Tesco Share Price Struggles as Competition With Amazon Heats Up

The Tesco share price is under pressure after a recent report pointed to the rising competition by Amazon. The TSCO shares ended the day at 225p on Wednesday, down by more than 10% from its year-to-date high. 

Tesco news: The retail sector in the UK is going through substantial changes. The most notable one is the proliferation of discount chains like Aldi and Lidl. The other one is the strong demand for e-commerce products. In fact, the proportion of online sales in the country jumped during the coronavirus pandemic as more people stayed at home. This has benefited retailers with an online presence like Tesco and Ocado.

Now, a new report says that Amazon is also achieving substantial growth in the UK. A report by Edge by Ascential said that Amazon is set to overtake Tesco as the biggest retailer in the UK in the next four years. The report estimates that Amazon’s sales in the United Kingdom will surge to 77 billion pounds in 2025. This will be 1 billion pounds more than what Tesco will make.

The report suggests that Amazon will almost double its sales since it generated 36.3 billion pounds in 2020 while Tesco made more than 64 billion pounds. In addition to its e-commerce operations, Amazon has launched several Amazon Go locations in the country.

Still, Tesco will likely retain its role as a leading retailer in the country thanks to its huge network of physical stores and the fact that its online business is growing rapidly.

Tesco share price forecast

On the four-hour chart, we see that the Tesco share price has moved sideways in the past few trading sessions. The stock is trading between the important support and resistance levels at 220p and 236p. It is also trading at the 25-day and 15-day moving averages. 

While the pattern is yet to completely form, the shares seem to be forming a double top pattern. Therefore, in the near term. I suspect that the stock will remain in the current range. Still, we can’t rule out a situation where the shares drop. This will be confirmed if it moves below the support at 220p.

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TSCO share price chart

Tesco share price

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