Alibaba Group Holding Ltd. is investing $2.9 billion in China’s largest “hyper-market” or superstore company, Sun Art Retail Group, in a move there against Walmart and its partnership with Alibaba rival JD.com. Sun Art owns 400 hypermarkets under the Auchan and RT-Mart brands.
To date the Chinese ecommerce giant has spent billions in China purchasing grocery chains, shopping malls and even department stores as it pursues a more aggressive clicks-to-bricks strategy in an effort to transform retail.
As part of the deal, French-based Auchan Retail SA will raise its stake in Sun Art and form a partnership with Alibaba, going after the food retail sector in China and up against Walmart and digital partner JD.com. The $2.9 billion investment from Alibaba gives it a 36% stake in Sun Art.
In February, Walmart increased its stake in JD.com to a 12.1% share, and participated in its 8.8 shopping holiday in August, as it looks to expand its position in the massive Chinese market. It’s not clear what the volume of sales was for the first-ever 8.8 festival, but of course it’s dwarfed by Alibaba’s Singles Day which netted over $25 billion in its ninth year.
According to a report in Bloomberg, Alibaba is seeking to leverage its technology to allow physical stores to better manage inventory and customer data, as are Walmart and JD.com, marrying physical and digital to enable delivery in major markets.
Unlike Amazon, which paid a premium when it acquired Whole Foods for $13.7 billion this summer, Alibaba picked up its stake on the cheap, a 24% discount off Sun Art’s most recent valuation.
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