Alibaba Pushes Deeper Into Retail With $2.88 Billion Investment

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"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, chief executive officer of Alibaba Group.

XAutoplay: On | OffSun Art Retail operates 446 "hypermarket complexes" in 224 cities across 29 provinces, regions and municipalities in China, under the RT-Mart and Auchan banners.

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. 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%.

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. Jack Ma's company spent billions buying into grocers, shopping malls and even department stores long before Amazon picked up Whole Foods. These deals concentrate on providing a connection between online and offline commerce, both for users and retailers.

China's largest online giant, Alibaba Group Holding Ltd (Alibaba) is making moves to equally become a giant offline. Notably, offline retail now constitutes 85% of total retail sales in China despite the enormous growth of e-commerce over the last few years.

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Alibaba has been looking to integrate online and offline shopping without having to build its own physical stores.

Either way, developments such as these are rendering the term "e-commerce" increasingly nebulous, also suggesting that there are limits to consumer's appetites for in-home deliveries, or their willingness to give up perusing the aisles for something that strikes their fancy. Ruentex's share of Sun Art will fall to about 4.7% after the transaction.

Shares of Hong Kong-listed Sun Art, which were suspended on Nov 13, resumed yesterday and were down 5.3 per cent in morning trade, while the benchmark index was flat. The plunge took place following the announcement of the Alibaba deal.

Sun Art is a grocery store leader in China, with its brands taking about 15 percent share in the hypermarket business in the country, followed by Walmart stores with 10 percent, Bloomberg reports, citing Euromonitor data.