Alibaba spends $2.88bn to partner with Auchan in new retail venture

Chinese e-commerce giant Alibaba has announced a strategic alliance with Auchan Retail SA and Reuntex Group, which it hopes will bring together the company’s online and offline strengths in order to explore growth opportunities in the Chinese food retail sector.

Alibaba will invest $2.88bn in Sun Art Retail Group, which is currently owned by Auchan and Reuntex. The ecommerce giant will obtain an indirect stake of 36.16% while Auchan will retail 36.18% and Reuntex will retain 4.67%. This has been achieved by Alibaba purchasing from Reutnex’s stake, and Auchan’s initial stake being boosted.

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This comes as Alibaba develops its “New Retail” vision which hopes to work closely with retail partners to provide “a seamless offline and online experience” in retail.

Since 2015, Alibaba has invested around $9.3bn in total in brick and mortar stores, some of which are unmanned. Just recently, its new ally Auchan launched a series of small unmanned “Auchan Minute” stores across China following a successful pilot.

China’s food retail market is currently worth $500bn and Sun Art is a leading offline food retailer in the country, with around 12mn sq m of store space across China. The company is based in Hong Kong and has been providing “O2O” (online to offline) services in China since 2015.

Sun Art operates a total of 446 hypermarkets in 29 provinces in mainland China. Some are marketed at RT-Mart and others as Auchan.

Daniel Zhang, CEO of Alibaba, has stated of the alliance: “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.”