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Alibaba forms strategic alliance

Alibaba Group, Auchan Retail and Ruentex form new retail strategic alliance

Alibaba forms strategic alliance

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Alibaba Group Holding Limited, Auchan Retail SA and Ruentex Group on Sunday (19 November) announced a strategic alliance that brings together their online and offline expertise to explore new retail opportunities in China’s food retail sector.

As part of this strategic alliance, Alibaba Group will invest a total of HK$22.4bn (US$2.88bn) to obtain an aggregate direct and indirect stake of 36.16 per cent in Sun Art Retail Group Limited by acquiring shares from Ruentex. Auchan Retail is also increasing its stake in Sun Art.

The transaction will give Auchan Retail, Alibaba Group and Ruentex approximately a 36.18 per cent, 36.16 per cent, and 4.67 per cent economic interest in Sun Art, respectively.

Alibaba chief executive officer Daniel Zhang told reporters in Hong Kong the investment is in line with Alibaba’s mission of enabling retailers around the world to enhance consumers’ shopping experience and boost business efficiency through the use of analytics.

As one of China’s most well-respected retail operators, Sun Art provides a strong foundation for new retail exploration by building on its two decades of experience in China’s retail space, Zhang said.

The initial stage of the tie-up will focus on digitising Sun Art’s operations to increase the retailer’s understanding of its customers shopping habits, improving its product selection, as well as the design of its storefronts.

“Alibaba is excited to join with our new partners to redefine traditional retail through digital transformation,” said Zhang.

Auchan Retail’s chief executive officer Wilhelm Hubner said the shared commitment among the partners to digital transformation will help retailers meet Chinese customers’ increasing demand for higher-quality goods and services.

“This alliance with Alibaba stems from our shared vision for the future of commerce in China,” he said.

The strategic alliance also presents a key opportunity for Alibaba to explore markets beyond China, said Zhang, highlighting the international reach of Auchan’s operations as a strong foundation. Auchan has retail operations in 17 countries. It will continue to consolidate Sun Art in its financials following the deal.

“Going forward, we will explore various opportunities together with Auchan and try to improve our services in (overseas) markets,” said Zhang.

Sun Art is a leading multi-format offline food retailer in China. It operates 446 hypermarkets as large as 17,000m2 in 29 provinces, municipalities and autonomous regions across China under the RT-Mart and Auchan banners. It also operates superstores and innovative unmanned stores under the Auchan Minute brand.

This Sun Art investment is the latest in a series of New Retail-related investments Alibaba has made or announced recently.

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