Alibaba buys stake in Sun Art Retail from Ruentex

Alibaba buys stake in Sun Art Retail from Ruentex

Sun Art Retail Group is China's leading hypermarket operator that operates 446 hypermarkets across 224 cities in mainland China.

Hong Kong-Alibaba Group Holding Ltd.'s $3.7-billion deal to buy a slice of China's largest hypermart chain pits it against Wal-Mart Stores the world's largest retail arena.

Sun Art is market leader in the offline grocery market with an 8.2% market share according to Kantar Worldpanel.

The broader goal is to tap China's massive retail space worth approximately $5 trillion and comprising both online and offline options.

Alibaba Group Holding Ltd.'s investment is part of a three-way strategic alliance between the Chinese internet and e-commerce giant, Ruentex Group and Auchan Retail SA. Sun Art also operates superstores and innovative unmanned stores under the "Auchan Minute" brand.

In what can be seen as its latest strategic move, Alibaba puts into practice its new approach to retail marketing. Alibaba's 36.16% stake in the venture was acquired from Ruentex.

The firm said that their online and offline expertise are exploring new opportunities in China's food retail sector.

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Wilhelm Hubner, chief executive of Auchan Retail, said the alliance will allow them to serve a "fully integrated" in-store and online shopping experience to hundreds of millions of Chinese 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", he said.

In addition, back in 2014, the Chinese retail giant upped its stake in the department store operator InTime to 35% followed by a 20% stake in the retail giant Suning for $4.6 billion in 2015.

The investment is being made via Alibaba's popular online shopping platform Taobao.

Alibaba is exerting more efforts to secure offline, rural, and overseas customers as China's urban electronic commerce market shows indications of steeping, including buying extensive infrastructure which it had formerly avoided.

"They're getting into a territory that's not their core strength. for example securing a property, the licences to sell certain products, paying tax, more labour and so on", said Mr Weiwen Han, managing partner for Greater China at Bain & Company.

"On one hand they really need to do it, but on the other hand they are facing a lot of challenges that they have never experienced before".

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