A 36% stake in Auchan owner
Sun Art, a challenger of Wal-Mart Stores (WMT) in China’s grocery market, operates about 450 hypermarkets across China under the Auchan and RT-Mart brands. According to global business intelligence firm Euromonitor International, Sun Art controls 14.6% of China’s hypermarket sector, compared with China Resources’ 15.5% and Wal-Mart China’s 10.2%.
Grocery arms race
Alibaba is making the investment in Sun Art through its Taobao unit. The investment in Sun Art is viewed as part of Alibaba’s efforts to blur the line between online and offline commerce. This investment also appears to fit into Alibaba’s ambition to increase its exposure to the lucrative grocery sector, a goal that US-based (SPY) e-commerce giant Amazon.com (AMZN) also appears to have.
Just a few months ago, Amazon acquired organic foods retailer Whole Foods Market for $13.7 billion in an apparent effort to step up competition with traditional retailers like Walmart, Kroger (KR), and Costco Wholesale (COST) for grocery sales.
$2.7 trillion in grocery sales
According to a new report by research firm IGD, worldwide grocery sales could reach $2.7 trillion by 2022. The US and China are expected to be the top grocery markets, with sales worth more than $1.72 trillion and $1.67 trillion, respectively, by 2022.
Including the Sun Art deal, Alibaba has invested at least $5.5 billion in its grocery push. The company acquired Intime Retail for $2.6 billion earlier this year.