Alibaba goes offline with stake in brick-and-mortar retailer

Saul Bowman
November 21, 2017

"Physical stores serve an indispensable role during the consumer journey, and should be enhanced through data-driven technology and personalised services in the digital economy", Alibaba chief executive officer Daniel Zhang said in the statement.

As part of the deal, Auchan Retail will slightly raise its stake in Sun Art, too.

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 overseas.

Alibaba has invested upwards of US$9.3 billion in brick-and-mortar stores since 2015, and has launched many unstaffed concept shops in the past year.

When the transactions are completed, Auchan will own 36.18 percent of Sun Art Retail, while Alibaba will hold 36.16 percent and Ruentex 4.67 percent. Taobao will form an alliance with Auchan Retail S.A. and Reuntex Group.

Alibaba would acquire a 36-percent stake in Sun Art Retail Group from Taiwanese conglomerate Ruentex Group, the Chinese e-commerce firm said in a statement, leaving Alibaba and French firm Auchan Retail with roughly equal stakes in Sun Art. In May, the e-commerce behemoth invested in the supermarket brand Lianhua.

In 2014, Alibaba bought 35 percent stake in Chinese department store operator InTime, and in the following year took 20 percent in electronics and electrical appliance retailer Suning.

He added that by integrating fully online and physical, together with partners, we are looking forward to delivering a delightful and original shopping experience across all of China. Wal-Mart and are doing the same, marrying online commerce with data and combining their network of warehouses and cold storage for same-day delivery to customers.

Alibaba shares now carry a Zacks Rank #2 (Buy).

Shares of Sun Art fell by as much as 14% on Monday after it announced Alibaba's stake purchase.

"Grocery retailing, unlike other categories thus far, has encountered greater barriers to the shift online, with online sales still in the low single digits of online retail market share", he said. As they may be considered "acting in concert", the group may be required to make an offer for the remainder of Sun Art shares, the listed company said in its filing.

"The acquisition by Alibaba is part of its investment diversification", said Andy Kwan, a Hong Kong-based director at ACE Centre for Business and Economic Research.

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