Alibaba Bets $3.6B On Chinese Online Grocery Sun Art Retail Group

In a quest to dominate online food shopping in China, Alibaba invested $3.6 billion for a controlling stake in the hypermarket operator Sun Art Retail Group, Alibaba said in a statement on Monday (Oct. 19).

As part of the deal, Alibaba will acquire a 70.94% equity interest — worth about $3.6 billion — in Auchan’s A-RT Retail. A-RT has about a 51% equity interest stake in Sun Art. Peter Huang will continue as chief executive officer (CEO) of Sun Art and will also serve as chairman.

“As the COVID-19 pandemic is accelerating the digitization 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,” said Daniel Zhang, director and CEO of Alibaba.

Alibaba first invested in Sun Art in 2017 as part of the company’s New Retail strategy as it seeks to build a “robust infrastructure to create opportunities and value in China’s retail sector,” Zhang also said.

In 2017, Alibaba also formed an alliance with Auchan Retail and Ruentex Group to digitize and launch retail solutions at Sun Art stores such as omnichannel integration and customer personalization. Sun Art tapped Alibaba technology to leverage growth opportunities in China’s hypermarket and supermarket space.

As of June 30, 2020, Sun Art operates 481 hypermarkets and 3 mid-size supermarkets in China, with a focus on strengthening its position through small and offline community stores.

The deal with Sun Art Retail Group — one of China’s leading supermarket chains — is an offensive move against JD.com, Alibaba’s biggest competitor in the online grocery space, according to a Monday (Oct. 19) CNN report.

Alibaba is also planning to buy out the rest of the company and will make a general offer to shareholders. China’s biggest online shopping event since COVID-19 — the annual 618 sale — netted a combined $136.5 billion for Alibaba and JD.com. The event is named for the date the sale ends, June 18.