On December 8, according to an announcement by Sun Art Retail Group, Taobao China made a mandatory unconditional cash offer to acquire all issued shares of RT-Mart's parent company Sun Art Retail at HK$6.50 per share. Screenshot of the announcement The announcement disclosed that Alibaba Zetai signed a business cooperation agreement with the company and its subsidiaries Auchan China and RT-Mart China on December 7. According to the cooperation agreement, Sun Art Retail Group and Alibaba Zetai will cooperate and cause their respective affiliates to cooperate to adopt the 'Taobao to Home' model in stores operated by Sun Art Retail Group and its affiliates:
(1) Stores have the right to use the business model and online platform;
(2) Share certain transaction raw data generated through the business cooperation;
(3) Complete the integration of relevant systems and POS hardware and self-checkout equipment;
(4) Alibaba Zetai and its affiliates provide delivery services for products sold on the platform;
(5) Cooperation in other areas, such as assisting in procurement, participating in marketing and promotional activities, and using Alipay. Sun Art Retail stated that the new alliance with Alibaba Group will enable the group's business to benefit from Alibaba Group's digital ecosystem. The business cooperation agreement will digitize Sun Art Retail Group's stores and introduce new retail solutions. Under the agreement, stores will be able to operate as part of the 'Taobao to Home' business model. The cooperation will enable Sun Art Retail Group to leverage the internet technology and Taobao traffic provided by Alibaba Group's Taobao to Home business, thereby increasing the efficiency of its traditional hypermarket and supermarket stores. Only 10% Overlap Between Tmall & RT-Mart Consumers Kantar Worldpanel research found that in the FMCG sector, only 10% of consumers are both consumers of Sun Art Group (RT-Mart + Auchan) and Taobao/Tmall. Therefore, through offline physical store contact, Alibaba has a 60% opportunity to win over and convert the consumer dividend of Sun Art Retail that is not yet on Taobao/Tmall, with these consumers mostly residing in third- and fourth-tier cities. This also means that the cooperation between Alibaba and Sun Art Retail will achieve a win-win: physical retail represented by Sun Art Retail will gain new momentum, while Tmall's advantage in online FMCG will continue to expand. The Kantar report pointed out that the cooperation between Alibaba and Sun Art Retail can, on one hand, organically combine Sun Art Retail's numerous stores and supply chain capabilities with Alibaba's new technologies and home delivery model, improving corporate efficiency and providing consumers with a better experience, thereby gaining new market growth. On the other hand, Alibaba can leverage Sun Art Retail's good coverage in key cities, provincial capitals, and prefecture-level cities to more efficiently develop its supermarket and fresh food business. Therefore, regardless of what new retail species the two create, the impact on the entire retail market will inevitably be profound. Kantar also mentioned in previous reports that the overall growth of China's modern trade channels is weak, with foot traffic (penetration) generally declining. So, from another perspective, Alibaba's resources and support are expected to inject new vitality into Sun Art Retail Group, which holds a leading position in modern trade. Now, the integration of online and offline has become inevitable, and major giants have begun to stake their claims. Tencent Heavily Invests in Yonghui Super Species Caijing magazine reported yesterday that Tencent will invest in Yonghui Superstores. In the morning, Yonghui's stock price hit the daily limit immediately. At noon, according to Securities Times, Yonghui responded to the Tencent investment rumor, saying that the matter is still only at the stage of commercial cooperation negotiations, and it is not necessarily related to the expansion of Super Species, nor has it reached the situation described in the report. The company will suspend trading in the afternoon. This response at least confirms that the two parties are in negotiations. If this matter is ultimately implemented, Tencent's direct investment in Yonghui, bypassing JD.com, can be understood as a further consolidation of the 'Tencent-JD-Yonghui' alliance, or as Tencent's business tentacles reaching into traditional physical industries, or as the business integration between Tencent and JD.com and between JD.com and Yonghui not being deep. This is a business restructuring involving three leading listed companies (Yonghui's A-share market value once exceeded 100 billion yuan, Tencent's Hong Kong stock market value is currently about 3.74 trillion yuan, and JD.com's US stock market value is currently about 54.3 billion yuan). The situation cannot be simply understood as Tencent leading and Yonghui cooperating. The key point here is that between Tencent and JD.com, the key links in reaching the 'people, goods, and places' aspects of business, such as membership, products, services, and payment, have not been fully connected. Between JD.com and Yonghui, two years have passed, and Yonghui is still positioned as a large B-type merchant for JD.com, far from full business integration and mutual support. Even in terms of resource sharing, it is not as close as the relationship between Tencent and Meituan. From the above background analysis, Tencent's investment in Yonghui is intended to break down business barriers and internal conflicts through equity control, seeking a deeper and more thorough cooperation with Yonghui in terms of membership, traffic, payment, and online-offline experience scenarios. If Tencent's investment in Yonghui is realized, Tencent and Alibaba will directly clash in offline retail layout. Don't forget that among the top ten in the list of China's top 100 retail revenue (listed companies), six have already been brought under the umbrella of Alibaba and Tencent. Alibaba's target this time, Sun Art Retail, is the number one in China's supermarket sector by sales, with business coverage nationwide. According to CITIC Securities research (as of September 30, 2017), it has 454 hypermarkets in 226 cities across 29 provinces. Sun Art Retail operates hypermarket business under the two well-known brands Auchan and RT-Mart. As of December 31, 2016, by turnover and net profit, Sun Art Retail was almost twice the size of Yonghui Superstores, which ranked second. Compiled from: China Business Network, Lianshang.com, Kantar, Retail Boss Internal Reference -END-