Chinese e-commerce giant invests in China’s top grocer
Alibaba is extending its push into brick-and-mortar retail in a big way.
The Chinese e-commerce giant will invest a total of HK$22.4 billion (approximately $2.88 billion in U.S. dollars) in Chinese hypermarket operator Sun Art Retail Group Limited, a move that will give it a major stake in the company. Alibaba is making the investment through an alliance with Auchan Retail S.A. and Ruentex Group.
Sun Art currently operates 446 hypermarkets in 29 provinces, autonomous regions and municipalities across China under the RT-Mart and Auchan banners. It also operates superstores and innovative unmanned stores under the Auchan Minute brand. The transaction will give Auchan Retail, Alibaba Group and Ruentex approximately a 36.18%, 36.16%, and 4.67% share in Sun Art, respectively.
The alliance coincides with Alibaba’s “New Retail” vision which leverages its web-based approach and new technology, while working closely with retailer partners to provide a seamless online and offline experience to consumers in China. It is also aligns with the alliance’s goal to introduce a new shopping experience to China’s 1.3 billion consumers.
“Physical stores serve an indispensable role during the consumer journey, and should be enhanced through data-driven technology and personalized services in the digital economy,” said Daniel Zhang, CEO of Alibaba Group. “By fully integrating online and physical channels together with our partners, we look forward to delivering an original shopping experience to Chinese consumers.”
In addition to combining the resources of the three companies, the new alliance will enable Sun Art to benefit from Alibaba’s digital ecosystem. Specifically, Alibaba will digitize and introduce new retail solutions at Sun Art stores, including online and offline integration together with modern fulfillment and personalized customer experience.
“This alliance with Alibaba stems from our shared vision for the future of commerce in China,” said Wilhelm Hubner, CEO of Auchan Retail. “Bringing together the leaders of in-store retail and of online retail will allow us to serve hundreds of millions of Chinese consumers a fully integrated, world-class shopping experience.”
This is not Alibaba’s first foray into brick-and-mortar stores. The company has invested approximately $9.3 billion in physical stores since 2015. It also has launched many unmanned concept shops in the past year, including grocery and coffee stores, according to CNBC.
Alibaba’s Sun Art announcement comes on the heels of last week’s record-breaking Singles Day event. The 24-hour shopping extravaganza, held on Nov. 11, brought in $25.3 billion in sales (or gross merchandise value) to Alibaba’s platforms, up 39% compared to 2016.
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