Another brick in the wall for web retailers

Updated 2017-12-03 16:01:56 China Daily

Chinese shoppers have array of outlets as brands cross over into cyberspace

Shoppers have never had it so good as online companies search for offline opportunities and traditional stores look for a home in cyberspace.

Brands have been able to cash in on rising internet spending, while consumers have a greater variety of products and outlets.

"This trend has helped provide consumers with a better shopping experience and enabled brands to achieve incremental growth," said Jason Yu, general manager of Kantar Worldpanel China.

Leading this retail revolution has been Alibaba Group Holding Ltd, which has been expanding offline. On Nov 21, it acquired a 36.16 percent stake in China's largest hypermarket operator Sun Art Retail Group.

The chain store giant dominates the hypermarket business with a market share of 15 percent, consultancy Euromonitor International reported.

"To join forces with Sun Art, Alibaba is looking to seamlessly integrate more than 500 million 'super consumers' at its e-commerce platform that sells everything from fresh products to electronics, with this well-established brick-and-mortar retail network," Daniel Zhang, CEO of Alibaba, told China Daily.

"As the country's 'super consumers' are reshaped by the internet, the boundary between the online and offline retail arenas continues to be blurred," he added. "It becomes a big trend when an e-commerce giant and a hypermarket operator form a strong alliance."

Sun Art operates about 450 hypermarkets across China under the RT-Mart and Auchan banners.

The HK.4 billion (.88 billion) deal will make Alibaba the second-largest stakeholder in a business which generated 100 billion yuan (.09 billion) of revenue last year.

"The New Retail strategy is at its starting point and it is hard to know whether it can completely change the retail landscape," said Yu, of Kantar Worldpanel China.

"But it is reforming the retail structure and driving efficiency through internet technology," he added.

Alibaba's move was part of an investment spree which started in 2014. This included buying department store chain, Intime Retail Group Co Ltd in January, and investing in Shanghai-based supermarket brand Lianhua in May.

The company is pushing ahead with its "New Retail strategy", merging online and offline commerce by using colossal amounts of data collected through its array of digital services.

JD.com Inc, China's second-biggest e-commerce player, is in a similar position.

It plans to open 200 more bricks-and-mortar stores by the end of this year. They will mainly offer consumer electronics products.

This is considered a bold move by JD as it will go head-to-head with Suning Commerce Group and Gome Electrical Appliances Holding Ltd, two of the biggest electronic offline retailers in China.

But JD has a massive online presence and some powerful partners offline.

Earlier this year, the company and one of the world's biggest retailers, Walmart Inc, joined forces to expand their strategic partnership in China.

They agreed to further integrate their platforms, supply chains and customer resources.

The two groups also confirmed that they would continue to share resources on customers, stores and inventory.

By November, the effects were visible. Sam's Club, Walmart's high-end membership store in China, reported that it had tripled its revenue in a year since going online with JD last October.

Overall, Walmart China has seen its orders surge more than 30 times after working with JD Daojia services. The collaboration covers 146 stores in 20 cities.

"Since forming our strategic partnership with JD.com in June last year, we have continued to expand our omni-channel strategy to better serve customers and grow our business in China," Ben Hassing, senior vice-president of Walmart China e-commerce and technology, told China Daily.

Today, the digitally adept consumers are always connected, browsing products on the move and comparing prices. It is in this space that retail brands now need to position themselves.

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