Chinese e-commerce giant Alibaba is deepening its involvement in physical retailing by taking a controlling share in the country’s largest hypermarket network, Sun Art.

Nikkei Asia Review reports that Alibaba Group Holding will increase its stake in Sun Art to around 72%, by purchasing a majority share of A-RT Retail from France’s Auchan Retail. A-RT Retail has a majority stake in Sun Art.

The Sun Art network extends to 486 outlets, and Alibaba’s move is being seen as an extension of its “New Retail” strategy, which aims to unite online and offline activity, from supply chain and the shopper experience to logistics.

The strategy is being spearheaded by CEO and Chairman Daniel Zhang, who says the pandemic has accelerated the growth of online grocery in China.

"As the COVID-19 pandemic is accelerating the digitisation of consumer lifestyles and enterprise operations, this commitment to Sun Art serves to strengthen our new retail vision and serve more consumers with a fully integrated experience," Zhang said in a statement. 

Alibaba took a minority stake in Sun Art in 2017, and has since integrated all the physical outlets of the hypermarket chain to its online platforms, Nikkei reports. This has enabled online shoppers who use Alibaba's Tmall Supermarket, Taoxianda, and platforms to buy from Sun Art, and get their goods delivered in as little as an hour.

New Retail is exemplified in Alibaba’s Freshippo/Hema supermarket chain, which launched in Shanghai in 2016 and now has around 200 branches. 

The stores allow shoppers to scan items with their mobile phones to see the provenance of each item, and fresh food can be taken home by the shopper, delivered to them, or cooked to order and served in the in-store restaurants. The stores also serve as back-end processing centres for online orders placed Alibaba’s digital platforms. The stores’ location in urban centres, rather than out-of-town warehouses, helps reduce delivery time.

Auchan’s sale of its stake in Sun Art marks its exit from the China market; as Nikkei notes, this follows the departure of fellow European retail giants Carrefour, Metro and Tesco.

Sourced from Nikkei Asian Review