Alibaba is splashing out $3.6 billion to take over China’s biggest hypermarket operator Sun Art Retail Group Ltd., which runs the Auchan and RT-Mart hypermarket chains in China. Observers see the move as Alibaba’s play to consolidate its e-commerce dominance with the world of traditional offline grocery stores.

The deal will add Sun Art’s 484 physical outlets to Alibaba’s broad e-commerce offering, along with its food takeout platform Ele.me and logistics subsidiary Cainiao.

Alibaba’s long-running efforts in online grocery retail – a sector that saw 35% growth in the first eight months of this year — paid off in 2020, as people turned to online groceries and home deliveries during the pandemic.

Apart from transforming traditional hypermarkets, Alibaba has also opened its own Freshippo grocery retail chain, which now runs 200 stores across China. Sun Art is the market leader in brick-and-mortar hypermarkets, with 14.1% of the market, followed by China Resources and Yonghui, in which Tencent owns a 5% stake, according to market research firm Euromonitor.

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Contact editor Marcus Ryder (marcusryder@caixin.com)

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