largest retailer in the United States within the next four years, followed by Walmart and Kroger.

Amazon gross merchandise value sales (GMV is the standard used to measure the size of third-party marketplaces)  will reach  $631.6 billion by 2025, representing a compound annual growth rate of 14% between 2020 and 2025, according to a report from Edge by Ascential’s market research arm, Retail Insight. The Amazon metric includes online and offline sales.

"The United States Retail Landscape and Market Planning Report 2021" forecasts that Walmart’s total sales (offline and online, and including Sam’s Club) will grow at a 2020-2025 CAGR of 3.9% to reach  $523.3 billion by 2025, boosted by its e-commerce offering.

The report reveals that Walmart’s e-commerce sales are set to grow at a five-year CAGR of 14.9% from $43.6 billion in 2020 to $87.5 billion in 2025, accounting for 16.7% of total retailer sales in 2025. Meanwhile, Amazon will continue to grow its third-party marketplace business model, which will account for 66% of gross merchandise value sales in 2025, up from 60% in 2020.    

“As Amazon grows to become the largest retailer in the U.S., brands must understand they cannot win through mass personalization when faced with the huge spending power of large marketplaces like this,” said Deren Baker, CEO, Edge by Ascential. “They should therefore ensure they have the correct strategies in place to use marketplaces, like Amazon, to reach the right consumers and meet their needs.” 

E-commerce is the only channel that is expected to grow market share in the United States during the next four years, grabbing market share from supermarket and big-box retailers, according to the report. Foodservice and discount retailers are expected to maintain market share.  

U.S. e-commerce sales are expected to increase to more than $1.204 trillion by 2025, up 41% over 2020. E-commerce sales grew about 30% in 2020 from $546.3 billion in 2019. In 2018, e-commerce sales were $471.3 billion.  

Other highlights from the Edge by Ascential’s Retail Insight report are below.

• Kroger will remain the third-largest U.S. retailer, with sales growing at a CAGR of 3.6% to reach $166.6 billion in sales by 2025.

• Costco,  the fourth largest U.S. retailer, is expected to invest heavily in its digital capabilities, with its online sales set to increase by 47% over the same period, reaching $15.3bn in 2025.   

• Edge by Ascential analysts forecast that U.S. e-commerce penetration will grow from 22.1% in 2020 to account for 29% of total chain retail sales by 2025. This will be driven by a new generation of customers with greater expectations of immediacy and personalization. 

“Over the next few years, Generation Z will become a bigger share of wallet for brands and retailers, who will need to focus investment in online and engage with the digital ecosystem in order to win market share,” the report stated. 

• There will be a more permanent shift to online grocery even after the relaxing of social restrictions and a return to some sort of normality.  The pace of growth for online grocery will level off after the 2020 boom, but edible grocery e-commerce is still expected to grow at 13.3% CAGR between now and 2025. 

“The pandemic has permanently shifted consumer habits from in-store to e-commerce,” Baker said. “This has implications for a brand’s go-to-market approach but also its store strategy as stores become part of an ecosystem of retailing touchpoints rather than the main event with a digital add-on. Brands must embrace digital platforms, such as marketplaces and delivery intermediaries and customize product offerings and selling strategies accordingly.”