Alibaba buys stake in Sun Art Retail as it expands footprint in food and grocery sector

Alibaba is expanding into the grocery sector with new alliance and stake in Sun Art Retail

Alibaba plans to expand its ‘new retail’ approach, which merges online and offline shopping, further into the food and grocery sector after purchasing a stake in food retailer Sun Art.

Alibaba has invested $2.88bn (HK$22.4bn) to gain a 36.16% stake in Sun Art Retail Group. The move is part of a strategic alliance with Auchan Retail, which has also increased its stake in Sun Art to 36.18% and Ruentex Group, which has sold down its stake to 4.67%.

The move gives the alliance majority control of Sun Art, which is one of the leading offline food retailers in China and operates 446 hypermarkets in 29 areas across China under the “RT-Mart” (大润发) and “Auchan” (欧尚) brands. Sun Art also operates superstores and innovative unmanned stores under the “Auchan Minute” brand.

The deal will give Sun Art access to Alibaba’s digital ecosystem, providing new digitised retail solutions including online and offline integration, fulfilment and customer experiences.

Alibaba said it will work closely with its new retail partners to provide Chinese consumers with a new food shopping experience that seamlessly merges online and offline experience for customers.

It is the latest in a string of strategic moves by Alibaba as the e-commerce company continues to roll out its ‘new retail’ vision, both within China and abroad.

Alibaba has already rolled out 20 Hema supermarkets in China and also has a strategic partnership with China’s largest supermarket operator Bailian Group and a stake in Bailian Group’s largest chain Lianhua Supermarket.

Daniel Zhang, chief executive officer of Alibaba Group, said the alliance aims to “redefine traditional retail through digital transformation.”

“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.”

The alliance is a response to the “tremendous” change in consumer demands and the rapid growth of mobile internet, according to Ruentex Group vice chairman Peter Huang.

Auchan Retail’s chief executive officer Wilhelm Hubner said the alliance stemmed from the companies shared visions for the future of commerce in China.

“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.”

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