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21 November 2017

Alibaba continues to increase its "bricks and mortar" presence

Lisa Wright

In June this year when Amazon announced its $13.7bn offer for Whole Foods, there was a lot of media comment about the deal finally representing a move towards "physical" locations, as well as being an e-retailer, and many commentators seemed transfixed by this.

However, what seemed to go relatively unnoticed was the fact there is already a precedent of a global e-retailer looking to physical locations in order to help it fulfil the next stage of its strategic plan. Alibaba, the Chinese e-commerce conglomerate, had already started to invest in "bricks and mortar" retailers as far back as 2014, and yesterday saw it continue with this strategy with the announcement of its acquisition of a 26% stake in Sun Art Retail Group, the Hong Kong-based hypermarket operator.

For Alibaba, this deal represents its fourth acquisition of a "physical" retailer, after acquiring the remaining 53% of Intime Retail earlier this year, as well as minority positions in household appliance retailer Suning Commerce and Lianhua Supermarkets in May 2016 and May 2017, respectively.

The underlying driver for both Amazon and Alibaba in making these acquisitions is to access data held by the target companies, and also to bring together the two worlds of online and offline commerce for all parties involved.

Alibaba's CEO, Daniel Zhang, is quoted as saying that "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". He also said: "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."

LIsa Wright

Lisa Wright, Managing Director, M&A products

A regular blogger on this site, Lisa shares her analysis and opinion on news and trends in M&A, private equity, venture capital and IPOs.

A regular blogger on this site, Lisa shares her analysis and opinion on news and trends in M&A, private equity, venture capital and IPOs.

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