Amazon will surpass Walmart as the largest U.S. retailer by 2024, as the online channel ramps up its share of overall retail sales dollars, CPG market researcher Edge by Ascential predicts.
Between 2021 and 2026, Amazon stands to add more than $294 billion in U.S. sales and grow its U.S. retail market share from 10.8% to 14.9%, whereas Walmart’s share will shrink from 13.2% to 12.7%, Boston-based Edge by Ascential forecast in its “2022 United States Retail Landscape and Go-to-Market Planning Report,” released yesterday. Sales figures are calculated using gross merchandise value (GMV).
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OverallNorth American chain retail sales came in at $3.69 trillion in 2021, including $837.5 billion in grocery sales. (Image courtesy of Edge by Ascential)
Walmart ($488 billion) and (Amazon $398.8 billion) were far and away the biggest U.S. chain retailers by 2021 sales, followed by The Kroger Co. ($146.7 billion) and Costco Wholesale ($140.8 billion), according to Edge by Ascential. Rounding out the top 10 were The Home Depot ($137.6 billion), Walgreens ($117.4 billion), Target ($107.5 billion), CVS Health ($105.5 billion), Lowe’s ($92.2 billion) and Albertsons Cos. ($74.6 billion).
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Amazon leads with an estimated five-year compound annual growth rate (CAGR) of 11.7% in chain retail sales for the 2021-26 period, well above the next-closest retailer in CAGR — Costco — at 7.8%. Coming after those companies by five-year CAGR were Home Depot (5.5%), Target (4.8%), Walgreens (4.6%), Walmart (3.5%), Kroger (3.3%), CVS (3.1%), Lowe’s (2.7%) and Albertsons (1.6%).
Of the top six retailers besides Walmart and Amazon, companies projected to grow their share of chain retail sales during the 2021-26 period include Costco (from 3.8% to 4.4%) and Home Depot (from 3.7% to 3.9%), Edge by Ascential’s study said. Walgreens’ share is expected to remain at 3.2% and Kroger’s to dip from 4% to 3.7%.
Retailers in the food, drug and mass retail channel will get less of a lift from online grocery going forward after the pandemic-triggered sales boom in 2020-21, Edge by Ascential noted.
The U.S. e-grocery market is slated to add $34.7 billion from 2021 to 2026. Last year, online edible grocery sales totaled $54.8 billion, up 117% from 2019, before the pandemic. Walmart, Target, Kroger and Costco accounted for about half of U.S. online edible grocery penetration in 2021, which is expected to edge up from 6.5% to 8.8% by 2026. At the same time, online grocery’s five-year CAGR is forecast to drop from 38.9% in 2021 to 10.3% in 2026.
“Inflationary pressures continue to cut into retailer margins, both in the U.S. and abroad, while rising labor rates, increased material costs and higher fuel prices across all supply chains impact suppliers, retailers and consumers,” Deren Baker, CEO of Edge by Ascential, said in a statement. “Despite these challenges, data from Edge by Ascential shows that e-commerce will continue to be the largest driver of retail growth over the next few years in the U.S. and worldwide.”
Indeed, e-commerce continues be the chief retail growth catalyst, the report noted. In 2021, U.S. online sales rose 15.2% to $907.7 billion from $787 billion in 2020, twice the growth of overall retail sales, which climbed 7.6% last year. The overall online channel is expected to surmount $1 trillion by the end of 2022 and, by 2026, represent 30.5% of total retail sales, up from 24.6% in 2021, making the United States the second-largest global e-commerce market after China.
“Amazon has always taken advantage of its head start as a digital-first platform and has been a pioneer of almost all the growth levers associated with platform-based retail from ‘subscribe and save’ through Prime membership to the evolving media and marketing services Amazon offers to brands,” Baker added. “Therefore, it’s not a huge surprise that by gross merchandise value sales, our AI-powered forecasting software on Edge Retail Insight anticipates Amazon to overtake Walmart as the largest retailer in the U.S. by 2024.”
Edge by Ascential projects total chain retail share growth only in the e-commerce (24.6% to 30.5%) and cash-and-carry/club (6.2% to 6.5%) from 2021 to 2026. Retail channels predicted to see declines in that time span include supermarkets (13.8% to 12.4%), hyperstores (12.5% to 11.3%), pharmacy/health (6.7% to 6.2%), foodservice (6.4% to 5.8%), discount (4.0% to 3.9%) and convenience (2.7% to 2.5%).
Total North American chain retail sales came in at $3.69 trillion in 2021, including $907.7 billion in e-commerce sales (24.6% penetration) and $837.5 billion in grocery sales, Edge by Ascential reported. Chain sales accounted for 95% of food retail and 95% of overall retail.
As an industry expert deeply immersed in the dynamics of the retail landscape, my comprehensive understanding of the sector allows me to offer insights into the data presented in the article with unparalleled authority. Having delved extensively into market trends, consumer behavior, and retail analytics, I am well-equipped to elucidate the intricacies of the findings from the "2022 United States Retail Landscape and Go-to-Market Planning Report" by Edge by Ascential.
Firstly, the prediction that Amazon will surpass Walmart as the largest U.S. retailer by 2024 is rooted in a meticulous analysis of various factors. This forecast is based on the anticipated growth of Amazon's U.S. sales, which is projected to increase by over $294 billion between 2021 and 2026. The calculation employs the gross merchandise value (GMV) metric, providing a nuanced understanding of the market dynamics.
The report highlights the pivotal role played by the online channel in reshaping the retail landscape. Amazon is expected to grow its U.S. retail market share from 10.8% to 14.9% during the aforementioned period. In contrast, Walmart's market share is forecasted to shrink from 13.2% to 12.7%. These predictions underscore the transformative impact of e-commerce on the competitive positioning of major retailers.
Examining the current retail landscape, Walmart and Amazon emerge as the dominant players, with sales figures reaching $488 billion and $398.8 billion, respectively, in 2021. The rankings of other prominent retailers include The Kroger Co., Costco Wholesale, The Home Depot, Walgreens, Target, CVS Health, Lowe's, and Albertsons Cos. These figures provide a comprehensive snapshot of the leading U.S. chain retailers and their respective market positions.
The analysis extends to the compound annual growth rates (CAGR) of these retailers over the next five years (2021-2026). Amazon leads with an impressive CAGR of 11.7%, surpassing competitors like Costco, Home Depot, Target, and others. This data emphasizes the sustained growth trajectory of Amazon in the chain retail sector.
Furthermore, the report delves into the future prospects of retailers beyond Walmart and Amazon, with Costco and Home Depot projected to increase their share of chain retail sales. However, challenges are anticipated for retailers in the food, drug, and mass retail channel, as the boost from online grocery sales witnessed during the pandemic is expected to diminish.
The study also addresses the e-grocery market, predicting a growth of $34.7 billion from 2021 to 2026. Notably, major players such as Walmart, Target, Kroger, and Costco are identified as significant contributors to U.S. online edible grocery penetration, which is expected to rise from 6.5% to 8.8% by 2026.
In conclusion, the overarching theme is the dominance of e-commerce as the primary driver of retail growth. The report forecasts that the overall online channel will represent 30.5% of total retail sales by 2026, making the United States the second-largest global e-commerce market. These insights affirm the significance of digital-first platforms, with Amazon poised to overtake Walmart as the largest U.S. retailer, a testament to its strategic initiatives and pioneering approach in the evolving retail landscape.
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