Alibaba takes participation in the Chinese food chain

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Chinese e-commerce giant Alibaba is to move forward in brick-and-mortar retailers for the purchase of a 36% stake in China’s largest hypermarket operator.

A unit of Alibaba will pay $2.9 million (£2.2 bn) for direct and indirect participations in the Sun Art, which operates more than 400 stores throughout China.

The purchase gives Alibaba a leg up in the lucrative grocery sector.

US rival Amazon paid nearly $14bn for prestigious supermarket chain Whole Foods earlier this year, in a raid similar.

Alibaba has been looking to integrate on-line and off-line purchases, without having to build their own physical stores.

The online giant has invested more than $9.3 million in bricks-and-mortar stores from 2015, according to Reuters.

Alibaba chief executive Daniel Zhang said: “Physical store to serve an indispensable role during the consumer journey, and should be improved through data-driven technology and personalized services in the digital economy.”Grocery shopping

Alibaba’s latest deal targets of China of $500 billion of food in the retail sector, where online businesses have struggled to win market share.

Analysts believe that the agreement will have a “positive impact” on both Alibaba and the Art of the Sun.

Steven Kwok, a partner at OC&C strategy Consultants, said that Alibaba could achieve an improvement of the distribution network through Sun Art, shops, while the Art of the Sun will benefit from Alibaba with experience in e-commerce.

“Retailers, unlike the other categories until now, it has found more obstacles to change in line with sales in line, still in the low single-digit online sales market share,” he said.

“This is evident both in China and in the world, but perhaps even more pronounced in China, given that beyond the needs of the immediacy and the convenience, customers also have the habit of being able to “touch and feel” and, finally, choose the actual products you’re buying.”

Shares of Sun Art fell as much as 14% on Monday after it announced Alibaba stake purchase. They recovered part of the losses to close 4.1% lower than in Hong Kong.