Online giant Alibaba agrees deal with China’s Sun Art

Alibaba shares look set to open higher in the US trading session Monday following news it will take a 36.16% stake in China's biggest bricks and mortar retailer, Sun Art.

Online giant Alibaba agrees deal with China’s Sun Art

Alibaba shares are currently poised to open a little higher Monday, following news it will take a stake in China’s largest grocer, Sun Art.

Alibaba is China’s largest eCommerce retailer. However, it has been searching for the right bricks and mortar deal to help expand its business. It appears to have found it.

Alibaba shares, which trade on the New York Stock Exchange, ended down 0.18% on Friday at $185.13.

Growth plans

The deal, announced Monday, shows Alibaba will purchase a 36.16% stake in Sun Art, for $2.88 billion, (HKD$22.4 billion).

“Physical stores serve an indispensable role during the consumer journey, and should be enhanced through data-driven technology and personalized services in the digital economy,” said Alibaba Group’s CEO, Daniel Zhang.

“By fully integrating online and physical channels together with our partners, we look forward to delivering an original and delightful shopping experience to Chinese consumers,” he added.

This is the latest in a number of grocer-related investments made by Alibaba. It underscores the online giant’s ambition to reach an even bigger consumer base.

Alibaba’s investment plans are also reminiscent of competitor Amazon’s business ongoing development into the bricks and mortar retail world.

Alibaba targets rural China

The deal, which makes Alibaba the second largest Sun Art shareholder, is also a sign that it is increasing its efforts to add more rural China consumers to its customer base.

Sun Art is currently an offline, solely bricks and mortar retailer. It operates over 400 stores across 29 provinces, municipalities and autonomous regions. Sun Art’s hypermarket stores are operated under the RT-Mart and Auchan brands.

But that’s not all the online giant intends. As with other retailers, including Wal-Mart, Alibaba is attempting to create a happier marriage between online and offline sales.

By integrating technology in both types of stores, it will likely work to better utilise the available data. That should help to win even more customers, as well as securing the loyalty of its existing customers.

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