Alibaba’s USD 10 Billion Brick & Mortar Shopping Spree is Not Slowing

After 11.11., when we had thought all the buzz surrounding Alibaba was about to calm down a little while, on November 20, it dropped another bombshell – USD2.9 billion investment stake in Sun Art, China’s top hypermarket operator. Or maybe it should not surprise us at all. The momentum of Alibaba’s shopping spree in brick&mortar has never slowed. As from June 2016 until today, within less than 18 months, Alibaba has lavished at least USD10 billion in the sector. 

Honestly outside the retail industry, not many people recognized Sun Art until this time the headline news made it a household name and just realized it actually operates 466 Walmart-style hypermarts under the Auchan and RT-Mart banners across China. Even better, it has been the leader in China’s grocery market.

For Sun Art competitors, the move must have stirred much anxiety or at least a wakeup call, in particular, Carrefour. It is reportedly said the deal has turned up the pressure on Carrefour because it has not found an ally in China yet. Well, at least

  • Wal-Mart, Yonghui paired with JD (second largest e-commerce company in China)
  • Tesco made a joint ventured with China Resources Vanguard (a state-run conglomerate focusing on retail)
  • Balian, Sun Art just wedded Alibaba

Oh, Carrefour does look a bit lonesome.

Never mind. Local analysts are spreading the exciting message to the consumers that we are expected to see over 400 supermarkets under Sun Art operation will soon be technically upgraded to the infrastructure akin to Alibaba’s newly launched futuristic grocery store “Hema”. For those do not want to read too much about how “Hema” works, just watch the video to get an understanding.

In a nutshell, it is

  • supermarket
  • Food court
  • app-driven in terms of discovery, promotion, personalization, payment (definitely cashless checkout)
  • Fulfillment center: within 30 minutes grocery delivery inside 3-kilometer radius

Such convenience would make every consumer scream for thankfulness. Alibaba has opened 20 “Hema” stores so far, which even drove up the prices of nearby real estate property. Many believed Sun Art’s 400 supermarkets are the new ammunition adding to Alibaba’s Hema’s aggressive expansion. Sounds like a plausible strategy. Because Hema also has to compete with a local rival with the similar concept called “Super Species” powered by Yonghui Supermarket Chains belongs to JD camp.

The e-commerce giant is taking the offline retail world by storm. Whether love or fear for it, there is no turning back, only the level and the scope will get more sophisticated and creative.

Author: Cecilia Wu