Alibaba says the transaction demonstrates its continued commitment to its ‘New Retail’ strategy

Alibaba says the transaction demonstrates its continued commitment to its ‘New Retail’ strategy

China's Alibaba Group Holding Limited is to take a majority stake in Sun Art Retail Group Limited, one of the country's largest big box retailers.

The Chinese e-commerce giant says it will invest US$3.6bn in the company, which operates hypermarket and supermarkets in China. This represents the purchase of a 70.94% equity interest in A-RT Retail Holdings from Auchan Retail International, raising its aggregate direct and indirect stake to around 72%.

Alibaba says the transaction demonstrates its continued commitment to Sun Art, and its 'New Retail' strategy by further integrating online and offline resources in China's retail sector.

"Alibaba's strategic investment in Sun Art in 2017 was an important step in our New Retail strategy," says Alibaba CEO Daniel Zhang. "The alliance we formed with Auchan Retail and Ruentex was instrumental in building a robust infrastructure to create opportunities and value in China's retail sector.

"Led by CEO Peter Huang, Sun Art has achieved impressive results in its digitalisation, and pursued promising synergies with businesses across the Alibaba digital economy. As the Covid-19 pandemic is accelerating the digitalisation 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."

Following the transaction, Alibaba will consolidate Sun Art in its financial statements. Additionally, Huang has been appointed chairman of Sun Art in addition to his current role as CEO.

In November 2017, Alibaba Group, Auchan Retail and Ruentex Group announced a strategic alliance to digitalise and introduce New Retail solutions at Sun Art stores, including omnichannel integration and a more personalised customer experience. Over the past three years, Sun Art has made significant progress in the digital transformation under a fast-changing market environment by leveraging resources and technology from the Alibaba ecosystem, to capitalise on the growth opportunities in China's hypermarket and supermarket space.

Today, all Sun Art physical stores in China have been integrated into Alibaba's Taoxianda and Tmall supermarket platforms, providing one-hour and half-day on-demand delivery through collaboration with other key businesses across the Alibaba ecosystem, including Ele.me and Cainiao.

As of 30 June, Sun Art operates 481 hypermarkets and three mid-size supermarkets in China, with a focus on strengthening its position through small and offline community stores.