Alibaba makes major New Retail investment

Alibaba is to splash out HK$22.4 billion ($2.88 billion) for a 36.16% stake in Sun Art Retail and provide technical guidance to the Chinese hypermarket operator as it digitises its operations.

This is part of Alibaba’s New Retail initiative as well as a strategic alliance with Auchan Retail and Ruentex Group. Alibaba will acquire its stake from Ruentex, whose Sun Art shareholding will decrease to 4.67%. Auchan will acquire shares and raise its stake to 36.18% in Sun Art upon the deal’s completion.

Alibaba Chief Executive Officer Daniel Zhang says the investment is in line with the company’s mission of enabling retailers around the world to enhance consumers’ shopping experience and boost business efficiency through the use of analytics. 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.

The strategic alliance also presents a key opportunity for Alibaba to explore markets beyond China, adds Zhang. Auchan has retail operations in 17 countries. “Going forward, we will explore various opportunities together with Auchan and try to improve our services in (overseas) markets.”