Chinese retail giant Alibaba continues its withdrawal from physical stores: after just five years, it is already selling hypermarket group Sun Art at a loss of 1.5 billion euros. Last month, the group had already sold its department store chain Intime, incurring a further loss of 1.2 billion euros.
Focus on online
When Alibaba bought department store group Sun Art from Auchan in 2020, it offered the Chinese e-commerce giant the chance to diversify to physical stores as the French group – in the midst of the Covid crisis – decided to withdraw from the Chinese market. Now, however, the tables have turned and Alibaba is selling the 466 hypermarkets and some department stores on to Chinese investment group DCP Capital.
The transaction represents another hefty loss for Alibaba, as the group paid three billion euros for the hypermarkets just five years ago, but it now only recuperates half of that amount. Not only is this a clear sign of China’s economic downturn in recent years, but Alibaba is also urgently looking for fresh capital and wants to refocus on e-commerce as its core business.
By withdrawing from physical retail and focusing on its online business, Alibaba wants to be able to better compete with Pinduoduo‘s Temu and ByteDance’s TikTok. Alibaba had already sold the 350 department stores of the Intime chain in December. The two transactions together have cost Alibaba a whopping 2.7 billion euros in losses.
