HONG KONG: Alibaba, the Chinese e-commerce giant, is taking a major step into physical retailing by joining forces with Auchan Retail of France and Taiwan’s Ruentex Group to take a controlling stake in Sun Art Retail Group.

Sun Art, which is listed in Hong Kong, is one of only a few Chinese retailers that have a nationwide footprint with its 446 hypermarkets that trade under the Auchan and RT-Mart banners. It also has superstores and unmanned stores under the Auchan Minute brand.

According to a joint statement, the deal involves Alibaba investing HK$22.4bn (US$2.9bn) to buy shares from Ruentex to take a 36.16% stake in Sun Art.

At the same time, France’s Auchan, one of the biggest supermarket chains in the world, increases its stake to 36.18%, while Ruentex keeps a holding of 4.67%.

Alibaba, which already operates about 20 Hema supermarkets in China, said its strategic partnership with Auchan and Ruentex reflected its “new retail” vision of integrating online and offline shopping.

“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,” said Daniel Zhang, CEO of Alibaba Group.

“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.”

Wilhelm Hubner, CEO of Auchan Retail, said: “This alliance with Alibaba stems from our shared vision 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.”

By combining the resources of the three companies, it is expected that Sun Art will be able to digitise and introduce new retail solutions at its stores, while Alibaba extends its reach into the food and grocery sector.

Commenting on the partnership, analyst Veronica Wang told Bloomberg: “Alibaba and Sun Art are forming a strong alliance: China’s dominant e-commerce giant and its best hypermarket operator. They can leverage the alliance and bring more benefits than Walmart and JD.”

Sourced from Alibaba, Auchan Retail, Ruentex, Bloomberg; additional content by WARC staff