Alibaba Extends Reach into Physical Retail
Sun Art will now utilize Alibaba’s capabilities to offer new consumer experiences in China.
ASIA–Looks like brick-and-mortar isn’t dead after all. Just as Amazon is busy expanding its reach into brick-and-mortar, Alibaba is making moves in the same director, most recently investing approximately $2.88 billion in Sun Art Retail Group, one of China’s largest grocery chains with 466 hypermarkets currently in operations.
Combining the resources of the three companies–Alibaba, Auchan and Ruentex–the new alliance will see Alibaba introduce a variety of new retail solutions in Sun Art stores, including online and offline integration together with modern fulfillment and personalized customer experiences.
Through the investment, Alibaba will obtain an aggregate direct and indirect stake of 36.16 percent in the food retailer by acquiring shares from Ruentex. The supermarket and hypermarket chain Auchan will also increase its stake in Sun Art.
The alliance also reflects Alibaba’s “New Retail” vision, which sees the company leverage its internet-based approach and new technology while working with retailer partners to provide a seamless online and offline experience to Chinese consumers. It also follows several other brick-and-mortar investments and acquisitions Alibaba has made in recent years–including its $4.6 billion investment in Suning Commerce Group in 2015, opening its first bookstore in 2016, its purchase of the China business of Yum Brands for $460 million in 2016, its $290 million investment in Sanjiang in 2016, its partnership agreement with Bailian Group in February and its roughly $100 million investment in Lianhua in May.
The deal also aligns with Auchan Retail’s Vision 2025.
“Alibaba is excited to join with our new partners to redefine traditional retail through digital transformation,” says Daniel Zhang, chief executive officer, Alibaba Group. “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. By fully integrating online and physical channels together with our partners, we look forward to delivering an original and delightful shopping experience to Chinese consumers.”
Sun Art is a multi-format offline food retailer in China that operates 446 hypermarkets as large as 17,000-square-meters in 29 provinces, autonomous regions and municipalities across China un the RT-Mart and Auchan banners. It also operates superstores and unmanned stores under the Auchan Minute brand.
“In recent years, consumer’ demands have changed tremendously with the rapid growth of the mobile internet, and Sun Art is also endeavoring to move from offline to online,” says Peter Huang, vice chairman, Ruentex Group. “Ruentex is delighted to see the win-win collaboration between Sun Art and Alibaba with high synergies in online and offline that will meet the needs of consumers for a better life with better products and services and higher efficiency.”